Larson, Donald F.

Development Research Group, World Bank
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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
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Last updated January 31, 2023
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.  
Citations 164 Scopus

Publication Search Results

Now showing 1 - 8 of 8
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    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.
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    The Environment as a Factor of Production
    (World Bank, Washington, D.C., 2004-04) Considine, Timothy J. ; Larson, Donald F.
    The authors develop a model of environmental resource use in production with an empirical analysis of how electric power companies consume and bank sulfur dioxide pollution permits. The model considers emissions, fuels, and labor as variable inputs with quasi-fixed inputs of permits and capital. Incorporating information from permit markets allows the authors to distinguish between user costs and asset shadow values. Their findings indicate that firms are holding stocks of pollution permits for reasons other than short-term cost savings. The results also reveal substantial substitution possibilities between emissions, permits stocks, and other factors of production. The authors speculate that anticipated secondary markets for carbon-offset inventories related to the flexibility mechanisms of the Kyoto Protocol will have similar effects for greenhouse-gas emitting firms.
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    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.
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    Policies on Managing Risk in Agricultural Markets
    (World Bank, 2004-09-01) Larson, Donald F. ; Anderson, Jock R. ; Varangis, Panos
    Over the past dozen years, policymakers have largely abandoned long-standing popular approaches for addressing risk in agriculture without fully resolving the question of how best to manage the negative consequences of volatile agricultural markets. The article reviews the transition from past policies and describes current approaches that distinguish between the trade-related fiscal consequences of commodity market volatility and the consequences of price and production risks for vulnerable rural households and communities. Current policies rely more heavily on markets, even though markets for risk are incomplete in numerous ways. The benefits and limitations of market-based instruments are examined in the context of risk management strategies, and innovative approaches to extend the reach of risk markets are discussed.
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    How Endowments, Accumulations, and Choice Determine the Geography of Agricultural Productivity in Ecuador
    (Oxford University Press on behalf of the World Bank, 2006-09-01) Larson, Donald F. ; Leon, Mauricio
    Spatial disparity in incomes and productivity is apparent across and within countries. Most studies of the determinants of such differences focus on cross-country comparisons or location choice among firms. Less studied are the large differences in agricultural productivity within countries related to concentrations of rural poverty. For policy, understanding the determinants of this geography of agricultural productivity is important, because strategies to reduce poverty often feature components designed to boost regional agricultural incomes. Census and endowment data for Ecuador are used to estimate a model of endogenous technology choice to explain large regional differences in agricultural output and factor productivity. A composite-error estimation technique is used to separate systemic determinants from idiosyncratic differences. Simulations are employed to explore policy avenues. The findings suggest a differentiation between the types of policies that promote growth in agriculture generally and those that are more likely to assist the rural poor.
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    Commodity Market Reform in Africa : Some Recent Experience
    (World Bank, Washington, DC, 2003-03) Akiyama, Takamasa ; Baffes, John ; Larson, Donald F. ; Varangis, Panos
    Since the early 1980s, dramatic changes in export commodity markets, shocks associated with resulting price declines, and changing views on the role of the state have ushered in widespread reforms to agricultural commodity markets in Africa. The reforms significantly reduced government participation in the marketing and pricing of commodities. Akiyama, Baffes, Larson, and Varangis examine the background, causes, process, and consequences of these reforms and derive lessons for successful reforms from experiences in markets for four commodities important to Africa-cocoa, coffee, cotton, and sugar. The authors' commodity focus highlights the special features associated with these markets that affect the reform process. They complement the current literature on market reforms in Africa, where grain-market studies are more common. The authors suggest that the types of market interventions prior to reform are more easily classified by crop than by country. Consequently, there are significant commodity-specific differences in the initial conditions and in the outcomes of reforms related to these markets. But there are general lessons as well. The authors find that the key consequences of reform have been significant changes in or emergence of marketing institutions and a significant shift of political and economic power from the public to the private sector. In cases where interventions were greatest and reforms most complete, producers have benefited from receiving a larger share of export prices. Additionally, the authors conclude that the adjustment costs of reform can be reduced in most cases by better understanding the detailed and idiosyncratic relationships between the commodity subsector, private markets, and public services. Finally, while there are significant costs to market-dependent reforms, experiences suggest that they are a necessary step toward a dynamic commodity sector based on private initiative. This is particularly true in countries and sectors where interventions were greatest and market-supporting institutions the weakest.
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    Factors Affecting Levels of International Cooperation in Carbon Abatement Projects
    (Washington, DC: World Bank, 2008-11) Dinar, Ariel ; Rahman, Shaikh Mahfuzur ; Larson, Donald ; Ambrosi, Philippe
    The Clean Development Mechanism, a provision of The Kyoto Protocol, allows countries that have pledged to reduce their greenhouse gas emissions to gain credit toward their treaty obligations by investing in projects located in developing (host) countries. Such projects are expected to benefit both parties by providing low-cost abatement opportunities for the investor-country, while facilitating capital and technology flows to the host country. This paper analyzes the Clean Development Mechanism market, emphasizing the cooperation aspects between host and investor countries. The analysis uses a dichotomous (yes/no) variable and three continuous variants to measure the level of cooperation, namely the number of joint projects, the volume of carbon dioxide abatement, and the volume of investment in the projects. The results suggest that economic development, institutional development, the energy structure of the economies, the level of country vulnerability to various climate change effects, and the state of international relations between the host and investor countries are good predictors of the level of cooperation in Clean Development Mechanism projects. The main policy conclusions include the importance of simplifying the project regulation/clearance cycle; improving the governance structure host and investor countries; and strengthening trade or other long-term economic activities that engage the countries.
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    Heterogeneous Technology and Panel Data : The Case of the Agricultural Production Function
    (World Bank, Washington, DC, 2008-02) Mundlak, Yair ; Butzer, Rita ; Larson, Donald F.
    The paper presents empirical analysis of a panel of countries to estimate an agricultural production function using a measure of capital in agriculture absent from most studies. The authors employ a heterogeneous technology framework where implemented technology is chosen jointly with inputs to interpret information obtained in the empirical analysis of panel data. The paper discusses the scope for replacing country and time effects by observed variables and the limitations of instrumental variables. The empirical results differ from those reported in the literature for cross-country studies, largely in augmenting the role of capital, in combination with productivity gains, as a driver of agricultural growth. The results indicate that total factor productivity increased at an average rate of 3.2 percent, accounting for 59 percent of overall growth. Most of the remaining gains stem from large inflows of fixed capital into agriculture. The results also suggest possible constraints to fertilizer use.