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- Powdery Mildew

- Economics of Pierce's Disease

- The Economic Effects of Climate Change

- Wine Regulations

- High Brix Grapes and High Alcohol Wine

- Economics of Wine Quality



Powdery Mildew
 December 18th, 2009

Grape Growers & the Economics of the Powdery Mildew Index: Risk perceptions, disease management & the value of information

Travis J. LYBBERT, W. Douglas GUBLER

The treatment of powdery mildew is among grape growers’ most important management practices. Growers’ only real hope in the powdery mildew battle is proper preventative management. Founded on the observation that powdery mildew growth is largely a function of length of exposure to different temperature ranges, the Gubler-Thomas Powdery Mildew Index (PMI) helps growers anticipate outbreaks in order to time more precisely their preventative powdery mildew treatments. The PMI can improve powdery mildew treatment timing and efficacy, yet many growers do not use this forecasting tool.

The objective of this project is (i) to assess grape growers’ perceptions and use of the PMI and (ii) to estimate the impact of the PMI on the timing of growers’ fungicide applications and their overall fungicide use intensity. We have merged original survey data among California grape growers with spatially-explicit PMI data and pesticide use reports filed by the growers included in our survey. This merged dataset spans more than 10 years and provides basis for panel models of the powdery mildew treatment timing decision. In these models, we will estimate the impact of the intensity of PMI use by growers – as captured in our survey – on their fungicide applications. These models will offer an unprecedented test of the impact of disease forecast information on the treatment decision and assess the value of the PMI as a pesticide-reduction tool.




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Economics of Pierce's Disease

The project team includes economists and biological scientists from other countries and other UC campuses, as well as UC Davis.

Julian Alston
Kate Fuller
Jennifer S. James
Mark Hoddle
Nicholas Kalaitzandonakes
Phil Pardey
Bob Sutherst
Andrew Walker

Pierce’s Disease (Xylella fastidiosa), a bacterial plant pathogen, was first recognized in California in 1892. This disease affects grapevines by restricting the water flow in the xylem, and as a result, eventually kills them. In recent years, a new non-native vector, the Glassy Winged Sharpshooter (Homalodisca coagulata), has emerged to create an increased threat because of its ability to fly long distances, reproduce rapidly, and live longer than other native sharpshooters, which also spread the disease. It is thus evident that this pest and the disease it carries pose current and very large potential economic threats to the California wine industry.  In this project, we will integrate economic and biological modeling techniques to address economic questions related to Pierce’s disease. The interplay between the biophysical and economic components of the model will be structured to allow us to simulate market outcomes under alternative scenarios for the prevalence of Pierce’s disease, and alternative technologies and policies for its management, and to assess the economic consequences of these alternatives for various stakeholder groups. The model will be designed specifically with a view to using it to evaluate the likely expected benefits from investments in alternative R&D projects related to the management of Pierce’s disease.

The project is partially supported by grants from the Pierce’s Disease/Glassy Winged Sharpshooter (PD/GWSS) Board and the Giannini Foundation of Agricultural Economics


Pierce’s Disease/Glassy Winged Sharpshooter (PD/GWSS) Board

Giannini Foundation of Agricultural Economics

Pierce's disease research makes gains, much more ahead.   
UC ANR, January 9, 2002

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The Economic Effects of Climate Change

The Economic Effects of Climate Change on California Winegrape Industry

Calanit Bar-Am
Daniel A. Sumner

We estimate relationships between weather, climate, characteristics and prices of wine grapes varieties grown in different climatic regions across 17 crush districts in California.  We use time series cross section data over several decades. Estimation is divided to three parts: weather and sugar content relationship, sugar content and grape price relationship, and weather, climate and grape price relationship. 

We hypothesize that both weather and climate affect the price of wine grapes. Weather affects the vintage-to-vintage price, mainly through yield level, and climate affects the price through reputation. Furthermore, regions that grow varieties with similar characteristics are close substitutes such that prices of grapes are jointly determined. Therefore weather and climate that affect grape prices grown in a particular region may also affect prices of grapes grown in other regions. We use these historical relationships across regions and varieties to consider potential impacts of climate change on the winegrape industry.

