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Crop Biodiversity, Risk Management and the Implications of Agricultural Assistance

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  • Salvatore Di Falco
  • Charles Perrings

    () (Department of Economics, National University of Ireland, Galway)

Abstract

This paper presents a theoretical and empirical analysis of the impact of financial assistance to farms on crop biodiversity in an uncertain setting. The findings reveal that risk aversion is an important driving force for crop biodiversity conservation. Risk averse farmers can hedge against the uncertainty they face by allocating land to different crop species. However, policies intended to stabilize revenues by supporting particular species may alter this link by delinking crop biodiversity from the management of revenues risk.

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Bibliographic Info

Paper provided by National University of Ireland Galway, Department of Economics in its series Working Papers with number 0084.

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Date of creation: 2004
Date of revision: 2004
Handle: RePEc:nig:wpaper:0084

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References

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  1. Jeffrey T. LaFrance, 1992. "Do Increased Commodity Prices Lead To More Or Less Soil Degradation?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 36(1), pages 57-82, 04.
  2. L‚onard,Daniel & Long,Ngo van, 1992. "Optimal Control Theory and Static Optimization in Economics," Cambridge Books, Cambridge University Press, number 9780521337465.
  3. Grepperud, Sverre, 1997. "Poverty, Land Degradation and Climatic Uncertainty," Oxford Economic Papers, Oxford University Press, vol. 49(4), pages 586-608, October.
  4. Hild Rygnestad & Rob Fraser, 1996. "Land Heterogeneity And The Effectiveness Of Cap Set-Aside," Journal of Agricultural Economics, Wiley Blackwell, vol. 47(1-4), pages 255-260.
  5. Moschini, GianCarlo & Hennessy, David A., 2001. "Uncertainty, Risk Aversion, and Risk Management for Agricultural Producers," Staff General Research Papers 5323, Iowa State University, Department of Economics.
  6. Brush, Stephen B. & Taylor, J. Edward & Bellon, Mauricio R., 1992. "Technology adoption and biological diversity in Andean potato agriculture," Journal of Development Economics, Elsevier, vol. 39(2), pages 365-387, October.
  7. Smale, Melinda & Bellon, Mauricio R & Aguirre Gomez, Jose Alfonso, 2001. "Maize Diversity, Variety Attributes, and Farmers' Choices in Southeastern Guanajuato, Mexico," Economic Development and Cultural Change, University of Chicago Press, vol. 50(1), pages 201-25, October.
  8. Grepperud, Sverre, 2000. "Optimal soil depletion with output and price uncertainty," Environment and Development Economics, Cambridge University Press, vol. 5(03), pages 221-240, July.
  9. Smale, M. & Meng, E. & Brennan, J. P. & Hu, Ruifa, 2003. "Determinants of spatial diversity in modern wheat: examples from Australia and China," Agricultural Economics, Blackwell, vol. 28(1), pages 13-26, January.
  10. Melinda Smale & Jason Hartell & Paul W. Heisey & Ben Senauer, 1998. "The Contribution of Genetic Resources and Diversity to Wheat Production in the Punjab of Pakistan," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(3), pages 482-493.
  11. Salvatore Di Falco & Charles Perrings, 2003. "Crop Genetic Diversity, Productivity and Stability of Agroecosystems. A Theoretical and Empirical Investigation," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(2), pages 207-216, 05.
  12. Derek Byerlee & Edward Souza, 1997. "Wheat Rusts and the Costs of Genetic Diversity in the Punjab of Pakistan," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 726-737.
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Citations

