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Endogenous risk in weed control management

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  • Archer, David W.
  • Shogren, Jason F.

Abstract

Weed control decisions are modeled in an endogenous risk framework where a producer invests in self-insurance and self-protection to reduce the severity of a realized pest infestation, or reduce the likelihood the infestation occurs. Self-insurance and self-protection are risk-reducing technologies that capture both the type and quantity of herbicides used. We supply conditions to unambiguously sign the effects of an increase in the probability of application or effectiveness failure and increased application or effectiveness uncertainty on optimal herbicide choices. If self-protection and self-insurance are stochastic substitutes, non-point source pollution policies targeted to reduce herbicide loadings can increase the use of more persistent herbicides. Policies that decrease loadings by reducing total mass may induce a substitution to herbicides more damaging or more likely to be transported to sensitive areas.

Suggested Citation

  • Archer, David W. & Shogren, Jason F., 1996. "Endogenous risk in weed control management," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 14(2), July.
  • Handle: RePEc:ags:iaaeaj:173946
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    References listed on IDEAS

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    1. Dionne, Georges & Eeckhoudt, Louis, 1985. "Self-insurance, self-protection and increased risk aversion," Economics Letters, Elsevier, vol. 17(1-2), pages 39-42.
    2. Richardson, James W. & Smith, Edward G. & Knutson, Ronald D. & Outlaw, Joe L., 1991. "Farm Level Impacts of Reduced Chemical Use on Southern Agriculture," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 23(01), pages 27-37, July.
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    6. Aziz Bouzaher & Richard Cabe & Stanley R. Johnson & Andrew Manale & Jason F. Shogren, 1994. "CEEPES: An Evolving System for Agro-environmental Policy," Center for Agricultural and Rural Development (CARD) Publications 94-wp122, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    7. David W. Archer & Jason F. Shogren, 1994. "Nonpoint Pollution, Weeds And Risk," Journal of Agricultural Economics, Wiley Blackwell, vol. 45(1), pages 38-51.
    8. Taylor, C. Robert & Penson, John B. & Smith, Edward G. & Knutson, Ronald D., 1991. "Economic Impacts of Chemical Use Reduction on the South," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 23(01), pages 15-23, July.
    9. Shogren, Jason F. & Crocker, Thomas D., 1991. "Risk, self-protection, and ex ante economic value," Journal of Environmental Economics and Management, Elsevier, vol. 20(1), pages 1-15, January.
    10. Babcock, Bruce A. & Shogren, Jason F., 1995. "The cost of agricultural production risk," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 12(2), August.
    11. Yang-Ming Chang & Issac Ehrlich, 1985. "Insurance, Protection from Risk, and Risk-bearing," Canadian Journal of Economics, Canadian Economics Association, vol. 18(3), pages 574-586, August.
    12. Taylor, C. Robert & Penson, John B., Jr. & Smith, Edward G. & Knutson, Ronald D., 1991. "Economic Impacts Of Chemical Use Reduction On The South," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 23(01), July.
    13. E. Douglas Beach & Gerald A. Carlson, 1993. "A Hedonic Analysis of Herbicides: Do User Safety and Water Quality Matter?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(3), pages 612-623.
    14. William Deen & Alfons Weersink & Calum G. Turvey & Susan Weaver, 1993. "Weed Control Decision Rules under Uncertainty," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 15(1), pages 39-50.
    15. Ehrlich, Isaac & Becker, Gary S, 1972. "Market Insurance, Self-Insurance, and Self-Protection," Journal of Political Economy, University of Chicago Press, vol. 80(4), pages 623-648, July-Aug..
    16. Bouzaher, Aziz & Archer, David & Cabe, Richard & Carriquiry, Alicia L. & Shogren, Jason F., 1992. "Effects of Environmental Policy on Trade-Offs in Agri-Chemical Management," Staff General Research Papers Archive 565, Iowa State University, Department of Economics.
    17. Babcock, Bruce A. & Shogren, Jason F., 1995. "Cost of Agricultural Production Risk (The)," Staff General Research Papers Archive 5014, Iowa State University, Department of Economics.
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    Citations

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    Cited by:

    1. Shogren, Jason F. & Crocker, Thomas D., 1999. "Risk and Its Consequences," Journal of Environmental Economics and Management, Elsevier, vol. 37(1), pages 44-51, January.
    2. repec:eee:eecrev:v:94:y:2017:i:c:p:23-44 is not listed on IDEAS
    3. Finnoff, David & Potapov, Alexei & Lewis, Mark A., 2010. "Control and the management of a spreading invader," Resource and Energy Economics, Elsevier, vol. 32(4), pages 534-550, November.
    4. Costello, Christopher & Quérou, Nicolas & Tomini, Agnes, 2017. "Private eradication of mobile public bads," European Economic Review, Elsevier, vol. 94(C), pages 23-44.
    5. Charles Sims & David Finnoff & Jason F. Shogren, 2016. "Bioeconomics of invasive species: using real options theory to integrate ecology, economics, and risk management," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 8(1), pages 61-70, February.
    6. Sims, Charles & Finnoff, David, 2013. "When is a “wait and see” approach to invasive species justified?," Resource and Energy Economics, Elsevier, vol. 35(3), pages 235-255.
    7. Archer, David W. & Shogren, Jason F., 2001. "Risk-indexed herbicide taxes to reduce ground and surface water pollution: an integrated ecological economics evaluation," Ecological Economics, Elsevier, vol. 38(2), pages 227-250, August.
    8. Finnoff, David & Shogren, Jason F. & Leung, Brian & Lodge, David, 2005. "The importance of bioeconomic feedback in invasive species management," Ecological Economics, Elsevier, vol. 52(3), pages 367-381, February.
    9. Hurley, Terrance M. & Shogren, Jason F., 1998. "Effort levels in a Cournot Nash contest with asymmetric information," Journal of Public Economics, Elsevier, vol. 69(2), pages 195-210, June.
    10. Mitchell, Paul D., 2001. "Additive Versus Proportional Pest Damage Functions: Why Ecology Matters," 2001 Annual meeting, August 5-8, Chicago, IL 20775, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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