IDEAS home Printed from https://ideas.repec.org/a/nec/raestu/v94y2013i02p195-219_01.html
   My bibliography  Save this article

The role of risk aversion and labor constraints in the adoption of low input practices supported by the CAP green payments in cash crop farms

Author

Listed:
  • Ridier, Aude
  • Ben El Ghali, Mohamed
  • Nguyen, G.
  • Kephaliacos, Charilaos

Abstract

Since the late 1980s, many alternative practices have been proposed to European farmers to reduce pesticide and input use in general. These practices have been promoted by agro-environmental contracts signed between individual farmers and the European Union and by which farmers engage themselves in changing their practices. The adoption rate of these measures has remained very low in many European regions particularly in Southwestern France. This article aims at stressing the role played by risk attitude and labor constraint in farmers’ adoption decision. After presenting a static theoretical model which assesses the impact of labor constraints and risk attitude on the level of adoption of low input practices supported by agro-environmental contracts, the article proposes a numerical application based on a mathematical programming risk-model implemented on two typical crop farms in South-western France. Three kinds of contracts (no tillage, long rotation, lower pest treatments) are tested, two of them (long rotation and lower pest treatments) aiming at directly reducing input use. The results show that, despite the overall positive impact of alternative practices under contract on environment and farmers’ income, increased yield variability under positive risk aversion and larger labor requirements are actual barriers to adoption.

Suggested Citation

  • Ridier, Aude & Ben El Ghali, Mohamed & Nguyen, G. & Kephaliacos, Charilaos, 2013. "The role of risk aversion and labor constraints in the adoption of low input practices supported by the CAP green payments in cash crop farms," Revue d'Etudes en Agriculture et Environnement, Editions NecPlus, vol. 94(02), pages 195-219, June.
    • Handle: RePEc:nec:raestu:v:94:y:2013:i:02:p:195-219_01
    as

