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A Market-based Mitigation Program for Wind-borne Diseases

  • Bekkerman, Anton
  • Piggott, Nicholas E.
  • Goodwin, Barry K.
  • Jefferson-Moore, Kenrett Y.

Wind-borne diseases can spread rapidly and cause large losses. Producers may have little incentive to prevent disease spread because prevention may not be welfare-maximizing. This study proposes a market-based mitigation program that indemnifies producers against disease-related losses and provides an incentive to neighboring producers to take preventive action, which can substantially mitigate infestations, reduce the likelihood of catastrophic losses, and increase social welfare. An equilibrium displacement model simulates introduction of the program for U.S. soybeans. Simulations reveal that the market-based solution contributes to minor market distortions but also reduces social welfare losses and could succeed for other at-risk commodities.

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File URL: http://purl.umn.edu/132528
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Article provided by Northeastern Agricultural and Resource Economics Association in its journal Agricultural and Resource Economics Review.

Volume (Year): 41 (2012)
Issue (Month): 2 (August)
Pages:

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Handle: RePEc:ags:arerjl:132528
Contact details of provider: Web page: http://www.narea.org/
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  1. Michael J. Roberts & David Schimmelpfennig & Michael J. Livingston & Elizabeth Ashley, 2009. "Estimating the Value of an Early-Warning System," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 31(2), pages 303-329, 06.
  2. T.J. Richards & J. Eaves & M. Manfredo & S.E. Naranjo & C.-C. Chu & T.J. Henneberry, 2008. "Spatial-Temporal Model of Insect Growth, Diffusion and Derivative Pricing," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(4), pages 962-978.
  3. Bekkerman, Anton & Goodwin, Barry K. & Piggott, Nicholas E., 2008. "Spatio-temporal Risk and Severity Analysis of Soybean Rust in the United States," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 33(3), December.
  4. Livingston, Michael J., 2010. "U.S. Soybean Producer Perceptions and Management of Soybean Rust in the United States under the USDA Pest Information Platform for Extension and Education," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 39(3), October.
  5. Costanza, Robert & Perrings, Charles, 1990. "A flexible assurance bonding system for improved environmental management," Ecological Economics, Elsevier, vol. 2(1), pages 57-75, April.
  6. Barry K. Goodwin & Nicholas E. Piggott, 2009. "Spatiotemporal Modeling of Asian Citrus Canker Risks: Implications for Insurance and Indemnification Fund Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(4), pages 1038-1055.
  7. Cornes, Richard, 1993. "Dyke Maintenance and Other Stories: Some Neglected Types of Public Goods," The Quarterly Journal of Economics, MIT Press, vol. 108(1), pages 259-71, February.
  8. Horan, Richard D. & Lupi, Frank, 2005. "Tradeable risk permits to prevent future introductions of invasive alien species into the Great Lakes," Ecological Economics, Elsevier, vol. 52(3), pages 289-304, February.
  9. Duffy, Patricia A. & Wohlgenant, Michael K., 1991. "Effects Of An Export Subsidy On The U.S. Cotton Industry," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 23(02), December.
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