Hotspots of Certified Organic Operations in the United States: Identification, Formation, and Impact

Open Access
Marasteanu, Ioana Iulia
Graduate Program:
Agricultural, Environmental and Regional Economics
Doctor of Philosophy
Document Type:
Date of Defense:
July 07, 2014
Committee Members:
  • Edward C Jaenicke, Dissertation Advisor/Co-Advisor
  • Edward C Jaenicke, Committee Chair/Co-Chair
  • Stephan J Goetz, Committee Member
  • Spiro E Stefanou, Committee Member
  • N Edward Coulson, Committee Member
  • Agricultural Economics
  • Spatial Econometrics
  • Organic Farming
  • Treatment Effects
  • Local Economic Development
Hotspots, which are sometimes simply referred to as clusters, represent close together areas with positively correlated, high attribute values. A county-level hotspot of a particular industry would represent close together counties with positively correlated, high numbers of industry operations. Industry hotspots have been found be beneficial to the affected industries, as well as to the area in which they are located, with some research suggesting that policies that facilitate industry clustering can be effective economic and rural development tools. Research on the impact hotspots in the agricultural industry is prevalent; however, none of this research addresses this issue as it specifically pertains to the organic sector, although the benefits of organic clustering have been touted by organic supporters. The organic sector is important to address separately, as a special case of agriculture, as differences between it and the conventional agricultural industry may indicate that organic hotspots can affect the local economy differently than conventional agricultural hotspots. The primary goal of this dissertation is to quantify the economic impact of hotspots of organic operations in order to assess their potential as an economic development tool. To achieve this broad goal, I first need to identify the hotspots, and then analyze factors that are associated with hotspot formation. I, therefore, break up this dissertation into three separate essays, which address organic hotspot identification, formation, and impact, respectively. The objective of my first essay is to identify statistically significant, county-level hot and cold spots of certified organic operations, as well as to determine the type of spatial autocorrelation present in the distribution of certified organic operations at the county-level. I use the Local Moran’s I test statistic for the cluster identification, and identify hotspots of organic operations along the West Coast, in the Midwest, and in the Northeast. I compare these clusters of conventional agricultural operations and general operations, and show that clusters of organic operations are not necessarily consistent with clusters of general agriculture or general establishments. Using a spatial autoregressive model, I confirm the presence of spatial spillovers in the distribution of organic operations. The objective of my second essay is to investigate cluster formation. Using the clusters identified through my first objective, I use a logistic regression to analyze the impact of county-level factors related to policy, economics and demographics on the probability that a county is in a hotspot or coldspot, paying particular attention to the role of the organic certifying agent. I find that the presence of certifiers who provide outreach opportunities is associated with a higher probability of a county being in a hotspot. The objective of my final essay is to analyze the impact that organic hotspots have on county-level economic activity, and compare it with the impact of hotspots of general agricultural operations. I consider organic hotspots to be a treatment, and use propensity score matching, as well as a treatment effects model, to quantify the impact of the treatment on county-level economic indicators. I use the hotspots identified in the first essay as my endogenous treatment, and I instrument for it using the characteristics identified in the second essay. This research makes an interesting and important contribution to literature for several reasons. First, it differs from the already scarce research on the topic of clustering in the organic sector by using methods in spatial statistics to define and compare clusters. It is also, to my knowledge, the first to address the role of the organic certifying agent in the presence of hotspots and coldspots of certified organic operations. Finally, it provides a simultaneous treatment of cluster formation and impact, and focuses on the impact of organic hotspots on the local economy as a whole.