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The Department of Environmental Economics and Management

The Robert H. Smith Faculty
of Agriculture, Food and Environment
The Hebrew University of Jerusalem

Herzl 229, Rehovot 7610001
Fax: 08-9466267

Department Head:
Prof. Ayal Kimhi, Tel: 08-9489376

Head of the teaching program:
Dr. Ohad Raveh, Tel: 08-9489373

Meital Kappach, Tel: 08-9489230


David, Z. ; Thomas, R. ; Jed, S. ; Liang, L. ; Heiman, A. From the laboratory to the consumer: Innovation, supply chain, and adoption with applications to natural resources. Proceedings of the National Academy of SciencesProceedings of the National Academy of Sciences 2022, 119, e2115880119. Publisher's Version
Heiman, A. ; Reardon, T. ; Zilberman, D. The Effects of COVID-19 on the Adoption of “On-the-Shelf Technologies”: Virtual Dressing Room Software and the Expected Rise of Third-Party Reverse-Logistics. Service ScienceService Science 2022, 14, 179 - 194. Publisher's VersionAbstract
The fashion industry is adapting to the new situation caused by the COVID-19 pandemic by changing the structure of its supply chain, much like other industries that experience exogenous shocks. The pandemic affected conditions of apparel retailers: downstream among consumers and upstream among suppliers. It induced retailers to accelerate the adoption of technologies to make their supply chains more flexible and resilient. Before COVID-19, the apparel industry had gradually adopted virtual dressing room (VDR) technologies and crowd wisdom software, both of which reduce the risk associated with online purchases. Apparel retailers also altered the structure of their supply chains by outsourcing product turns via third-party logistics providers. This article analyzes how changes in market demand and supply conditions following the outbreak of COVID-19 accelerated the adoption of VDR technologies. The analysis is based on a conceptual microeconomic model of adopting technologies and changes in the supply chain. We support our theoretical findings with business cases. Understanding the nonlinear relationships among changes in demand, supply chains, and retail technology adoption triggered by exogenous shocks is essential for managers and affects the quality of service.The fashion industry is adapting to the new situation caused by the COVID-19 pandemic by changing the structure of its supply chain, much like other industries that experience exogenous shocks. The pandemic affected conditions of apparel retailers: downstream among consumers and upstream among suppliers. It induced retailers to accelerate the adoption of technologies to make their supply chains more flexible and resilient. Before COVID-19, the apparel industry had gradually adopted virtual dressing room (VDR) technologies and crowd wisdom software, both of which reduce the risk associated with online purchases. Apparel retailers also altered the structure of their supply chains by outsourcing product turns via third-party logistics providers. This article analyzes how changes in market demand and supply conditions following the outbreak of COVID-19 accelerated the adoption of VDR technologies. The analysis is based on a conceptual microeconomic model of adopting technologies and changes in the supply chain. We support our theoretical findings with business cases. Understanding the nonlinear relationships among changes in demand, supply chains, and retail technology adoption triggered by exogenous shocks is essential for managers and affects the quality of service.
Biyalogorsky, E. ; Heiman, A. ; Muller, E. The differential effects of time and usage on the brand premiums of automobiles. 2022, 39, 212 - 226. Publisher's VersionAbstract
We investigate how the status and functional benefits of cars’ brands lose value over time. Theoretically, we show that brands with a higher status, or that appeal to status-conscious consumers, exhibit steeper price decline over time. Empirically, we take advantage of the phenomenon of twin cars – pairs of car models that are nearly identical from a structural and mechanical standpoint, but that are sold under differing brand names – to disentangle the effects of physical wear and tear, which should impact both the premium brand and the corresponding standard brand similarly; and time-related price decline, which should affect each brand differently. The main result is that a premium car’s price declines much faster than that of the corresponding standard car (controlling for physical condition, mileage, and initial price). This result suggests that status declines faster than do functional attributes, and status seekers tend to replace their cars earlier.
