Person:
Larson, Donald F.

Development Research Group, World Bank

Fields of Specialization

Rural Development Policy; Natural Resource Policy; Agricultural Productivity and Growth; Climate Change Policy and Markets; Commodity Markets and Risk

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Development Research Group, World Bank

Last updated: January 31, 2023

Biography

Donald F. Larson is a Senior Economist with the World Bank’s Development Research Group. He holds a B.A in economics from the College of William and Mary, an M.A. in economics from Virginia Tech, and a Ph.D. in Agricultural and Resource Economics from the University of Maryland. With colleagues, he has authored or edited five books, including An African Green Revolution: Finding Ways to Boost Productivity on Small Farms, a forthcoming volume from Springer, and The Clean Development Mechanism: An Early History of Unanticipated Outcomes, a forthcoming volume from World Scientific. He has published numerous book chapters and journal articles, with an emphasis on agricultural productivity and growth; food and rural development policies; natural resource policies; the institutions and markets related to climate change; and the performance of commodity futures and risk markets. During his time with the World Bank, Don has participated in policy discussion in Africa, Eastern Europe, Central Asia, East Asia, Latin America, and the Caribbean. He was a member of the team that launched the World Bank’s Prototype Carbon Fund.

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Publication Search Results

Now showing 1 - 10 of 12

Measures of Fixed Capital in Agriculture
(2010-11-01) Butzer, Rita; Mundlak, Yair; Larson, Donald F.
Capital is a fundamental component of agricultural production, and the accumulation of capital is key to growth in agriculture and the process of development. Unfortunately, cross-country data sets on agricultural fixed capital are rare. Using a common methodology that allows comparisons across countries, as well as over time, this paper introduces a data series on fixed capital in agriculture, based on national accounts data. The fixed capital measure differs remarkably from the Food and Agriculture Organization's data series on tractors, which has been widely utilized as a proxy for agricultural fixed capital. The authors construct comparable measures of capital in livestock and tree stock. They examine the evolution of the capital stocks from 1970 to 2000, paying particular attention to the changing composition of agricultural capital, as well as differences in the accumulation of capital for high-income and middle and lower-income countries. Using the capital measures in agricultural productivity analyses, the data yield estimated input elasticities substantially different from those found previously in the literature. The authors show explicitly that this is due to the improved data set on agricultural capital stocks, as well as the methodology used in the study.
Are Women Less Productive Farmers?: How Markets and Risk Affect Fertilizer Use, Productivity, and Measured Gender Effects in Uganda
(World Bank, Washington, DC, 2015-04) Savastano, Sara; Larson, Donald F.; Murray, Siobhan; Palacios-Lopez, Amparo
African governments and international development groups see boosting productivity on smallholder farms as key to reducing rural poverty and safeguarding the food security of farming and non-farming households. Prompting smallholder farmers to use more fertilizer has been a key tactic. Closing the productivity gap between male and female farmers has been another avenue toward achieving the same goal. The results in this paper suggest the two are related. Fertilizer use and maize yields among smallholder farmers in Uganda are increased by improved access to markets and extension services, and reduced by ex ante risk-mitigating production decisions. Standard ordinary least squares regression results indicate that gender matters as well; however, the measured productivity gap between male and female farmers disappears when gender is included in a list of determinants meant to capture the indirect effects of market and extension access.
Determinants of Agricultural Growth in Indonesia, the Philippines, and Thailand
(World Bank, Washington, D.C., 2002-03) Mundlack, Yair; Larson, Donald F.; Butzer, Rita
The introduction of new high-yielding varieties of cereals in the 1960s, known as the green revolution. Changed dramatically the food supply I Asia, as well as in other countries. The authors examine over an extended period, the growth consequences for agriculture in Indonesia, the Philippines, and Thailand. Despite geographic proximity, similar climate, and other shared characteristics, gains in productivity, and income differed significantly among the countries. The authors quantify these differences, and examine their determinants. They find that the new technology changed the returns to fertilizers, irrigated land, and capital, all of which proved scarce to varying degrees, Complementing technology-related changes in factor use were investments - public and private - driven in part by policy. The authors find that factor accumulation played an important role in output growth, and that accumulations from policy-driven investments in human capital, and public infrastructure, were important sources of productivity gains. They conclude that policies that ease constraints on factor markets, and promote public investment in people, and infrastructure, provide the best opportunities for agricultural growth.
Sugar Policy and Reform
(World Bank, Washington, DC, 2001-05) Borrell, Brent; Larson, Donald F.
