IDEAS home Printed from https://ideas.repec.org/a/spr/annopr/v219y2014i1p243-26410.1007-s10479-011-0902-7.html
   My bibliography  Save this article

A portfolio theory approach to crop planning under environmental constraints

Author

Listed:
  • Marius Rădulescu
  • Constanta Rădulescu
  • Gheorghiţă Zbăganu

Abstract

This paper presents a multiobjective model for crop planning in agriculture. The approach is based on portfolio theory. The model takes into account weather risks, market risks and environmental risks. Input data include historical land productivity data for various crops, soil types and yield response to fertilizer/pesticide application. Several environmental levels for the application of fertilizers/pesticides, and the monetary penalties for overcoming these levels, are also considered. Starting from the multiobjective model we formulate several single objective optimization problems: the minimum environmental risk problem, the maximum expected return problem and the minimum financial risk problem. We prove that the minimum environmental risk problem is equivalent to a mixed integer problem with a linear objective function. Two numerical results for the minimum environmental risk problem are presented. Copyright Springer Science+Business Media, LLC 2014

Suggested Citation

  • Marius Rădulescu & Constanta Rădulescu & Gheorghiţă Zbăganu, 2014. "A portfolio theory approach to crop planning under environmental constraints," Annals of Operations Research, Springer, vol. 219(1), pages 243-264, August.
    • Handle: RePEc:spr:annopr:v:219:y:2014:i:1:p:243-264:10.1007/s10479-011-0902-7
    DOI: 10.1007/s10479-011-0902-7
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10479-011-0902-7
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10479-011-0902-7?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. P. B. R. Hazell, 1971. "A Linear Alternative to Quadratic and Semivariance Programming for Farm Planning under Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 53(1), pages 53-62.
    2. Talaat El-Nazer & Bruce A. McCarl, 1986. "The Choice of Crop Rotation: A Modeling Approach and Case Study," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(1), pages 127-136.
    3. Scott L. Johnson & Richard M. Adams & Gregory M. Perry, 1991. "The On-Farm Costs of Reducing Groundwater Pollution," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(4), pages 1063-1073.
    4. P. B. R. Hazell, 1971. "A Linear Alternative to Quadratic and Semivariance Programming for Farm Planning under Uncertainty: Reply," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 53(4), pages 664-665.
    5. Detlefsen, Nina K. & Jensen, Allan Leck, 2007. "Modelling optimal crop sequences using network flows," Agricultural Systems, Elsevier, vol. 94(2), pages 566-572, May.
    6. Earl O. Heady, 1954. "Simplified Presentation and Logical Aspects of Linear Programming Technique," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 36(5), pages 1035-1048.
    7. Maurice J. Roche, 2004. "Riskier product portfolio under decoupled payments," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 31(2), pages 111-123, June.
    8. Zekri, Slim & Casimiro Herruzo, A., 1994. "Complementary instruments to EEC nitrogen policy in non-sensitive areas: A case study in Southern Spain," Agricultural Systems, Elsevier, vol. 46(3), pages 245-255.
    9. Frank Ellis, 2000. "The Determinants of Rural Livelihood Diversification in Developing Countries," Journal of Agricultural Economics, Wiley Blackwell, vol. 51(2), pages 289-302, May.
    10. Steven C. Blank, 2001. "Producers get Squeezed up the Farming Food Chain: A Theory of Crop Portfolio Composition and Land Use," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 23(2), pages 404-422.
    11. Wossink, G. A. A. & de Koeijer, T. J. & Renkema, J. A., 1992. "Environmental-economic policy assessment: A farm economic approach," Agricultural Systems, Elsevier, vol. 39(4), pages 421-438.
    12. Robert A. Collins & Peter J. Barry, 1986. "Risk Analysis with Single-Index Portfolio Models: An Application to Farm Planning," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(1), pages 152-161.
    13. Frank Ellis, 1998. "Household strategies and rural livelihood diversification," Journal of Development Studies, Taylor & Francis Journals, vol. 35(1), pages 1-38.