Bar-Nahum, Z. ; Reznik, A. ; Finkelshtain, I. ; Kan, I. Centralized water management under lobbying: Economic analysis of desalination in Israel. Ecological Economics 2022, 193, 107320. Publisher's VersionAbstract
This paper studies the impact of lobbying on policies in a centrally managed water economy. First, we develop an optimal control model in which long-run water-management policies are an outcome of negotiation between policymakers and a politically organized farming sector. We show that under equilibrium conditions in the political game, larger political power of the farmers' lobby leads to faster exhaustion of naturally replenished water resources, and expedites the investment in water-supply backstop technologies such as desalination. Then, we employ a detailed hydro-economic model of Israel's water economy to assess the validity of claims by scientists and bureaucrats that lobbying by the local agricultural sector has contributed to the depletion of the country's natural freshwater resources and thus accelerated the development of seawater desalination. Specifically, we compare observed trajectories of water-management policies in the years 2000–2020 to their simulated counterparts, and find a better fit for simulated scenarios that involve lobbying than for a socially optimal one; this result prevails under simulated conditions of extreme water shortage due to faster population growth or lower recharge of natural water sources. The best-fitted political-equilibrium scenarios indicate considerable deadweight loss. We discuss potential causes of over- and undervaluation of the lobbying effect.
Muklada, H. ; Davidovich-Rikanati, R. ; Awabdeh, S. ; Weinberg, Z. G. ; Hen, Y. ; Deutch, T. ; Klein, J. D. ; Voet, H. ; Lewinsohn, E. ; Landau, S. Y. Ensiling willow (Salix acmophylla) fodder modifies the contents of plant specialized metabolites, but not nutritional attributes. ANIMAL FEED SCIENCE AND TECHNOLOGY 2021, 278.Abstract
Willow (Salix spp.) is grown for energy biomass in temperate regions and is also a promising source of feed for ruminants. Willow fodder contains high concentrations of beneficial plant specialized metabolites (PSMs). We investigated the efficacy of ensiling willow fodder in 1.5 L jars without (control-C) or with silage additives (lactobacilli-LAB, molasses-M, or the combination MLAB), and the effects on nutritional attributes of ensiling willow in 60 L drums with LAB. We also assessed the effect of ensiling willow fodder on PSMs by liquid chromatography / time-offlight / mass spectrometry (LC-TOF-MS). Exact or tentative compound identification was established, depending on availability of appropriate standards. In jars, LAB-supplemented silages reached lowest pH (4.2). M-supplemented silages had lower aNDF and aADF contents. IVDMD was higher in M than in C, and the contents of crude protein (CP) were not affected by silage treatments. Ensiling in drums did not affect the major nutritional components of willow fodder. Even though phenylalanine, arginine, tyrosine, histidine, and methionine, but not tryptophan, were increased 3.8-7.9-fold by ensiling, the finding is of low importance, as free amino acids are totally degraded in the rumen. In contrast, the main PSM, i.e., the salicinoid salicin was 74 % deglycosylated, concomitantly with a ten-fold increase in salicylic acid concentration and with the appearance of acetyl-salicylic acid; likewise, the flavonoids hyperin and rutin were 66 % deglycosylated, consequent with a 48-fold increase in quercetin concentration. As the bioavailability of the quercetin aglycone is inferior to that of its glycosylated counterparts, ensiling might affect the nutraceutical value of willow fodder. Likewise, catechin, gallocatechin and epicatechin were totally metabolized by ensiling. Overall, ensiling willow fodder (with LAB) does not affect the nutritional attributes of willow fodder but it greatly alters its PSM concentrations and, possibly impairs its nutraceutical value. However, as anti-oxidative activity is supposed to increase, following de-glycosylation, further research is needed to evaluate a possible trade-off on nutraceutical value between the glycosylated and aglycone forms of phenolics contained in willow fodder.