Reviewing cross-country experience with sugar policies, and policy reform, the authors conclude that long-standing government interventions - rooted in historical trade arrangements, fear of shortages, and conflicting interests between growers, and sugar mills - often displace both the markets, and the institutions required to produce efficient outcomes. Arrangements rooted in colonial eras, still shape policies, and trade in the United States, the European Union (EU), and many developing countries. Once policies, and institutions are put in place, households, and the value of investments grow dependent on them, even as their usefulness fades. Firms and households make decisions that are costly to reverse. And the result is a legacy of path-dependent policies, in which approaches, and instruments are greatly influenced by past agreements, and previous interventions. The cumulative effects of these interventions are embodied in livelihoods, political institutions, capital stocks, and factor markets - which not only dictate the starting point for reform, but also determine which reform paths are feasible. Experiments with public ownership, common in many countries, have not succeeded. So most countries have initiated some measure of market reform. And events relating to NAFTA, Lome, and expansion of the EU, may bring about significant changes in the EU, and US sugar regimes, with cascading effects on other countries. Common problems in the sector include determining cane quality, finding methods for fairly sharing revenues from joint production, finding ways to take advantage of preferential trade arrangements with minimal negative consequences, finding ways to finance, and encourage research, and other activities with common benefits, identifying practices that facilitate equitable, sustainable privatization, and determining the relationship between sugar market reform, and markets in land, water, credit, and other inputs.
Intersectoral Migration in Southeast Asia : Evidence from Indonesia, Thailand, and the Philippines
(World Bank, Washington, DC, 2003-01) Butzer, Rita; Mundlak, Yair; Larson, Donald F.
Using time series data spanning three decades, the authors examine the determinants of sectoral migration in Indonesia, Thailand and the Philippines. They employ a principal components algorithm to address problems associated with trended and inter-correlated explanatory variables. Migration rates in the three countries are low relative to other developing countries with the consequence of persistent inter-sectoral income differentials. Even so, the rate of migration has been responsive to income ratios in each country. The migration rates were also affected by the absorbing capacity of non-agriculture, as indicated by several measures. In contrast to other studies, policy variables consisting of indicators of physical and human capital had little impact on the migration rate separate from that captured by relative incomes.
Agriculture and the Clean Development Mechanism
(2011-04-01) Dinar, Ariel; Larson, Donald F.; Frisbie, J. Aapris
Many experts believe that low-cost mitigation opportunities in agriculture are abundant and comparable in scale to those found in the energy sector. They are mostly located in developing countries and have to do with how land is used. By investing in projects under the Clean Development Mechanism (CDM), countries can tap these opportunities to meet their own Kyoto Protocol obligations. The CDM has been successful in financing some types of agricultural projects, including projects that capture methane or use agricultural by-products as an energy source. But agricultural land-use projects are scarce under the CDM. This represents a missed opportunity to promote sustainable rural development since land-use projects that sequester carbon in soils can help reverse declining soil fertility, a root cause of stagnant agricultural productivity. This paper reviews the process leading to current CDM implementation rules and describes how the rules, in combination with challenging features of land-use projects, raise transaction costs and lower demand for land-use credits. Procedures by which developed countries assess their own mitigation performance are discussed as a way of redressing current constraints on CDM investments. Nevertheless, even with improvements to the CDM, an under-investment in agricultural land-use projects is likely, since there are hurdles to capturing associated ancillary benefits privately. Alternative approaches outside the CDM are discussed, including those that build on recent decisions taken by governments in Copenhagen and Cancun.
Agricultural Markets and Risks : Management of the Latter, Not the Former
(World Bank, Washington, DC, 2002-02) Varangis, Panos; Larson, Donald; Anderson, Jack R.
The authors review the historical relationship between the work of applied economists, and policymakers, and the institutions that came to characterize the commodity, and risk markets of the 1980s. These institutions were a response to the harmful consequences of commodity market volatility, and declining terms of trade. But the chosen policies, and instruments relied on market interventions, to directly affect prices, or the distribution of prices in domestic, and international markets. For practical, and more fundamental reasons, this approach failed. The authors next discuss how a growing body of work, contributed to a change in thinking that moved policy away from stabilization goals, toward policies that emphasized the management of risks. They distinguish between the macroeconomic effects of volatile commodity markets, and the consequences for businesses, and households. The authors argue that both sets of problems remain important development issues, but that appropriate policy instruments are largely separate. Nonetheless, because governments, households, and firms must all respond to a wide range of sources of risk, they emphasize the role for an integrated policy by government. Increasingly, alternative approaches have come to rely on market-based instruments. Such approaches accept the market view of relative prices as immutable, but address directly the negative consequences of volatility. As traditional risk markets (such as futures and insurance markets) expand, and new parametric markets emerge, the practicality of applying market-based instruments to traditional risk, and development problems increases. The authors show the change in approaches to risk, and the reliance on old, and new market instruments, with new, and sometimes experimental programs, with special emphasis on programs at the World Bank.