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Cited by:
  1. Müller, Birgit & Quaas, Martin F. & Frank, Karin & Baumgärtner, Stefan, 2011. "Pitfalls and potential of institutional change: Rain-index insurance and the sustainability of rangeland management," Ecological Economics, Elsevier, vol. 70(11), pages 2137-2144, September.
  2. Sipilainen, Timo & Huhtala, Anni, 2011. "Opportunity Costs of Providing Crop Diversity in Organic and Conventional Farming: Would Targeted Environmental Policies Make Economic Sense?," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114527, European Association of Agricultural Economists.
  3. Baumgärtner, Stefan & Quaas, Martin, 2005. "The private and public insurance value of conservative biodiversity management," UFZ Discussion Papers 27/2005, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
  4. Stefan Baumgärtner & Martin F. Quaas, 2007. "Agro-biodiversity as natural insurance and the development of financial insurance markets," Working Paper Series in Economics 61, University of Lüneburg, Institute of Economics.
  5. Lauriane MOUYSSET (CERSP, UMR 7204, CNRS-MNHN-UPMC, SADAPT, INRA, UMR 1048) & Luc DOYEN (CERSP, UMR 7204, CNRS-MNHN-UPMC, GREThA, CNRS, UMR 5113) & Fréderic JIGUET (CERSP, UMR 7204, CNRS-MNHN-UPMC), 2012. "How does the economic risk aversion affect biodiversity?," Cahiers du GREThA 2012-03, Groupe de Recherche en Economie Théorique et Appliquée.
  6. Di Falco, Salvatore & Capitanio, Fabian & Adinolfi, Felice, 2011. "Natural Vs Financial Insurance in the Management of Weather Risk Exposure in the Italian Agriculture," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114325, European Association of Agricultural Economists.
  7. Edward Kato & Claudia Ringler & Mahmud Yesuf & Elizabeth Bryan, 2011. "Soil and water conservation technologies: a buffer against production risk in the face of climate change? Insights from the Nile basin in Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 42(5), pages 593-604, 09.
  8. Sipilainen, Timo & Huhtala, Anni, 2012. "Opportunity Costs of Providing Crop Diversity in Organic and Conventional Farming," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126652, International Association of Agricultural Economists.
  9. Elisa Gatto & Guido Signorino, 2011. "Long-run relationship between crop-biodiversity and cereal production under the CAP reform: evidence from Italian regions," ERSA conference papers ersa11p964, European Regional Science Association.
  10. Martin Schönhart & Erwin Schmid & Uwe A. Schneider, 2009. "CropRota – A Model to Generate Optimal Crop Rotations from Observed Land Use," Working Papers 452009, Institute for Sustainable Economic Development, Department of Economics and Social Sciences, University of Natural Resources and Life Sciences, Vienna.
  11. Sookhtanlo, Mojtaba & Sarani, Valiollah, 2011. "Analysis of Factors Affecting on Risk Management of Wheat Production Among Wheat Farmers (Razavieh Region, Khorasan-E-Razavi Province, Iran)," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 3(4), December.
  12. Nastis, Stefanos A. & Michailidis, Anastasios & Mattas, Konstadinos, 2011. "Crop biodiversity repercussions of subsidized organic farming in Greece," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114628, European Association of Agricultural Economists.
  13. Béné, C. & Doyen, L., 2008. "Contribution values of biodiversity to ecosystem performances: A viability perspective," Ecological Economics, Elsevier, vol. 68(1-2), pages 14-23, December.
  14. Sipilainen, Timo & Marklund, Per-Olov & Huhtala, Anni, 2008. "Efficiency In Agricultural Production Of Biodiversity: Organic Vs. Conventional Practices," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6478, European Association of Agricultural Economists.
  15. Knoke, Thomas & Steinbeis, Otto-Emmanuel & Bösch, Matthias & Román-Cuesta, Rosa María & Burkhardt, Thomas, 2011. "Cost-effective compensation to avoid carbon emissions from forest loss: An approach to consider price-quantity effects and risk-aversion," Ecological Economics, Elsevier, vol. 70(6), pages 1139-1153, April.
  16. Kato, Edward & Nkonya, Ephraim & Place, Frank & Mwanjalolo, Majaliwa, 2010. "An econometric investigation of impacts of sustainable land management practices on soil carbon and yield risk: A potential for climate change mitigation," IFPRI discussion papers 1038, International Food Policy Research Institute (IFPRI).
  17. Eugenio Figueroa B. & Roberto Pasten C., 2012. "The insurance value of forests in supplying climate regulation," Working Papers wp372, University of Chile, Department of Economics.
  18. Stefan Baumgärtner & Martin F. Quaas, 2008. "Managing increasing environmental risks through agro-biodiversity and agri-environmental policies," Working Paper Series in Economics 80, University of Lüneburg, Institute of Economics.
  19. Charles Palmer & Salvatore Di Falco, 2012. "Biodiversity, poverty, and development," Oxford Review of Economic Policy, Oxford University Press, vol. 28(1), pages 48-68, Spring.

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