Becker, C. K. ; Ert, E. ; Trautmann, S. T. ; van de Kuilen, G. Experiencing Risk: Higher-Order Risk Attitudes in Description- and Experience-Based Decisions. JOURNAL OF EXPERIMENTAL PSYCHOLOGY-LEARNING MEMORY AND COGNITION 2021, 47, 727-746.Abstract
Risky decisions are often characterized by (a) imprecision about consequences and their likelihoods that can be reduced by information collection, and by (b) unavoidable background risk. This article addresses both aspects by eliciting risk attitude, prudence, and temperance in decisions from description and decisions from experience. The results reveal a novel description-experience gap for prudence and replicate the known gap for risky decisions. While widespread prudence has been observed in decisions form description, we find no evidence of prudent decision making from experience. In decisions from experience people are strongly influenced by the sampled mean, while skewness plays a smaller role than in decisions from description.
Arnon, A. ; Landau, S. Y. ; Izhaki, I. ; Malkinson, D. ; Levy-Paz, Y. ; Deutch-Traubman, T. ; Voet, H. ; Segev, O. ; Dovrat, G. A NIRS-Aided Methodology to Elucidate the Nutrition of the Endangered Mountain Gazelle (Gazella gazella) Using Samples of Rumen Contents from Roadkills. REMOTE SENSING 2021, 13.Abstract
The populations of the endangered mountain gazelle (Gazella gazella), which inhabit large parts of Israel, across various ecosystems and climatic conditions, shrunk drastically over the last decades. To date, data on gazelle nutrition, how these relate with individual characteristics and respond to seasonal and environmental changes, have not been available. We analyzed 110 samples from gazelle rumen contents collected throughout the country from occasional fatalities, mainly roadkills, and tested the feasibility of using them for near-infrared spectrometry (NIRS) calibrations. Although NIR calibrations for crude protein, in vitro dry matter digestibility, and ash were reasonable, we found that using calibrations based on local forage and feed plant species performed better, and used these to estimate several nutritional constituents in gazelle rumens, using NIRS. We tested how constituents relate to the sex, age-class, and weight of the individual gazelle, and to season and ecosystem type, and found that season plays a major role in gazelle nutrition. Winter is the most propitious season, when crude protein, ash and digestibility are highest, and acid detergent fiber (ADF), neutral detergent fiber (NDF), and the carbon to nitrogen (C:N) ratio are lowest. Autumn, being the harshest season, mirrors winter conditions, and summer and spring show intermediate levels. Yet the relative changes between seasons were mild: about 30%, for crude protein, digestibility, and ash, and 14-22% for ADF, NDF, and C:N ratio. Ecosystem type affected several constituents, and nutrition was slightly better in Mediterranean than in dry ecosystems. Gazelle sex, weight, and age-class had minor effects on nutrition. Overall, it seems that the adaptation of gazelles to their environment is germane to keeping relatively steady nutrition throughout the year. Our results, which do not show a dramatic decline in the quality of gazelle nutrition during any season or among the climatic regions that were studied, suggest that nutrition is not a major driver of the survival of gazelles in the populations surveyed.
Uzun, V. ; Shagaida, N. ; Lerman, Z. Russian agroholdings and their role in agriculture. POST-COMMUNIST ECONOMIES 2021.Abstract
Agroholdings have become a major player in Russian agriculture in less than two decades. Nevertheless, there is no legal definition of agroholding as an organisation, and no statistical information on agroholdings as a distinct category is collected. Only informal definitions exist, which regard agroholdings as groupings of agricultural enterprises linked into a single management network. The numerous publications on Russian agroholdings are mostly based on limited or sporadic data. This is the first study that assembles a full list of more than 1,000 agroholdings in Russia and analyses the corresponding data from official sources. The study examines the role of agroholdings in Russian agriculture and estimates some performance measures. We group all agricultural enterprises (corporate farms in their own right) in Russia into agroholding members and independent, non-member farms, and perform a comparative analysis of the two distinct organisational forms that are at the focus of Russian agricultural policy.
