This interdisciplinary day will close the CIREQ-CIRANO-RRECQ Workshops on Environmental and Natural Resource Economics, organized by Geir B. Asheim (Oslo University), Hassan Benchekroun (McGill University), Sophie Bernard (Polytechnique Montréal, CIRANO), Etienne Billette de Villemeur (Université de Lille, UQAM), Robert Cairns (McGill University), Justin Leroux (HEC Montréal, CIRANO), and Charles Séguin (UQAM, CIRANO).

The day will welcome Florentin Ametonou, PhD student at UQAM, Bruno Larue (Laval University), Aurélie Harou (McGill University).

• Florentin Ametonou, PhD student at UQAM
  Climate Extremes, Adaptation, and Agricultural Productivity: Evidence from Canadian Provinces, 1997-2023

Abstract

Over the past several decades, global warming has been observed worldwide, and Canada is no exception. In a context where the global population continues to grow, it has become urgent to support increases in agricultural productivity.

In this regard, this study aims to assess the effects of climate extremes—particularly temperature and precipitation—on agricultural productivity, labor productivity, and capital deepening. Most existing studies address this issue at the farm or firm level. In contrast, our study is among the first to use a province-year panel dataset for Canada.

The analysis relies on data on the growth rates of total factor productivity, labor productivity, and capital deepening. Climate data consist of adjusted daily precipitation observations, as well as adjusted and homogenized daily air temperature data.

The results reveal substantial heterogeneity across provinces, both in terms of economic performance and sensitivity to climatic conditions. In particular, we find that an increase in drought episodes has a negative effect on agricultural productivity as well as on labor productivity. Furthermore, droughts and heatwaves negatively affect capital intensity in the short run.

These findings are consistent with the existing literature, confirming the adverse effects of climate extremes while highlighting the adaptive responses of exposed agents.

• Bruno Larue (Laval University)
  Near zero trade flows and gravity with endogenous market structures

Abstract

Trade in agricultural products is often modeled as an oligopoly because exports originate from a small number of countries, with a handful of traders, private or state-owned. Trade statistics at the commodity level typically show many zeros and near-zero trade flows and countries importing from a single source. We develop a simple theory and an empirical framework that posit that there is an effective market size threshold below which imports are zero and a threshold over which all export traders enter with certainty and in between there are markets that can be entered profitably by a single trader, but not by two or more, which rationalizes randomized entry and mixed or correlated strategy equilibria. Canada is a much larger producer and exporter of maple syrup yet there are more countries buying only from the USA. We show that this is consistent with equilibria in mixed strategies with a Canadian cost advantage.  Our estimation strategy estimates market structure probabilities in a first step and market structure-specific gravity equations in a second step.         

• Aurélie Harou (McGill University).
  The adoption of conservation agricultural practices: experimental evidence on the role of risk and ambiguity

Abstract

We examine how risk and ambiguity influence farmers’ adoption decisions for conservation agricultural practices, focusing on cover cropping. Using a novel experimental design, we combine survey data with dynamic decision-making games conducted among farmers in Québec and a comparison sample of university students, allowing for both behavioral and external validity insights. We elicit risk and ambiguity preferences using established experimental methods, and estimate their effects through panel logistic models that account for repeated decisions over time. Results show that a lower probability of favorable outcomes significantly reduces adoption, particularly when this information is made more certain. Ambiguity aversion is generally associated with lower adoption rates, whereas factors such as farm size and awareness of subsidy programs positively influence adoption behavior. The study also highlights the dynamic nature of decision-making, showing that participants update their choices over time based on both information and prior outcomes. The findings suggest that policies aimed at reducing ambiguity—such as improved information provision on returns—may increase adoption, although their effectiveness depends on the underlying risk environment.

This event will be in English.

This workshop is supported by the Centre interuniversitaire de recherche en analyse des organisations (CIRANO), the Centre interuniversitaire de recherche en économie quantitative (CIREQ), the Réseau de recherche en économie circulaire du Québec (RRECQ), and the Fonds de recherche du Québec (FRQ).