Heitor S. Pellegrina

We study the general equilibrium effects of scaling up rainfall insurance in low-income agricultural economies. Microeconomic experiments show that risk is an important constraint for farmers in developing countries and that rainfall insurance increases investment and shifts crop choice toward riskier, higher-return crops. We develop a model of farmer-households and insurance to quantify these effects. We derive a sufficient-statistics characterization of the optimal subsidy, which trades off three terms: a fiscal externality from subsidizing insurance below cost, a pecuniary externality that captures how crop-price changes reallocate consumption across states of the world, and a fiscal incidence term that captures how the subsidy transfers resources from those who do not buy insurance towards those who do. We calibrate the model to Ghana's agricultural economy, combining experimental moments from the literature with additional moments from household survey data. Subsidizing insurance leads to increased insurance take-up, fertilizer use, and agricultural output, and general equilibrium forces significantly amplify these effects. However, we find that the optimal insurance subsidy is close to zero.

Can public R&D in developing countries raise productivity? We study how Brazil's Embrapa---a public research corporation founded in 1973 to develop locally-relevant agricultural technologies---shaped agricultural development. Researcher-level microdata reveal that Embrapa shifted innovation toward staple crops and Brazil-specific ecology, with no decline in researcher productivity. Exploiting Embrapa's staggered expansion alongside municipality-level variation in the ecological suitability of Embrapa's innovation, we find significant increases in agricultural productivity, concentrated in targeted staple crops. Our estimates imply that Embrapa raised aggregate agricultural productivity by 110 with a benefit–cost ratio of 17, driven by the applicability of Embrapa's innovation across Brazil.

We study how weather shocks affect the farm-size distribution and agricultural productivity. We document new patterns about farm-size dynamics and the effects of weather shocks across developing countries. Drawing on administrative data from Colombia with land-transaction records, census-based farm sizes, and household surveys, we show that weather shocks intensify land-market activity and reduce farm size within regions. To understand mechanisms, we quantify a heterogeneous-agent model with endogenous farm-size distribution. Results reveal that temporary shocks have long-lasting effects on farm size, that agricultural risk substantially distorts the farm-size distribution, and that small changes in weather regimes significantly reduce output per farmer.

We study deforestation in a dynamic world trade system. We first document a set of facts relating deforestation across countries to international trade and population growth. Guided by these facts, we build a model in which structural change and comparative advantage determine the extent, location, and timing of deforestation. Using the model, we obtain conditions under which reductions in trade costs and tariffs reduce global deforestation. Quantitatively, eliminating global agricultural tariffs has a limited impact on global forest area, leads to substantial forest reallocation across countries, and results in net welfare benefits.

We develop a quantitative, multi-country general equilibrium framework to study the impact of economic growth, dietary restrictions and food trade policies on global greenhouse-gas (GHG) emissions from agriculture. Motivated by new cross-country relationships between economic development, diet patterns, agricultural technologies and GHG emissions, our framework features different income elasticities of demand across food products and multiple agricultural technologies for production across grid cells covering the surface of the Earth, with food products and technologies being heterogeneous in their GHG emissions per calorie. Using our model’s open-economy structure, we propose a simple procedure to estimate the income elasticities without price data. We find that GHG emissions following economic growth are strongly influenced by general equilibrium effects related to dietary changes, agricultural modernisation and food supply readjustments. Moreover, compared with food trade policies, dietary restrictions are both substantially more effective in reducing GHG emissions and more favourable when considering the welfare losses in developing countries.

We study how migration shapes aggregate and regional comparative advantage, exploiting a large migration of farmers to Brazil’s West between 1950 and 2010. Migration allowed workers to sort according to their own comparative advantage, reallocating knowledge and raw labor to high-productivity regions. In a quantitative model, we find that migration cost reductions reshaped Brazil’s comparative advantage and contributed to its rise as a leading commodity exporter—accounting for 25% of the observed changes in specialization. Road expansions were key drivers of migration. Migration opportunities, moreover, account for a substantial share of the gains from trade.