Kimhi, A. ; Tzur-Ilan, N. Structural Changes in Israeli Family Farms: Long-Run Trends in the Farm Size Distribution and the Role of Part-Time Farming. AGRICULTURE-BASEL 2021, 11.Abstract
Israeli agriculture has experienced rapid structural changes in recent decades, including the massive exit of farmers, a resulting increase in average farm size, a higher farm specialization and a higher reliance on non-farm income sources. The higher farm heterogeneity makes it necessary to examine changes in the entire farm size distribution rather than the common practice of analyzing changes in the average farm size alone. This article proposes a nonparametric analysis in which the change in the distribution of farm sizes between two periods is decomposed into several components, and the contributions of subgroups of farms to this change are analyzed. Using data on Israeli family farms, we analyze the changes in the farm size distribution in two separate time periods that are characterized by very different economic environments, focusing on the different contributions of full-time farms and part-time farms to the overall distributional changes. We found that between 1971 and 1981, a period characterized by stability and prosperity, the farm size distribution has shifted to the right with relatively minor changes in higher moments of the distribution. On the other hand, between 1981 and 1995, a largely unfavorable period to Israeli farmers, the change in the distribution was much more complex. While the overall change in the size distribution of farms was smaller in magnitude than in the earlier period, higher moments of the distribution were not less important than the increase in the mean and led to higher dispersion of farm sizes. Between 1971 and 1981, the contributions of full- and part-time farms to the change in the size distribution were quite similar. Between 1981 and 1995, however, full-time farms contributed mostly to the growth in the average farm size, while the average farm size among part-time farms actually decreased, and their contribution to the higher dispersion of farm sizes was quantitatively larger. This highlights the need to analyze the changes in the entire farm size distribution rather than focusing on the mean alone, and to allow for differences between types of farms.
Hurwitz, A. ; Mitchell, O. S. ; Sade, O. Longevity Perceptions and Saving Decisions during the COVID-19 Outbreak: An Experimental Investigation. AEA Papers and Proceedings 2021, 111, 297-301. Publisher's Version
Hurwitz, A. ; Lahav, E. ; Mugerman, Y. “Financial less is more”: An experimental study of financial communication. 2021, 94, 101756. Publisher's VersionAbstract
Past research has demonstrated that many individuals are not well equipped to make financial decisions and hence depend greatly on the flow and quality of financial information. Various governments are implementing reforms aimed at improving the quality of pension financial communication. Certain countries are requiring a move to short-form pension reporting, and some are requiring digital reporting instead of (or in some cases, in addition to) paper reporting. In a series of experiments, we show that the ability to locate information in financial reports is sensitive to the length of the report and to the communication form.
Heiman, A. ; Just, D. R. Nationalism in the produce aisle: Using country of origin labels to stir patriotism and animosity. Q Open 2021, 1. Publisher's VersionAbstract
This study aims to determine how feelings of nationalism or patriotism for one's own country and feelings of animosity for countries that are in political conflict affect consumers’ willingness to refrain from buying products from various origins. Four hundred forty-two shoppers participated in a survey that included questions about ethnocentric and patriotic feelings and a choice task between local and foreign produce. We find that a significant proportion of Israeli consumers are not willing to buy imported produce from countries that are in conflict with Israel. The proportion of consumers who would not purchase imported produce increases substantially with the intensity of the conflict. Consumers who avoid buying produce from friendly countries are those whose ethnocentric and economic-centric relationship are strong.
Reardon, T. ; Heiman, A. ; Lu, L. ; Nuthalapati, C. S. R. ; Vos, R. ; Zilberman, D. “Pivoting” by food industry firms to cope with COVID-19 in developing regions: E-commerce and “copivoting” delivery intermediaries. Agricultural EconomicsAgricultural EconomicsAgricultural Economics 2021, 52, 459 - 475. Publisher's VersionAbstract
Abstract Coronavirus disease 2019 and related lockdown policies in 2020 shocked food industry firms? supply chains in developing regions. Firms ?pivoted? to e-commerce to reach consumers and e-procurement to reach processors and farmers. ?Delivery intermediaries? copivoted with food firms to help them deliver and procure. This was crucial to the ability of the food firms to pivot. The pandemic was a ?crucible? that induced this set of fast-tracking innovations, accelerating the diffusion of e-commerce and delivery intermediaries, and enabling food industry firms to redesign, at least temporarily, and perhaps for the long term, their supply chains to be more resilient, and to weather the pandemic, supply consumers, and contribute to food security. We present a theoretical model to explain these firm strategies, and then apply the framework to classify firms? practical strategies. We focus on cases in Asia and Latin America. Enabling policy and infrastructural conditions allowed firms to pivot and copivot fluidly.