    14. Haneveld, W. K. Klein & Stegeman, A. W., 2005. "Crop succession requirements in agricultural production planning," European Journal of Operational Research, Elsevier, vol. 166(2), pages 406-429, October.
    15. Castellazzi, M.S. & Wood, G.A. & Burgess, P.J. & Morris, J. & Conrad, K.F. & Perry, J.N., 2008. "A systematic representation of crop rotations," Agricultural Systems, Elsevier, vol. 97(1-2), pages 26-33, April.
    16. Blank, Steven C., 1990. "Returns To Limited Crop Diversification," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 15(2), pages 1-9, December.
    17. Gilbert V. Nartea & Peter J. Barry, 1994. "Risk Efficiency and Cost Effects of Geographic Diversification," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 16(3), pages 341-351.
    18. Marcel Fafchamps, 1992. "Cash Crop Production, Food Price Volatility, and Rural Market Integration in the Third World," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(1), pages 90-99.
    19. Calum G. Turvey & H. C. Driver & Timothy G. Baker, 1988. "Systematic and Nonsystematic Risk in Farm Portfolio Selection," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(4), pages 831-836.
    20. Mark L. Teague & Daniel J. Bernardo & Harry P. Mapp, 1995. "Farm-Level Economic Analysis Incorporating Stochastic Environmental Risk Assessment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(1), pages 8-19.
    21. STEVEN C. BLANK & COLIN A. CARTER & JEFFREY McDONALD, 1997. "Is The Market Failing Agricultural Producers Who Wish To Manage Risks?," Contemporary Economic Policy, Western Economic Association International, vol. 15(3), pages 103-112, July.
    22. Rafsnider, Giles T, et al, 1993. "Theory and Application of Risk Analysis in an Agricultural Development Setting: A Moroccan Case Study," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 20(4), pages 471-489.
    23. Barrett, C. B. & Reardon, T. & Webb, P., 2001. "Nonfarm income diversification and household livelihood strategies in rural Africa: concepts, dynamics, and policy implications," Food Policy, Elsevier, vol. 26(4), pages 315-331, August.
    24. Zeyuan Qiu & Tony Prato & Francis McCamley, 2001. "Evaluating Environmental Risks Using Safety-First Constraints," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(2), pages 402-413.
    25. Carlos Romero, 2000. "Risk programming for agricultural resource allocation: A multidimensional risk approach," Annals of Operations Research, Springer, vol. 94(1), pages 57-68, January.
    26. M. Mimouni & S. Zekri & G. Flichman, 2000. "Modelling the trade‐offs between farm income and the reduction of erosion and nitrate pollution," Annals of Operations Research, Springer, vol. 94(1), pages 91-103, January.
    27. Park, Timothy A. & Florkowski, Wojciech J., 2003. "Selection of Peach Varieties and the Role of Quality Attributes," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(1), pages 1-14, April.
    28. Robert N. Collender, 1989. "Estimation Risk in Farm Planning Under Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(4), pages 996-1002.
    29. K. C. Schaefer, 1992. "A Portfolio Model For Evaluating Risk In Economic Development Projects, With An Application To Agriculture In Niger," Journal of Agricultural Economics, Wiley Blackwell, vol. 43(3), pages 412-423, September.
    30. Ellis, Frank, 2000. "Rural Livelihoods and Diversity in Developing Countries," OUP Catalogue, Oxford University Press, number 9780198296966.
    31. J E Annetts & E Audsley, 2002. "Multiple objective linear programming for environmental farm planning," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 53(9), pages 933-943, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Alfandari, Laurent & Plateau, Agnès & Schepler, Xavier, 2015. "A branch-and-price-and-cut approach for sustainable crop rotation planning," European Journal of Operational Research, Elsevier, vol. 241(3), pages 872-879.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Andrés Weintraub & Carlos Romero, 2006. "Operations Research Models and the Management of Agricultural and Forestry Resources: A Review and Comparison," Interfaces, INFORMS, vol. 36(5), pages 446-457, October.
    2. Swinton, Scott M. & Black, J. Roy, 2000. "Modeling Of Agricultural Systems," Staff Paper Series 11581, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    3. Maria Mwaipopo Fibaek, 2021. "Working Poor? A Study of Rural Workers' Economic Welfare in Kenya," Journal of International Development, John Wiley & Sons, Ltd., vol. 33(1), pages 41-69, January.
