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A Safety-First Approach to Dynamic Cropping Decisions

Author

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  • van Kooten, G Cornelis
  • Young, Douglas L
  • Krautkraemer, Jeffrey A

Abstract

A risk-sensitive optimal flexible cropping plan for spring barley in southeastern Washington state is identified by stochastic dynamic programming. State transformation equations are determined from data generated by a process simulation model. Katoaka's safety-first criterion is proposed as an operational procedure for discounting payoff values for differential riskiness. Stronger short-run risk aversion leads to the use of more conservative optimal flexcrop strategies which require higher threshold spring soil moisture levels for cropping. The dynamically optimal barley flexcrop strategies generate similar expected net returns but decrease soil less relative to a fixed winter wheat-fallow rotation; however, annual income risk increases. Copyright 1997 by Oxford University Press.

Suggested Citation

  • van Kooten, G Cornelis & Young, Douglas L & Krautkraemer, Jeffrey A, 1997. "A Safety-First Approach to Dynamic Cropping Decisions," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 24(1), pages 47-63.
    • Handle: RePEc:oup:erevae:v:24:y:1997:i:1:p:47-63
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    Cited by:

    1. Sattinger, Michael, 2011. "The Markov consumption problem," Journal of Mathematical Economics, Elsevier, vol. 47(4-5), pages 409-416.
    2. Tadesse, Dawit & Blank, Steven C., 2003. "Cultivar Diversity: A Neglected Risk Management Strategy," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(2), pages 1-16, August.
    3. Kaplan, Jonathan D., 2001. "Prevention Versus Utilization Of Excess Nutrients From Animal Feeding Operations:The Case Of Managing Nutrient Uncertainty," 2001 Annual meeting, August 5-8, Chicago, IL 20533, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Blank, Steven C. & Erickson, Kenneth W. & Moss, Charles B., 2005. "Profit Patterns Across American Agriculture," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 30(2), pages 1-26, August.
    5. Upadhyay, Bharat Mani & Smith, Elwin G. & Clayton, George & Harker, Neil, 2004. "Risk Efficiency Of Alternate Canola Management Decisions," Annual Meeting, 2004, June 20-23, Halifax, Nova Scotia 34193, Canadian Agricultural Economics Society.

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