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The Impact of Input and Output Decisions on Agricultural Production Risk

Author

Listed:
  • Chavas, Jean-Paul
  • Cooper, Joseph
  • Wallander, Steven

Abstract

This paper investigates the measurement of risk exposure in agriculture and its linkages with input and output decisions. We develop a conceptual analysis of risk under general risk preferences, including cumulative prospect theory. The approach is applied to a sample of U.S. farms from 1996 to 2011. In a multi-input, multi-output framework, the analysis documents the effects of management on production risk exposure and estimates the cost of risk under alternative frameworks. We find that variable inputs contribute to increasing risk, while livestock contributes to reducing risk. Nonfarm income reduces the cost of risk.

Suggested Citation

  • Chavas, Jean-Paul & Cooper, Joseph & Wallander, Steven, 2019. "The Impact of Input and Output Decisions on Agricultural Production Risk," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 44(3), September.
    • Handle: RePEc:ags:jlaare:292329
    DOI: 10.22004/ag.econ.292329
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    Cited by:

    1. Wei Wang & Chongmei Zhang & Yan Guo & Dingde Xu, 2021. "Impact of Environmental and Health Risks on Rural Households’ Sustainable Livelihoods: Evidence from China," IJERPH, MDPI, vol. 18(20), pages 1-15, October.
    2. Harkness, Caroline & Areal, Francisco J. & Semenov, Mikhail A. & Senapati, Nimai & Shield, Ian F. & Bishop, Jacob, 2023. "Towards stability of food production and farm income in a variable climate," Ecological Economics, Elsevier, vol. 204(PA).
    3. Tanko, Mohammed, 2022. "Nexus of risk preference, culture and religion in the adoption of improved rice varieties: Evidence from Northern Ghana," Land Use Policy, Elsevier, vol. 115(C).
    4. Harkness, Caroline & Areal, Francisco J. & Semenov, Mikhail A. & Senapati, Nimai & Shield, Ian F. & Bishop, Jacob, 2021. "Stability of farm income: The role of agricultural diversity and agri-environment scheme payments," Agricultural Systems, Elsevier, vol. 187(C).

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