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A Comparison of Risk Exposure in Aquaculture and Agricultural Businesses

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  • Flaten, Ola
  • Lien, Gudbrand D.
  • Tveteras, Ragnar
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    Abstract

    Agriculture and aquaculture have common features associated with their biological nature affecting risk exposure of the businesses. The aim of this paper is to compare risk exposure in salmon farming and agricultural enterprises in Norway by using an implicit error component model to examine the risk structure of yields, prices and economic returns at the farm level. Results indicate a higher farm-level year-to-year variability in yields, prices and economic returns in salmon farming than in agricultural enterprises. The variability in livestock enterprises was generally lower than for crop enterprises. Return on assets was highest in salmon farming with an average annual return of 9.2%. All of the agricultural farm types exhibited a negative average return on assets on average. Stochastic dominance tests of the distribution of economic returns from aquaculture and agricultural farm types showed salmon farming to be the most risk efficient alternative and salmon farming was most attractive from an investor’s perspective.

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    File URL: http://purl.umn.edu/44052
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    Bibliographic Info

    Paper provided by European Association of Agricultural Economists in its series 2008 International Congress, August 26-29, 2008, Ghent, Belgium with number 44052.

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    Date of creation: 2008
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    Handle: RePEc:ags:eaae08:44052

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    Keywords: Risk analysis; variability; Norway; Risk and Uncertainty;

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