    Download full text from publisher

    File URL: http://www.necplus.eu/abstract_S1966960713012034
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Jaffe, Adam B. & Newell, Richard G. & Stavins, Robert N., 2003. "Chapter 11 Technological change and the environment," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 11, pages 461-516, Elsevier.
    2. Quiggin, John C., 2001. "Environmental economics and the Murray-Darling river system," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 45(1), pages 1-28.
    3. Sunding, David & Zilberman, David, 2001. "The agricultural innovation process: Research and technology adoption in a changing agricultural sector," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 4, pages 207-261, Elsevier.
    4. Just, Richard E. & Pope, Rulon D., 1978. "Stochastic specification of production functions and economic implications," Journal of Econometrics, Elsevier, vol. 7(1), pages 67-86, February.
    5. Sandmo, Agnar, 1971. "On the Theory of the Competitive Firm under Price Uncertainty," American Economic Review, American Economic Association, vol. 61(1), pages 65-73, March.
    6. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
    7. G Lien & JB Hardaker, 2001. "Whole-farm planning under uncertainty: impacts of subsidy scheme and utility function on portfolio choice in Norwegian agriculture," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 28(1), pages 17-36, March.
    8. Thomas L. Dobbs & Jules N. Pretty, 2004. "Agri-Environmental Stewardship Schemes and “Multifunctionality”," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 26(2), pages 220-237.
    9. Chavas, Jean-Paul & Holt, Matthew T, 1996. "Economic Behavior under Uncertainty: A Joint Analysis of Risk Preferences and Technology," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 329-335, May.
    10. Amir K. Abadi Ghadim & David J. Pannell, 1999. "A conceptual framework of adoption of an agricultural innovation," Agricultural Economics, International Association of Agricultural Economists, vol. 21(2), pages 145-154, October.
    11. Hardaker, J. Brian & Pandey, Sushil & Patten, Louise H., 1991. "Farm Planning under Uncertainty: A Review of Alternative Programming Models," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 59(01), pages 1-14, April.
    12. Richard D. Horan & James S. Shortle & David G. Abler, 1999. "Green Payments for Nonpoint Pollution Control," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(5), pages 1210-1215.
    13. Jorge Fernandez-Cornejo & Sharon Jans & Mark Smith, 1998. "Issues in the Economics of Pesticide Use in Agriculture: A Review of the Empirical Evidence," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 20(2), pages 462-488.
    14. Thomas L. Dobbs & Jules N. Pretty, 2004. "Agri-Environmental Stewardship Schemes and "Multifunctionality"," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 26(2), pages 220-237.
    15. Falconer, Katherine & Hodge, Ian, 2001. "Pesticide taxation and multi-objective policy-making: farm modelling to evaluate profit/environment trade-offs," Ecological Economics, Elsevier, vol. 36(2), pages 263-279, February.
    16. Lohr, Luanne & Park, Timothy & Higley, Leon, 1999. "Farmer risk assessment for voluntary insecticide reduction," Ecological Economics, Elsevier, vol. 30(1), pages 121-130, July.
    17. Knowler, Duncan & Bradshaw, Ben, 2007. "Farmers' adoption of conservation agriculture: A review and synthesis of recent research," Food Policy, Elsevier, vol. 32(1), pages 25-48, February.
    18. David K. Lambert & Bruce A. McCarl, 1985. "Risk Modeling Using Direct Solution of Nonlinear Approximations of the Utility Function," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(4), pages 846-852.
    19. Aude Ridier & Charilaos Kephaliacos & Francoise Carpy-Goulard, 2011. "Private transaction costs and environmental cross compliance in a crop region of Southwestern France," International Journal of Agricultural Resources, Governance and Ecology, Inderscience Enterprises Ltd, vol. 9(1/2), pages 68-79.
    20. Petr Havlik & Geoffroy Enjolras & Jean-Marie Boisson & Florence Jacquet & Michel Lherm & Patrick Veysset, 2008. "Environmental good production in the optimum activities portfolio of a risk averse-farmer," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 86(1), pages 9-33.
    21. Thomas B. Wiens, 1976. "Peasant Risk Aversion and Allocative Behavior: A Quadratic Programming Experiment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 58(4_Part_1), pages 629-635.
    22. de Koeijer, T. J. & Wossink, G. A. A. & van Ittersum, M. K. & Struik, P. C. & Renkema, J. A., 1999. "A conceptual model for analysing input-output coefficients in arable farming systems: from diagnosis towards design," Agricultural Systems, Elsevier, vol. 61(1), pages 33-44, July.
    23. Pannell, David J. & Malcolm, Bill & Kingwell, Ross S., 2000. "Are we risking too much? Perspectives on risk in farm modelling," Agricultural Economics, Blackwell, vol. 23(1), pages 69-78, June.
    24. Szvetlana Acs & Paul Berentsen & Ruud Huirne & Marcel van Asseldonk, 2009. "Effect of yield and price risk on conversion from conventional to organic farming ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(3), pages 393-411, July.
    25. Petr Havlik & Geoffroy Enjolras & Jean-Marie Boisson & Florence Jacquet & Michel Lherm & Patrick Veysset, 2008. "Environmental good production in the optimum activities portfolio of a risk averse-farmer," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 86(1), pages 9-33.
    26. Hardaker, J. Brian & Lien, Gudbrand D., 2007. "Rationalising Risk Assessment: Applications to Agricultural Business," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 15.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kleftodimos, Georgios & Gallai, Nicola & Rozakis, Stelios & Képhaliacos, Charilaos, 2021. "A farm-level ecological-economic approach of the inclusion of pollination services in arable crop farms," Land Use Policy, Elsevier, vol. 107(C).
    2. Aleksandra Pawłowska & Renata Grochowska, 2021. "“Green” Transformation of the Common Agricultural Policy and Its Impact on Farm Income Disparities," Energies, MDPI, vol. 14(24), pages 1-15, December.