Fleischer, A. ; Ert, E. ; Bar-Nahum, Z. The Role of Trust Indicators in a Digital Platform: A Differentiated Goods Approach in an Airbnb Market. Journal of Travel Research 2021, 00472875211021660. Publisher's VersionAbstract
We employed a differentiated goods market analysis where we utilized, in addition to the prevailing goods’ attributes, different types of the sellers’ attributes including trust indicators. We incorporated both sets of attributes into a structural model of the whole market including demand and pricing equations with the hotels as an outside good. Applying the model to Stockholm’s Airbnb market reveals that hosts’ attributes significantly affect market performance. Simulations of market scenarios show that the very high review scores and the Superhost certification help Airbnb compete with hotels and increase profitability. We also show that the “Airbnb plus” luxury program, which makes the apartments a closer substitute for hotels, leads to an increase in Airbnb’s market welfare. Our analysis provides a framework for understanding the full impact of the different attributes of the products, their providers, and their management in the sharing-economy accommodation market.
Dinar, A. ; Tsur, Y. The Economics of Water Resources: A Comprehensive Approach; Cambridge University Press: Cambridge, 2021. Publisher's VersionAbstract
Population growth and rising living standards, on the one hand, and changing climate, on the other hand, have exacerbated water scarcity worldwide. To address this problem, policymakers need to take a wide view of the water economy – a complex structure involving environmental, social, economic, legal, and institutional aspects. A coherent water policy must look at the water economy as a whole and apply a comprehensive approach to policy interventions. Written by two of the world's leading scholars on economics of water, this is the first graduate-level textbook on the topic. The book discusses water resource management within a comprehensive framework that integrates the different, yet highly entwined, elements of a water economy. It follows the steps needed to develop a well-designed set of policies based on detailed analyses of intervention measures, using multi-sectoral and economy-wide examples from a variety of locations and situations around the world.
Fan, J. ; Zhou, L. ; Zhang, Y. ; Shao, S. ; Ma, M. How does population aging affect household carbon emissions? Evidence from Chinese urban and rural areas. Energy Economics 2021, 100, 105356. Publisher's VersionAbstract
Population aging has become a salient demographic phenomenon in China, thus causing social and economic concerns. However, little is known about the impact of population aging on the environment. The available literature mainly emphasizes decreases in energy consumption or carbon emissions caused by population aging, conveying limited information about the impact of population aging on household carbon emissions. This paper explores the impact of population aging on household carbon emissions in both urban and rural areas of China, using panel data of 30 provinces over 1997–2017. The relationship between population aging and household carbon emissions is investigated with a threshold regression model and a two-stage instrumental variable regression model. The results show that urban population aging increases urban household carbon emissions at levels both below and above 0.083, while this positive impact is comparatively smaller when urban population aging is above 0.083. However, at the national level, rural population aging has no significant impact on rural household carbon emissions at the level below 0.066, while rural population aging significantly increases rural household carbon emissions at the level above 0.066. Rural population aging has a significant positive effect on the increase in household carbon emissions in northern heating areas, when rural population aging is both below and above 0.077. The analysis of the underlying mechanism identifies consumption structure and consumption level as intermediary factors that affect the nonlinear relationship between urban population aging and urban household carbon emissions. Furthermore, the income level also affects the nonlinear relationship between rural population aging and rural household carbon emissions.