    4. Josephson, Anna Leigh & Michler, Jeffrey D., 2015. "To Specialize or Diversify: Agricultural Diversity and Poverty Persistence in Ethiopia," 2015 Conference, August 9-14, 2015, Milan, Italy 212459, International Association of Agricultural Economists.
    5. Vellema, W. & Buritica Casanova, A. & Gonzalez, C. & D’Haese, M., 2015. "The effect of specialty coffee certification on household livelihood strategies and specialisation," Food Policy, Elsevier, vol. 57(C), pages 13-25.
    6. repec:dgr:rugcds:cds-27 is not listed on IDEAS
    7. Salassi, Michael E. & Deliberto, Michael A. & Guidry, Kurt M., 2013. "Economically optimal crop sequences using risk-adjusted network flows: Modeling cotton crop rotations in the southeastern United States," Agricultural Systems, Elsevier, vol. 118(C), pages 33-40.
    8. Chuan Liao & Christopher Barrett & Karim-Aly Kassam, 2015. "Does Diversification Improve Livelihoods? Pastoral Households in Xinjiang, China," Development and Change, International Institute of Social Studies, vol. 46(6), pages 1302-1330, November.
    9. Osaki, Mauro & Batalha, Mário Otavio, 2014. "Optimization model of agricultural production system in grain farms under risk, in Sorriso, Brazil," Agricultural Systems, Elsevier, vol. 127(C), pages 178-188.
    10. Bezu, Sosina & Holden, Stein, 2014. "Are Rural Youth in Ethiopia Abandoning Agriculture?," World Development, Elsevier, vol. 64(C), pages 259-272.
    11. Asfaw, Solomon & McCarthy, Nancy & Paolantonio, Adriana & Cavatassi, Romina & Amare, Mulubrhan & Lipper, Leslie, 2015. "Diversification, Climate Risk and Vulnerability to Poverty: Evidence from Rural Malawi," 2015 Conference, August 9-14, 2015, Milan, Italy 230216, International Association of Agricultural Economists.
    12. Zerihun Berhane Weldegebriel & Martin Prowse, 2013. "Climate-Change Adaptation in Ethiopia: To What Extent Does Social Protection Influence Livelihood Diversification?," Development Policy Review, Overseas Development Institute, vol. 31, pages 35-56, November.
    13. Fred Mawunyo Dzanku, 2018. "Rational But Poor? An Explanation for Rural Economic Livelihood Strategy," Journal of Agricultural Economics, Wiley Blackwell, vol. 69(2), pages 365-381, June.
    14. Yang Liu & Qing Zhang & Qingfu Liu & Yongzhi Yan & Wanxin Hei & Deyong Yu & Jianguo Wu, 2020. "Different Household Livelihood Strategies and Influencing Factors in the Inner Mongolian Grassland," Sustainability, MDPI, vol. 12(3), pages 1-15, January.
    15. Tadesse, Dawit & Blank, Steven C., 2003. "Cultivar Diversity: A Neglected Risk Management Strategy," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(2), pages 1-16, August.
    16. Gamel Abdul-Nasser Salifu, 2019. "The Political Economy Dynamics of Rural Household Income Diversification: A Review of the International Literature," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(3), pages 273-290, December.
    17. Nilsson, Pia & Backman, Mikaela & Bjerke, Lina & Maniriho, Aristide, 2019. "One cow per poor family: Effects on the growth of consumption and crop production," World Development, Elsevier, vol. 114(C), pages 1-12.
    18. Jiao, Xi & Pouliot, Mariève & Walelign, Solomon Zena, 2017. "Livelihood Strategies and Dynamics in Rural Cambodia," World Development, Elsevier, vol. 97(C), pages 266-278.
    19. Islam, Masanori Matsuura Yir-Huieh Luh Abu Hayat Md. Saiful, 2021. "Climate Variability, Livelihood Diversification, and Household Food Security in Bangladesh," 2021 ASAE 10th International Conference (Virtual), January 11-13, Beijing, China 329402, Asian Society of Agricultural Economists (ASAE).
    20. Md.Salamun Rashidin & Sara Javed & Bin Liu & Wang Jian, 2020. "Ramifications of Households’ Nonfarm Income on Agricultural Productivity: Evidence From a Rural Area of Pakistan," SAGE Open, , vol. 10(1), pages 21582440209, January.
    21. Michler, Jeffrey D. & Josephson, Anna L., 2017. "To Specialize or Diversify: Agricultural Diversity and Poverty Dynamics in Ethiopia," World Development, Elsevier, vol. 89(C), pages 214-226.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:annopr:v:219:y:2014:i:1:p:243-264:10.1007/s10479-011-0902-7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.