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Uncertainty, risk aversion, and risk management for agricultural producers

In: Handbook of Agricultural Economics

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Author Info
Moschini, Giancarlo
Hennessy, David A.

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Abstract

Uncertainty and risk are quintessential features of agricultural production. After a brief overview of the main sources of agricultural risk, we provide an exposition of expected utility theory and of the notion of risk aversion. This is followed by a basic analysis of agricultural production decisions under risk, including some comparative statics results from stylized models. Selected empirical topics are surveyed, with emphasis on risk analyses as they pertain to production decisions at the farm level. Risk management is then discussed, and a synthesis of hedging models is presented. We conclude with a detailed review of agricultural insurance, with emphasis on the moral hazard and adverse selection problems that arise in the context of crop insurance.

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This chapter was published in: B. L. Gardner & G. C. Rausser (ed.) Handbook of Agricultural Economics, , chapter 02, pages 88-153, 2001.

This item is provided by Elsevier in its series Handbook of Agricultural Economics with number 1-02.

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This chapter was published in the following book, which is listed on IDEAS:
B. L. Gardner & G. C. Rausser (ed.), 2001. "Handbook of Agricultural Economics," Handbook of Agricultural Economics, Elsevier, edition 1, volume 1, number 1, September. [Downloadable!] (restricted)
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Q00 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - General

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  1. Moschini, GianCarlo & Myers, Robert J., 2001. "Testing for Constant Hedge Ratios in Commodity Markets: A Multivariate GARCH Approach," Staff General Research Papers 1945, Iowa State University, Department of Economics.
    Other versions:
  2. Lagerkvist, Carl J., 2005. "Assessing farmers' risk attitudes based on economic, social, personal, and environmental sources of risk: evidence from Sweden," 2005 Annual meeting, July 24-27, Providence, RI 19361, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  3. Sarris, Alexander, 2002. "The demand for commodity insurance by developing country agricultural producers - theory and an application to cocoa in Ghana," Policy Research Working Paper Series 2887, The World Bank. [Downloadable!]
  4. Kurkalova, Lyubov A. & Kling, Catherine L. & Zhao, Jinhua, 2001. "Subsidy for Adopting Conservation Tillage: Estimation from Observed Behavior (The)," Staff General Research Papers 2007, Iowa State University, Department of Economics. [Downloadable!]
  5. MacNicol, R. & Ortmann, G.F. & Ferrer, S.R.D., 2008. "Management decisions on commercial sugarcane farms in KwaZulu-Natal: a focus on choice bracketing behaviour for risk management," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 47(1), March. [Downloadable!]
  6. Nicol, R. Mac & Ortmann, G.F. & Ferrer, S.R.D., 2007. "Perceptions of key business and financial risk by large-scale sugarcane farmers in KwaZulu-Natal in a dynamic socio-political environment," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 46(3), September. [Downloadable!]
  7. Blancard, S. & Boussemart, J.P. & Crainich, D. & Leleu, H., 2008. "How can allocative inefficiency reveal risk preference? An empirical investigation on French wheat farms," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44208, European Association of Agricultural Economists. [Downloadable!]
  8. Kurkalova, Lyubov & Kling, Catherine & Zhao, Jinhua, 2001. "The Subsidy For Adopting Conservation Tillage: Estimation From Observed Behavior," 2001 Annual meeting, August 5-8, Chicago, IL 20542, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  9. Szekely, Csaba & Palinkas, Peter, 2008. "Agricultural Risk Management in the European Union and in the USA," Studies in Agricultural Economics, Research Institute for Agricultural Economics, issue 109. [Downloadable!]
  10. WÄ s, Adam & Malak-Rawlikowska, Agata, 2008. "Policy Impact On Production Structure And Income Risk On Polish Dairy Farms," 109th Seminar, November 20-21, 2008, Viterbo, Italy 44842, European Association of Agricultural Economists. [Downloadable!]
  11. Kurkalova, Lyubov & Kling, Catherine L. & Zhao, Jinhua, 2003. "Green Subsidies in Agriculture: Estimating the Adoption Costs of Conservation Tillage from Observed Behavior," Staff General Research Papers 10354, Iowa State University, Department of Economics. [Downloadable!]
    Other versions:
  12. Lyubov A. Kurkalova & Catherine L. Kling & Jinhua Zhao, 2003. "Green Subsidies in Agriculture: Estimating the Adoption Costs of Conservation Tillage from Observed Behavior (Revised)," Center for Agricultural and Rural Development (CARD) Publications 01-wp286, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
  13. Bokusheva, Raushan & Breustedt, Gunnar & Heidelbach, Olaf, 2006. "Measurement and Comparison of Risk Reduction by Means of Farm Yield, Area Yield, and Weather Index Crop Insurance Schemes - The Case of Kazakhstani Wheat Farms," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25523, International Association of Agricultural Economists. [Downloadable!]
  14. Frechette, Darren L. & Wen, Fang-I, 2002. "Risk Aversion, Uncertainty Aversion, And Variation Aversion In Applied Commodity Price Analysis," 2002 Conference, April 22-23, 2002, St. Louis, Missouri 19062, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management. [Downloadable!]
  15. Alexander, Corinne & Fernandez-Cornejo, Jorge & Goodhue, Rachael E., 2003. "Effects of the GM Controversy on Iowa Corn-Soybean Farmers' Acreage Allocation Decisions," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(03), December. [Downloadable!]
  16. Jean-Philippe Boussemart & Walter Briec & Christophe Tavera, 2007. "More evidence on technological catching-up in the manufacturing sector," Working Papers 2007-ECO-02, IESEG School of Management. [Downloadable!]
  17. Polome, Philippe & Harmignie, Olivier & de Frahan, Bruno Henry, 2006. "Farm-level Acreage Allocation under Risk," 2006 Annual meeting, July 23-26, Long Beach, CA 21306, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  18. Stéphane Blancard & Jean-Philippe Boussemart & David Crainich & Hervé Leleu, 2008. "How can allocative inefficiency reveal risk preference? An empirical investigation on French wheat farms," Working Papers 2008-ECO-02, IESEG School of Management. [Downloadable!]
  19. Runge, C. Ford, 2006. "Agricultural Economics: A Brief Intellectual History," Staff Papers 13649, University of Minnesota, Department of Applied Economics. [Downloadable!]
  20. van Mellor, Thuy & Alexander, Corinne & Bledsoe, Larry & Krupke, Christian, 2006. "An Economic Analysis of Control of the Western Corn Rootworm Variant across Indiana," 2006 Annual meeting, July 23-26, Long Beach, CA 21264, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  21. Villano, Renato A. & O'Donnell, Christopher J. & Battese, George E., 2005. "An Investigation of Production Risk, Risk Preferences and Technical Efficiency: Evidence From Rainfed Lowland Rice Farms in the Philippines," Working Papers 12953, University of New England, School of Economics. [Downloadable!]
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