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Larson, Donald F.

Development Research Group, World Bank
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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
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.  
Citations 168 Scopus

Publication Search Results

Now showing 1 - 10 of 14
  • Publication
    Substitution and Technological Change under Carbon Cap and Trade : Lessons from Europe
    (2009-06-01) Considine, Timothy J.; Larson, Donald F.
    The use of carbon-intense fuels by the power sector contributes significantly to the greenhouse gas emissions of most countries. For this reason, the sector is often key to initial efforts to regulate emissions. But how long does it take before new regulatory incentives result in a switch to less carbon intense fuels? This study examines fuel switching in electricity production following the introduction of the European Union s Emissions Trading System, a cap-and-trade regulatory framework for greenhouse gas emissions. The empirical analysis examines the demand for carbon permits, carbon based fuels, and carbon-free energy for 12 European countries using monthly data on fuel use, prices, and electricity generation. A short-run restricted cost function is estimated in which carbon permits, high-carbon fuels, and low-carbon fuels are variable inputs, conditional on quasi-fixed carbon-free energy production from nuclear, hydro, and renewable energy capacity. The results indicate that prices for permits and fuels affect the composition of inputs in a statistically significant way. Even so, the analysis suggests that the industry s fuel-switching capabilities are limited in the short run as is the scope for introducing new technologies. This is because of the dominant role that past irreversible investments play in determining power-generating capacity. Moreover, the results suggest that, because the capacity for fuel substitution is limited, the impact of carbon emission limits on electricity prices can be significant if fuel prices increase together with carbon permit prices. The estimates suggest that for every 10 percent rise in carbon and fuel prices, the marginal cost of electric power generation increases by 8 percent in the short run. The European experience points to the importance of starting early down a low-carbon path and of policies that introduce flexibility in how emission reductions are achieved.
  • Publication
    Resource Management and the Effects of Trade on Vulnerable Places and People : Lessons from Six Case Studies
    (2010-03-01) Larson, Donald F.; Nash, John
    Lessons from six case studies illustrate the complex relationships between international trade, vulnerable ecologies and the poor. The studies, taken from Africa, Asia and Latin America and conducted by local researchers, are set in places where the poor live in close proximity to ecologies that are important to global conservation efforts, and focus on the cascading consequences of trade policy for local livelihoods and environmental services. Collectively, the studies show how under-valued common resources are often poorly protected and consequently subject to shifting economic incentives, including those that arise from trade. The studies provide examples where trade works to accelerate the use of natural resources and to exacerbate unsustainable dependencies by the poor, and other examples where trade has the opposite effect. An important conclusion is that local livelihood and technology choices have important consequences for how environmental resources are used and should be taken into account when designing policies to safeguard fragile ecologies.
  • Publication
    Incomplete Markets and Fertilizer Use : Evidence from Ethiopia
    (2010-03-01) Zerfu, Daniel; Larson, Donald F.
    While the economic returns to using chemical fertilizer in Africa can be large, application rates are low. This study explores whether this is due to missing and imperfect markets. Results based on a panel survey of Ethiopian farmers suggest that while fertilizer markets are not altogether missing in rural Ethiopia, high transport costs, unfavorable climate, price risk, and illiteracy present formidable hurdles to farmer participation. Moreover, the combination of factors that promote or impede effective fertilizer markets differs among locations, making it difficult to find a single production technology that is uniformly profitable -- perhaps explaining the inconsistency between field studies finding large returns to fertilizer use in Ethiopia and survey-based studies finding fertilizer use to be uneconomic. The results suggest that households with greater stores of wealth, human capital and authority can overcome these hurdles. The finding offers some encouragement, but also implies a self-enforcing link between low agricultural productivity and poverty, since low-asset households are less able to overcome these problems. The study suggests that the provision of extension services can be effective and that lowering transport costs can raise the intensity of fertilizer use by lowering the cost of fertilizer and boosting the farmgate value of output.
  • Publication
    Will the Clean Development Mechanism Mobilize Anticipated Levels of Mitigation?
    (2010-03-01) Rahman, Shaikh M.; Dinar, Ariel; Larson, Donald F.
    Under the Kyoto Protocol, developed countries can only tap mitigation opportunities in developing countries by investing in projects under the Clean Development Mechanism. Yet Clean Development Mechanism investments have so far failed to reach many of the high-potential sectors identified by the Intergovernmental Panel on Climate Change. This raises doubts about whether the Clean Development Mechanism can generate an adequate supply of credits from the limited areas where it has proved successful. This paper examines the current trajectory of mitigation projects entering the Clean Development Mechanism pipeline and projects it forward under the assumption that the diffusion of the Clean Development Mechanism will follow a path similar to other innovations. Projections are then compared with pre-Clean Development Mechanism predictions of the mechanism s potential market size to discern whether limits on the types of projects entering the pipeline have limited the expected supply of certified emission reductions. Parameter tests suggest that this is not the case and that currently identified Clean Development Mechanism investments will generate offsets in excess of early model predictions. In particular, under favorable circumstances, the mechanism is on track to deliver an average annual flow of roughly 700 million certified emission reductions by the close of 2012 and nearly to 1,100 million certified emission reductions by 2020.