Hatan, S. ; Fleischer, A. ; Tchetchik, A. Economic valuation of cultural ecosystem services: The case of landscape aesthetics in the agritourism market. 2021, 184, 107005. Publisher's VersionAbstract
Natural and agricultural landscapes provide a wide range of ecosystem services, among which are aesthetic landscapes. As these services have no direct market value, land use decision makers often ignore them in favor of urban sprawl, resulting in suboptimal resource allocation. Here, we suggest a novel method to evaluate the aesthetic landscape services of natural and agricultural ecosystems using the case of the agritourism market in Israel. We model the agritourism market as an oligopolistic market with differentiated products and formulate an equilibrium model with structural, double nested logit demand and pricing equations. The structural equations are expressed as a function of the attributes of the agritourism firm, among which are the components of landscape view. We use aggregate market data and GIS data to estimate the structural model. In the case of urban sprawl, the welfare loss is estimated at US$29,000–53,000 per km2, depending on the type of ecosystem that is forgone, whereas in agricultural sprawl over natural areas, the welfare loss is estimated at US$38,000 per km2. This welfare loss can be considered the economic value of landscape aesthetics services to the agritourism market. These findings illustrate the potential of using this valuation method for other ecosystems in other markets.
Perez-Sebastian, F. ; Raveh, O. ; van der Ploeg, F. Oil discoveries and protectionism: Role of news effects. Journal of Environmental Economics and Management 2021, 107, 102425. Publisher's VersionAbstract
Can oil discovery shocks affect the demand for protectionism? An intertemporal model of Dutch disease indicates that if the tradable sector is politically dominant then an oil discovery can induce protectionism. If the economy is also credit constrained, this effect is intensified upon discovery, but partially reversed when oil revenues start to flow. We test these predictions using 16.2 million, HS-6 level, bilateral tariff rates that cover 5718 products in 155 countries over the period 1988–2012, and data on worldwide discoveries of giant oil and gas fields. Our identification strategy rests on the exogeneity of the timing of discoveries. Our empirical results indicate that an oil discovery increases tariffs during pre-production years and decreases tariffs in the years to follow yet to a lesser extent, most notably in capital scarce economies with a relatively dominant tradable sector. Our baseline estimates indicate that a giant oil field discovery induces a rise of approximately 13% in the average tariff over the course of 10 years; this increase is approximately 2.5 times larger during the pre-production period when the oil discovery represents a pure news shock.
Becker, N. ; Kimhi, A. ; Argaman, E. Costs and benefits of waste soils removal. LAND USE POLICY 2020, 99.Abstract
Piles of soil excavated from construction sites become a problem when they are left on site for several reasons. For example, they are exposed to wind and water erosion and constitute an environmental nuisance by disturbing the natural landscape. Thus, they create an external cost. In Israel, it is illegal to leave such piles after the project ends. The aim of this paper is to test the efficiency of this mandatory policy. We estimated the benefit of transferring such waste soil to designated landfills through Contingent Valuation (CV) which assesses people's willingness to pay for the removal of the nuisance. We then compared it to the removal cost. To estimate these costs we used linear programming to find the minimum cost of transporting the soil to a set of designated landfills. Our results indicate an annual net benefit of ILS 4.7 million (about USD 1.34 million). This translates into a Benefit-Cost-Ratio of 1.058, which is not significantly different from 1 based on the confidence interval for willingness to pay. Net benefit is also sensitive to assumptions regarding transportation cost.
Muklada, H. ; Voet, H. ; Deutch, T. ; Zachut, M. ; Kra, G. ; Blum, S. E. ; Krifuks, O. ; Glasser, T. A. ; Klein, J. D. ; Davidovich-Rikanati, R. ; et al. The effect of willow fodder feeding on immune cell populations in the blood and milk of late-lactating dairy goats. ANIMAL 2020, 14, 2511-2522.Abstract
{{In a previous study, we showed that access to willow fodder decreased somatic cell counts (SCC) in the milk of local Mamber goats grazing in brushland at the end of lactation. To test whether the consumption of willow affects the cells of the immune system, Alpine crossbred dairy goats grazing in the same environment were either offered free access to freshly cut willow fodder (W