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A Market-based Mitigation Program for Wind-borne Diseases

Listed author(s):
  • 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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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)

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Handle: RePEc:ags:arerjl:132528
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  1. Costanza, Robert & Perrings, Charles, 1990. "A flexible assurance bonding system for improved environmental management," Ecological Economics, Elsevier, vol. 2(1), pages 57-75, April.
  2. 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.
  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. 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.
  5. Richard Cornes, 1993. "Dyke Maintenance and Other Stories: Some Neglected Types of Public Goods," The Quarterly Journal of Economics, Oxford University Press, vol. 108(1), pages 259-271.
  6. 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.
  7. repec:oup:revage:v:31:y:2009:i:2:p:303-329. is not listed on IDEAS
  8. 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, June.
  9. 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.
  10. 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.
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