This paper examines how labor market imperfections distort firm-level technology choices and alter the gains from trade in developing countries. Motivated by evidence that firms using modern technologies are disproportionately exposed to labor market distortions, we introduce firm-level technology choices and labor market distortions into an otherwise standard quantitative trade model. We then provide formulas for the welfare and labor productivity gains from trade liberalization, highlighting the role of distortions and technology choice. Our quantitative analysis reveals that labor market distortions provide a possible explanation for the inefficiently low levels of modern technology adoption in developing countries. Moreover, labor market distortions erode one-third of the potential labor productivity gains from trade liberalization among low-income countries.

We examine the contribution of trade to the rise of modern agriculture, taking into account interactions between trade, input requirements, and technology adoption. We develop and estimate a new multicountry general equilibrium model that incorporates producers’ choices of which crops to produce and with which technologies at the level of grid cells covering the earth’s surface. We find that trade cost reductions in agricultural inputs and the international transmission of productivity growth in the agricultural input sector since the 1980s induced large shifts from traditional, labor-intensive technologies to modern, input-intensive ones, with important global and distributional implications for productivity and welfare.

We study the long-term impact of large-scale irrigation infrastructure on the composition of local economic activity in India. Our analysis uses high-resolution spatial data covering approximately 150,000 villages and towns and exploits spatial discontinuities in the coverage of irrigation projects. Irrigation increases agricultural output, wealth, and population density in rural villages. However, in towns it reduces population and nightlight density, the size of the non-agricultural sector, and large-firm activity. These results highlight the heterogeneous impacts that agricultural productivity gains can have on the patterns local economic development.

This paper studies how farmers’ participation in non-local markets shapes agricultural productivity. Using farm-level data from Colombia, we document two empirical patterns about the spatial organization of agriculture. First, across municipalities, better access to urban centers increases farmers’ productivity and participation in non-local markets, but reduces farm size. Second, within municipalities and crop-choices, larger farms participate more in non-local markets and have higher productivity. To rationalize these patterns, we introduce farmers with heterogeneous productivity and market participation choices into a spatial economy model. We take the model to data and find that removing the geographic barriers to farmers’ participation in non-local markets can increase Colombia's agricultural value added by up to 14%. Changes in the productivity composition of farmers contribute substantially to this impact, particularly in remote regions with low participation of farmers in non-local markets.

Several African countries have recently centralized their agricultural markets by launching a commodity exchange. What will be the impact of such a move? Who will be the winners and the losers? We develop a simple search model to study the impact of introducing a commodity exchange in a village economy where traders and farmers exchange on a bilateral basis. We study the efficiency gains from moving from the status quo to a trading regime where farmers have the option of selling their produce to a commodity exchange. We describe how the gains from trade are distributed between farmers, traders and the commodity exchange itself. We show that a dual economy where high-cost farmers remain in the bilateral exchange market while low-cost ones sell to the commodity exchange can exist in equilibrium, and that forcing all farmers to sell into the commodity exchange can make some farmers worse off.

This paper studies how regional productivity shocks in agriculture propagate to the rest of the economy via trade and migration linkages, shaping their aggregate effects on GDP, welfare, and agricultural employment. Using comprehensive agricultural data from Brazil, I estimate a general equilibrium model with a rich spatial structure to evaluate the effects of a critical shock in modern agriculture: the adaptation of soybeans to tropical regions. Results show that this shock increased Brazil’s agricultural GDP by 4%–6%, with the bulk of this impact coming from international trade. Because soybeans are land-intensive relative to other agricultural sectors, agricultural employment fell in tropical regions to which soybeans expanded. In other parts of the economy, however, agricultural employment rose substantially. Additionally, I show that general equilibrium effects have important implications for the analysis of the returns to agricultural research and the evaluation of the reduced-form effects of productivity shocks on agricultural employment.