    3. Dupré, Marie & Blazy, Jean-Marc & Michels, Thierry & Le Gal, Pierre-Yves, 2021. "Supporting policymakers in designing agricultural policy instruments: A participatory approach with a regional bioeconomic model in La Réunion (France)," Land Use Policy, Elsevier, vol. 100(C).
    4. Mohamed Ghali & Maha Ben Jaballah & Nejla Ben Arfa & Annie Sigwalt, 2022. "Analysis of factors that influence adoption of agroecological practices in viticulture," Review of Agricultural, Food and Environmental Studies, Springer, vol. 103(3), pages 179-209, September.
    5. Hashmiu, Ishmael & Agbenyega, Olivia & Dawoe, Evans, 2022. "Determinants of crop choice decisions under risk: A case study on the revival of cocoa farming in the Forest-Savannah transition zone of Ghana," Land Use Policy, Elsevier, vol. 114(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kleftodimos, Georgios & Gallai, Nicola & Rozakis, Stelios & Képhaliacos, Charilaos, 2021. "A farm-level ecological-economic approach of the inclusion of pollination services in arable crop farms," Land Use Policy, Elsevier, vol. 107(C).
    2. Ridier, Aude & Chaib, Karim & Roussy, Caroline, 2016. "A Dynamic Stochastic Programming model of crop rotation choice to test the adoption of long rotation under price and production risks," European Journal of Operational Research, Elsevier, vol. 252(1), pages 270-279.
    3. Marc Baudry & Edouard Civel & Camille Tévenart, 2023. "Land allocation and the adoption of innovative practices in agriculture: a real option modelling of the underlying hidden costs," EconomiX Working Papers 2023-1, University of Paris Nanterre, EconomiX.
    4. Mohamed Ghali & Maha Ben Jaballah & Nejla Ben Arfa & Annie Sigwalt, 2022. "Analysis of factors that influence adoption of agroecological practices in viticulture," Review of Agricultural, Food and Environmental Studies, Springer, vol. 103(3), pages 179-209, September.
    5. Acs, Szvetlana & Berentsen, Paul B.M. & Huirne, Ruud & van Asseldonk, Marcel, 2009. "Effect of yield and price risk on conversion from conventional to organic farming," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(3), pages 1-19.
    6. Viaggi, Davide & Raggi, Meri & Gomez y Paloma, Sergio, 2011. "Farm-household investment behaviour and the CAP decoupling: Methodological issues in assessing policy impacts," Journal of Policy Modeling, Elsevier, vol. 33(1), pages 127-145, January.
    7. Lefebvre, Marianne & Midler, Estelle & Bontems, Philippe, 2020. "Adoption of environmentally-friendly agricultural practices with background risk: experimental evidence," TSE Working Papers 20-1079, Toulouse School of Economics (TSE).
    8. Ridier, Aude & Chaib, Karim & Roussy, Caroline, 2012. "The adoption of innovative cropping systems under price and production risks: a dynamic model of crop rotation choice," Working Papers 207985, Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2).
    9. De Nova, Carolina Carbajal, 2021. "Synthetic data. A novel proposed method for applied risk management," 95th Annual Conference, March 29-30, 2021, Warwick, UK (Hybrid) 311085, Agricultural Economics Society - AES.
    10. Marianne Lefebvre & Estelle Midler & Philippe Bontems, 2020. "Adoption of Environment-Friendly Agricultural Practices with Background Risk: Experimental Evidence," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(2), pages 405-428, July.
    11. Gomez-Limon, Jose A. & Arriaza, Manuel & Riesgo, Laura, 2003. "An MCDM analysis of agricultural risk aversion," European Journal of Operational Research, Elsevier, vol. 151(3), pages 569-585, December.
    12. Hassan, Rashid M. & Hallam, Arne & D'Silva, B., 1988. "Stochastic Technology in a Programming Framework: A Generalized E. V. Model," 1988 Annual Meeting, August 1-3, Knoxville, Tennessee 270212, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. Ahsanuzzaman, & Priyo, Asad Karim Khan & Nuzhat, Kanti Ananta, 2022. "Effects of communication, group selection, and social learning on risk and ambiguity attitudes: Experimental evidence from Bangladesh," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 96(C).
    14. Xavier Vollenweider, 2014. "A simple framework for the estimation of climate exposure," GRI Working Papers 158, Grantham Research Institute on Climate Change and the Environment.
    15. Alfons Weersink & Murray Fulton, 2020. "Limits to Profit Maximization as a Guide to Behavior Change," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 42(1), pages 67-79, March.
    16. Liu, Yucan & Shumway, C. Richard, 2005. "Indirect Utility Maximization under Risk: A Heterogeneous Panel Application," 2005 Annual Meeting, July 6-8, 2005, San Francisco, California 36307, Western Agricultural Economics Association.
    17. Monjardino, M. & McBeath, T. & Ouzman, J. & Llewellyn, R. & Jones, B., 2015. "Farmer risk-aversion limits closure of yield and profit gaps: A study of nitrogen management in the southern Australian wheatbelt," Agricultural Systems, Elsevier, vol. 137(C), pages 108-118.
    18. Pannell, David J. & Malcolm, Bill & Kingwell, Ross S., 2000. "Are we risking too much? Perspectives on risk in farm modelling," Agricultural Economics, Blackwell, vol. 23(1), pages 69-78, June.
    19. Reynaud, Arnaud, 2009. "Adaptation à court et à long terme de l'agriculture au risque de sécheresse : une approche par couplage de modèles biophysiques et économiques," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 90(2).
    20. Ward, Patrick S. & Singh, Vartika, 2013. "Risk and Ambiguity Preferences and the Adoption of New Agricultural Technologies: Evidence from Field Experiments in Rural India," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150794, Agricultural and Applied Economics Association.

    More about this item

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nec:raestu:v:94:y:2013:i:02:p:195-219_01. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jean-Louis Soubret (email available below). General contact details of provider: http://www.necplus.eu/jid_RAEProvider-Email:jlsoubret@necplus.eu .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.