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Wine Regulations

Competitive Impacts of Wine Regulations: Comparisons of Old World and New World Wine Producers

Henrich Brunke
Rold A. E. Mueller
Daniel A. Sumner

Regulations of the wine industry vary widely by country and sometimes even by region within a country. It is often noted that regulations governing the growing of wine grapes, the production and the marketing of wine are more stringent in the “Old World” countries of Europe than in “New World” countries and that these differences contribute to explain the dramatic changes the industry currently undergoes, such as the decreasing importance of old producing regions to the benefit of the new world ones. This research begins with an overview of such regulations in four countries, two from the “Old World”, France and Germany, and two from the “New World”, Australia and the United States (California) and illustrates differences in typical forms and degrees of regulation. We then evaluate economic rationales for the existence of the regulations in terms of interests to the consumer, the producer or the state. Hereby, we differentiate between the public interest theory of regulation and the private interest theory of regulation.

A second part of the research then considers how underlying market conditions have changed in recent years with the globalization of the wine sector and with the dramatic decline in demand for wine among traditional consumers, such as France, in order to appreciate the current pressure on wine regulations. We then show, in a supply and demand framework accompanied by numerical simulations, how in this new context the welfare impacts of regulations change. The presence of the new competitors erodes the dominant market positions traditional wine regions and challenges the producers in the heavily regulated countries.

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High Brix Grapes and High Alcohol Wine

The Economics of High Brix Grapes and High Alcohol Wine
Jim Lapsley
Julian Alston
Dan Sumner
Kate Fuller
George Soleas

Evidence is emerging of a substantial increase in the sugar content of wine grapes at harvest.  This increase may be a consequence of changes in weather patterns, or changes in cultural practices by growers, or both.  One possibility is that it reflects a response to the market. Delaying the harvest and other cultural practices can result in riper fruit with more concentrated flavors (which may contribute in an intended fashion to desired quality attributes of the wine), but also a higher sugar concentration (which may be an undesired side-effect, because it results in higher alcohol content of the wine, and makes wine making more difficult). Wineries are developing and applying practices to deal with excess alcohol without compromising the quality of the wine.

The objective of this project is to explore the causes and consequences of increases in sugar content of wine grapes, and the resulting economic implications for wine grape growers, wine makers, and wine consumers. It will entail an examination first of what has been happening to the sugar content of wine grapes, and in the alcohol content of wine, primarily in California but also around the world. By exploring differences in the extent of the phenomenon and its timing according to variety and location of production (which is a proxy for market segment) of grapes, we hope to establish some indication of the extent to which increases in sugar content of grapes and alcohol content of wine are likely to have been driven by choices by growers and winemakers (in a response to perceived market demand) relative to exogenous effects of changes in weather patterns or climate. Further elements of the work will explore more directly the derived demand for higher brix wine grapes and the costs to wine grape growers of supplying them, including increased risk. This project will have some intersection with other Center projects including work by Sumner and Lee (on pricing of wine grapes) and Bar-Am and others (on economic effects of climate change).

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Economics of Wine Quality

Experimental Analysis of Willingness to Pay for Attributes of Value-Added Agricultural Goods: Integration of Economics and Sensory Science

Christopher Gustafson
Daniel Sumner
Travis Lybbert
Julian Alston
Hildegarde Heymann

This research will (1) investigate, experimentally, consumer willingness to pay for agricultural value-added products differentiated by geographic origin and other attributes, (2) examine econometric estimates of hedonic pricing models using experimental economics to obviate estimation and identification problems, and (3) evaluate the effect of market experience on consumer valuation of product attributes.

Producers are increasingly using geographic origin as a means to differentiate and add value to their products. We examine the wine market in our experiments because geographic indicators have a long history of use, but vary in age and renown; product differentiation is important; and because product information is particularly important in the market. Furthermore, there have been many hedonic studies of wine pricing and a well developed wine sensory science literature.

We will implement two experimental strategies. First, we will conduct experimental auctions combining sensory and objective information with several different groups of participants with different levels of experience and formal training in a controlled sensory laboratory setting. Second, we will conduct field experiments of purchase decisions in a retail environment.

This strategy—using a valuation experiment—will offer subjects alternatives to their selected item and evaluate their willingness to pay for the alternatives. The results will help us better identify demand-side factors, by eliminating supply-side influences, and the importance of consumer information for differentiated, value-added products

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