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The effects of EU agricultural policy changes on farmers' risk attitudes

Author

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  • Phoebe Koundouri
  • Marita Laukkanen
  • Sami Myyrä
  • Céline Nauges

Abstract

This analysis utilises a model of production under risk estimated on Finnish farm-level data to measure farmers' risk attitudes in a changing policy environment. We find evidence of heterogeneous risk preferences among farmers, as well as notable changes over time in farmers' degree of risk aversion. This result is due to the increase in the non-random part of farm income generated by the policy change after Finland's European Union accession. The analysis confirms the assertion that agricultural policies that are decoupled from production do affect input use and crop mix through their effect on farmers' risk attitudes. Oxford University Press and Foundation for the European Review of Agricultural Economics 2009; all rights reserved. For permissions, please email journals.permissions@oxfordjournals.org, Oxford University Press.

Suggested Citation

  • Phoebe Koundouri & Marita Laukkanen & Sami Myyrä & Céline Nauges, 2009. "The effects of EU agricultural policy changes on farmers' risk attitudes," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 36(1), pages 53-77, March.
  • Handle: RePEc:oup:erevae:v:36:y:2009:i:1:p:53-77
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    File URL: http://hdl.handle.net/10.1093/erae/jbp003
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    Cited by:

    1. Matthews, Alan & Salvatici, Luca & Scoppola, Margherita, 2017. "Trade Impacts of Agricultural Support in the EU," Commissioned Papers 252767, International Agricultural Trade Research Consortium.
    2. Céline Nauges & Christopher J. O'Donnell & John Quiggin, 2011. "Uncertainty and technical efficiency in Finnish agriculture: a state-contingent approach," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 38(4), pages 449-467, October.
    3. Drichoutis Andreas & Phoebe Koundouri, "undated". "Estimating risk attitudes in conventional and artefactual lab experiments," DEOS Working Papers 1114, Athens University of Economics and Business.
    4. repec:spr:agfoec:v:5:y:2017:i:1:d:10.1186_s40100-017-0078-9 is not listed on IDEAS
    5. Chakir, Raja & Hardelin, Julien, 2011. "Hail Insurance and Pesticide use in French agriculture: an empirical analysis of multiple risks management," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114312, European Association of Agricultural Economists.
    6. Robert Finger & Niklaus Lehmann, 2012. "The influence of direct payments on farmers’ hail insurance decisions," Agricultural Economics, International Association of Agricultural Economists, vol. 43(3), pages 343-354, May.
    7. Britz, Wolfgang & Linda, Arata, "undated". "How Important Are Crop Shares In Managing Risk For Specialized Arable Farms? A Panel Estimation Of A Programming Model For Three European Regions," 56th Annual Conference, Bonn, Germany, September 28-30, 2016 244801, German Association of Agricultural Economists (GEWISOLA).
    8. Karina Schoengold & David L. Sunding, 2014. "The impact of water price uncertainty on the adoption of precision irrigation systems," Agricultural Economics, International Association of Agricultural Economists, vol. 45(6), pages 729-743, November.
    9. V. Santoni & M. Pulina, 2016. "An analysis on the Italian agricultural firms: effects of public subsidies," Working Paper CRENoS 201611, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    10. Marita Laukkanen & NAUGES Céline, 2009. "Environmental and production cost impacts of no-till: estimates from observed behavior," LERNA Working Papers 09.28.304, LERNA, University of Toulouse.
    11. Marita Laukkanen & Céline Nauges, 2014. "Evaluating Greening Farm Policies: A Structural Model for Assessing Agri-environmental Subsidies," Land Economics, University of Wisconsin Press, vol. 90(3), pages 458-481.
    12. Raja Chakir & Julien Hardelin, 2010. "Crop Insurance and Pesticides in French agriculture: an empirical analysis of multiple risks management," Working Papers 2010/04, INRA, Economie Publique.
    13. 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.
    14. Qiuzhen Chen & Stefan Bäckman & John Sumelius, 2016. "Nitrogen use and the integration of environmental concerns into production," International Journal of Agricultural Resources, Governance and Ecology, Inderscience Enterprises Ltd, vol. 12(1), pages 53-76.
    15. Xavier Vollenweider & Salvatore Di Falco & Cathal O�Donoghue, 2011. "Risk preferences and voluntary agrienvironmental schemes: does risk aversion explain the uptake of the Rural Environment Protection Scheme?," GRI Working Papers 48, Grantham Research Institute on Climate Change and the Environment.
    16. Drichoutis, Andreas C. & Koundouri, Phoebe, 2012. "Estimating risk attitudes in conventional and artefactual lab experiments: The importance of the underlying assumptions," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 6, pages 1-15.
    17. Menozzi, Davide & Fioravanzi, Martina & Donati, Michele, 2014. "Understanding Farmers’ Responses To Cap Reform," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182811, European Association of Agricultural Economists.
    18. Czyżewski, Bazyli & Trojanek, Radosław, 0. "Drivers of agricultural land prices in terms of different functions of rural areas in Poland," Problems of Agricultural Economics, Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI).
    19. Moro, Daniele & Sckokai, Paolo, 2013. "The impact of decoupled payments on farm choices: Conceptual and methodological challenges," Food Policy, Elsevier, vol. 41(C), pages 28-38.
    20. Ada Ignaciuk & Daniel Mason-D'Croz, 2014. "Modelling Adaptation to Climate Change in Agriculture," OECD Food, Agriculture and Fisheries Papers 70, OECD Publishing.
    21. Esther Boere & G. Cornelis van Kooten, 2015. "Reforming the Common Agricultural Policy: Decoupling Agricultural Payments from Production and Promoting the Environment," Working Papers 2015-01, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.
    22. Finger, Robert, 2012. "Nitrogen use and the effects of nitrogen taxation under consideration of production and price risks," Agricultural Systems, Elsevier, vol. 107(C), pages 13-20.
    23. 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.

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