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Empirical evidence for effective analysis and policy optimisation
The aim of this overarching project is to generate representative and reliable data for empirical economic and interdisciplinary analysis focusing on pressing issues in China and the region as e.g. sustainable productivity increase, innovation and technology transfer, digitalisation, migration, bioeconomy, circular processes and technologies, etc.
Cultivated land has become particularly important to support the resource need in China given its 1.4 billion population. At present, China's per capita arable land area is only about 0.1 hectares, which is far below the world average. It is crucial for the Chinese government to design their agricultural and resource policy with care to allocate and manage production resources efficiently and to produce more value from the existing cultivated land and other natural resources. While agricultural practices in China are facing a common challenge of increasing environmental problems, broadening and deepening the understanding of China’s current situation based on a data driven approach is needed to efficiently tailor the most suitable agricultural and resource policy for various regions in China.
In the past years, researchers have recognized and emphasized the importance of considering heterogeneity across households and regions in order to maximize the effectiveness of policy frameworks. Our planned data and evidence collection across heterogeneous regions in China is expected to result in an extensive and unique data set that can be used for a vast amount of scientific studies in collaborative work. The goal is to continue the data collection process over multiple years in order to study not only short- and medium-term effects of policy changes at the farm level, but also long term effects on the structural change in agriculture and at the landscape level. E.g. environmental consequences - such as the runoff of nutrients and water pollution - are often not visible immediately after changing farming practices. Therefore, our research questions require longitudinal data over many years. The collection of primary microeconomic farm, firm and household data supplemented with farm-level and regional biodiversity indicators will lay the foundation for high-level research articles to be published in international peer-reviewed journals, develop and maintain state-of-the-art empirical policy simulation tools and provide a basis for attracting large-scale funding for collaborative projects in the future.
Added value is provided by this core project by statistically and economically mapping, analysing and further optimising the development of bioeconomic procedures and by supporting policies. Furthermore, our approach allows to close the data and knowledge gaps for evaluating the eﬀectiveness and eﬃciency of the current and (potential) future residual management system in China and to work towards a circular system. (lead: Prof. Dr. Johannes Sauer)
Agricultural productivity and input markets (credit access)
In China, only 78 million out of 230 million rural households (33.2%) obtained formal loans in 2007, despite half of rural households being in demand of credits, according to the Financial Service Report 2008 published by the People’s Bank of China. Lack of credit access has long been recognized as a barrier for smallholder farmers to increase welfare. The literature shows that improved credit access increases agricultural production, investment and yields or income per unit of land. While partial productivity measures are important indicators of productivity, they do not account for the use of other inputs. For example, yield can be increased by expanding the use of other inputs such as seed, fertilizer, or mechanization. By contrast, TFP measures the returns on all inputs used in the production process, not only land or labor. Thus, it is a more meaningful welfare indicator than partial productivity measures.
In this project, we collaborate with colleagues from the Renmin University of China to assess the effect of improved credit access on TFP. To this end, we use data from a field experiment where a credit program was initiated in randomly selected villages across five provinces of China. Preliminary results show that the credit program improved total factor productivity, mainly by allowing farmers to increase their technical efficiency. (lead: Stefan Wimmer)
Agricultural waste management and circular economy
Agricultural waste, which includes crop straw and livestock manure, has become a significant source of environmental pollution in rural China. Agricultural residues are commonly discarded or incinerated instead of being converted to biomass, resulting in a loss of potential resources, intensification of environmental problems, and decline of arable land areas in China. The Chinese government has vigorously promoted the idea of utilizing agricultural residuals, especially for the production of various bio-industrial components. The main measures that the Chinese government applies for residual recycling by bio-reﬁneries are subsidies and tax credits. However, the eﬀect of these actions remains ambiguous. This is because currently, the data regarding available residuals, utilization quantity, and utilization rate are only approximates based on the size of the planting area. Moreover, the available data also does not allow to credibly assess the causal effects of policy interventions (such as subsidies or legislation) that aim at agricultural waste management and market development for recycling agricultural residuals.
Against this background, the PuR team aims to develop a standardized survey to be used for household data collection in rural communities in China, with regional heterogeneity explicitly taken into account. The data collection will allow us to employ micro-economic and econometric models to identify the economic and environmental outcomes of different waste management strategies, and thus to formulate policy recommendations that support the sustainable development of the agricultural sector in China, as well as in other countries where the agricultural sector is characterized by small scale farming and high environmental pressure.
The project is carried out in close collaboration with the Institute of Agricultural Resources and Regional Planning at the Chinese Academiy of Agricultural Sciences (CAAS). (lead: Dr. Xun Zhou)
Bioeconomy and biorefineries
The term 'bioeconomy' has become popular from the mid-2000s onwards with the aim of moving toward sustainable development. Bioeconomy refers to economic activity involving the use of biotechnology in the production of bio-based goods, services, or energy from biological material or biomass as the primary resource base. It has been widely adopted by governments and become a staple word in their development agendas and policy documents to promote the use of biotechnology to develop new products, markets, and uses of biomass. Regional development agencies, national and international organizations, and biotechnology companies, which previously worked individually, have now joined forces. This accelerated the evolution of the biotechnology industry and the capacity to study, understand and use genetic material. This evolution changed the path of scientific and technological development in agriculture, health, chemical, and energy industries.
The Chair Group of Production and Resource Economics is currently involved in a EU Horizon 2020 project trying to monitor the development of the bioeconomy against the background of its implication on the economy, society and environment. Given that China is currently facing immense sustainability issues with its limited resources and large population, it is crucial for China to consider bioeconomy as a sustainable development path in the near future. Together with researchers from Tongji University and Zhejiang University we want to provide empirical evidence based research on bioeconomy in China to assist the policy design on sustainable development. (lead: Benz Xinqi Zhu)
Digitalisation and agricultural efficiency (ICT-technologies)
Since the 1990s, Information and Communication Technology (ICT), represented by mobile phones and the Internet, has become the most influential information technology, and is profoundly changing the way farmers obtain information. Chinese governments at all levels have invested a great deal to promote rural ICT construction for narrowing the urban-rural “Digital Divide”. Previous research shows that ICT has the potential to weaken and remove the barriers of information in terms of time and space, promoting agricultural transformation and increasing farmers’ income. However, few studies try to explore the relationship between ICT investment and production efficiency at the farm level. The importance of this relationship comes from the fact that productivity growth is mainly the result of changes in technology and efficiency. Thus, the goal of this research is to estimate a state-of-the-art production function for vegetable farmers and verify the impact of ICT on productivity and technical efficiency. The results will provide suggestions for policy makers on what kind of economic policy can help farmers to make better use of ICT and obtain market benefits; how to strengthen farmers' ability to adopt ICT and thus help them to improve their market performance.
The project is carried out in cooperation with research partners from the Northwest A&F University in China and is funded by the China Scholarship Council (CSC). (lead: Shijia Kang)