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A Market-based Mitigation Program for Wind-borne Diseases

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

Abstract

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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Suggested Citation

  • Bekkerman, Anton & Piggott, Nicholas E. & Goodwin, Barry K. & Jefferson-Moore, Kenrett, 2012. "A Market-based Mitigation Program for Wind-borne Diseases," Agricultural and Resource Economics Review, Cambridge University Press, vol. 41(02), pages 175-188, August.
  • Handle: RePEc:cup:agrerw:v:41:y:2012:i:02:p:175-188_00
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    References listed on IDEAS

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    1. 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.
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    7. 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), pages 1-21.
    8. 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.
    9. 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), pages 1-14, October.
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    Cited by:

    1. Moschini, GianCarlo & Lapan, Harvey & Kim, Hyunseok, 2016. "The Renewable Fuel Standard: Market and Welfare Effects of Alternative Policy Scenarios," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235721, Agricultural and Applied Economics Association.
    2. Kojima, Yasutomo & Parcell, Joseph L. & Cain, Jewelwayne S., 2014. "A Demand Model of the Wholesale Vegetable Oils Market in the U.S.A," 2014 Annual Meeting, February 1-4, 2014, Dallas, Texas 162472, Southern Agricultural Economics Association.

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