  • Publication
    Carbon Markets, Institutions, Policies, and Research
    (World Bank, Washington, DC, 2008-10) Larson, Donald F.; Dinar, Ariel; Rahman, Shaikh Mahfuzur; Entler, Rebecca
    The scale of investment needed to slow greenhouse gas emissions is larger than governments can manage through transfers. Therefore, climate change policies rely heavily on markets and private capital. This is especially true in the case of the Kyoto Protocol with its provisions for trade and investment in joint projects. This paper describes institutions and policies important for new carbon markets and explains their origins. Research efforts that explore conceptual aspects of current policy are surveyed along with empirical studies that make predictions about how carbon markets will work and perform. The authors summarize early investment and price outcomes from newly formed markets and point out areas where markets have preformed as predicted and areas where markets remain incomplete. Overall the scale of carbon-market investment planned exceeds earlier expectations, but the geographic dispersion of investment is uneven and important opportunities for abatement remain untapped in some sectors, indicating a need for additional research on how investment markets work. How best to promote the development and deployment of new technologies is another promising area for study identified in the paper.
  • Publication
    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.
  • Publication
    Do Farmers Choose to Be Inefficient? Evidence from Bicol
    (2009) Larson, Donald F.
    Farming households that differ in their ability or willingness to take on risks are likely to allocate resources and effort among income producing activities differently with consequences for productivity. In this paper we measure voluntary and involuntary departures from efficiency for rice producing households in the Bicol region of the Philippines. We take advantage of a panel of observations on households from 1978, 1983 and 1994. Available monthly weather data and survey information on planting times allows us to create household specific measures of weather shocks, which we use in our analysis. We find evidence that diversification and input choices do affect efficiency outcomes among farmers, although these effects are not dominant; accumulated wealth, past decisions to invest, favorable market conditions, and propitious weather are also important determinants of efficiency outcomes among Bicol rice farmers. Our findings suggest that the costs of incomplete formal and informal insurance markets are higher for poorer farmers.
  • Publication
    Diffusion of Kyoto's Clean Development Mechanism
    (2010) Rahman, Shaikh M.; Dinar, Ariel; Larson, Donald F.
    To date, developed countries can only tap mitigation opportunities in developing countries by investing in projects under the Clean Development Mechanism (CDM). Yet CDM investments have so far failed to reach all of the high-potential sectors identified in IPCC reports. This raises doubts about whether the CDM will be able to generate an adequate supply of credits from the limited areas where it has proved successful. Our paper examines the current trajectory of potential mitigation entering the CDM pipeline and projects it forward under the assumption that the diffusion of the CDM will follow a path similar to other kinds of innovations. Projections are then compared to pre-CDM predictions of the mechanism's potential market size used to assess Kyoto's cost, in order to discem whether limits on the types of project entering the pipeline will also limit the eventual supply of certified emission reductions (CERs). The main finding of the paper is that the mechanism is on track to deliver an average annual flow of roughly 700 million CERs by the close of 2012 and nearly to 1100 million tons by 2020. Parameter tests suggest that currently identified CDM investments will exceed early model predictions of the potential market for CDM projects. (C) 2010 Elsevier Inc. All rights reserved.
  • Publication
    Can Africa Replicate Asia's Green Revolution in Rice?
    (2010-11-01) Larson, Donald F.; Kajisa, Kei; Estudillo, Jonna; Diagne, Aliou
    Asia's green revolution in rice was transformational and improved the lives of millions of poor households. Rice has become an increasingly important part of African diets and imports of rice have grown. Agronomists point out that large areas in Africa are well suited for rice and are encouraged by the field tests of new rice varieties. So is Africa poised for its own green revolution in rice? This study reviews the recent literature on rice technologies and their impact on productivity, incomes, and poverty, and compares current conditions in Africa with the conditions that prevailed in Asia as its rice revolution got under way. An important conclusion is that, to a degree, a rice revolution has already begun in Africa. Moreover, many of the same practices that have proved successful in Asia and in Africa can be applied where yields are currently low. At the same time, for many reasons, Africa's rice revolution has been, and will continue to be, characterized by a mosaic of successes, situated where the conditions are right for new technologies to take hold. This can have profound effects in some places. But because diets, markets, and geography are heterogeneous in Africa, the successful transformation of the Africa's rice sector must be matched by productivity gains in other crops to fully launch Africa's Green Revolution.
  • Publication
    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.