Do Farmers Choose to Be Inefficient? Evidence from Bicol, Philippines
(World Bank, Washington, DC, 2002-02) Plessmann, Frank; Larson, Donald F.
Farming households that differ in their ability, or willingness to take on risks are likely to make different decisions when allocating resources, and effort among income-producing activities, with consequences for productivity. The authors measure voluntary, and involuntary departures from efficiency for rice-producing households in Bicol, Philippines. They take advantage of a panel of household observations from 1978, 1983, and 1994. The unusually long-time span of the panel provides ample opportunities for the surveyed households to learn, and apply successful available technologies. The authors find evidence that diversification, and technology choices do effect outcomes among farmers, although these effects are not dominant. Accumulated wealth, past decisions to invest in education, favorable market conditions, and propitious weather are also important determinants of efficiency outcomes among Bicol rice farmers.
Commodity Market Reforms : Lessons of Two Decades
(Washington, DC: World Bank, 2001-03) Akiyama, Takamasa; Baffes, John; Larson, Donald; Varangis, Panos
Structural reform of the economies of developing countries has been in the forefront of development interest since the early 1980s. This interest stems from a recognition that the structures and institutions of these countries are critical to any enhancement of economic and social development. One of the key reforms has been that of primary commodity markets, especially agricultural commodity markets, because many developing countries, including the poorest, depend heavily on these for foreign exchange earnings and employment, and hence for poverty reduction. This report focuses on the political economy and institutional aspects of agricultural commodity market reform. In order to explore in detail factors that are critical to the processes, consequences, and substance of reform, the authors have focused the analysis and evaluation on five commodities important in many developing countries, specifically cocoa, coffee, sugar, cotton, and cereal. In doing so, they highlight important lessons on how agricultural sector reform can be launched and implemented. Some of the factors identified in the report as being key to successful reform include the recognition that commodity markets often affect communities and even politics, that the initial conditions of markets are critical, and that government intervention can crowd out private sector initiatives, especially when it comes to building the institutions needed to develop a healthy agricultural sector.
Can Financial Markets be Tapped to Help Poor People Cope with Weather Risks?
(World Bank, Washington, D.C., 2002-03) Skees, Jerry; Varangis, Panos; Larson, Donald; Siegel, Paul
Poor households in rural areas are particularly vulnerable to risks that reduce incomes and increase expenditures. Most past research has focused on risk-coping strategies for the rural poor, specially on micro-level and household actions. These are risks that can been shared within a community or extended family. These strategies are effective for independent risks, but ineffective for covariate or systemic risks. The authors focus on private and public mechanisms for managing covariate risk for natural disasters. When many households within the same community face risks that create losses for all, traditional coping mechanisms are likely to fail. Such covariate risks are not uncommon in many developing countries, especially where farming remains a major source of income. The authors focus on risks related to weather events (such as excess rain, droughts, freezes, and high winds) that have a severe impact on rural incomes. Weather insurance could cover the covariate risk for a community of poor households through formal and informal risk-sharing arrangements among households that are purchasing these weather contracts. Given recent Mexican innovations targeted at helping the poor cope with catastrophe weather events, the authors use Mexico as a case study. In Mexico, poor households are exposed to systemic risks, such as droughts and floods, that affect the economic livelihood of their region. Catastrophic insurance is useful for small farmers, although commercially oriented small farmers may wish to obtain coverage for less catastrophic events. Weather insurance could meet this need. It pays out according to the frequency and intensity of specific weather events. Because weather insurance depends on the occurrences and objective measure of intensity of a specific event, it does not require individual farm inspection that can be very costly for small farm. The authors argue that a key issue of delivering insurance to small farmers is the existence of producer organizations. In Mexico, the farmer mutual insurance funds provide a good example. These funds provide insurance to their members by pulling together resources to pay for future indemnities and reinsures itself from major systemic risks that could hurt simultaneously all their members.