Pests and Agricultural Commodity Losses: Evaluating Alternative Approaches to Damage Function Estimation
Estimating the economic impact of a pest requires linking biological and economic systems via a damage function. The most common damage function approach links exogenous pest populations to cumulative commodity yield losses at harvest. This type of representation is a reduced form because is not pest population levels per se that drive damage, but the underlying factors that affect pest populations and the susceptibility of the host. We specify and estimate a structural damage function and compare the results with those of the reduced form. We do so using two alternative models, one that explains the level of crop damage from a pest, and one that explains the timing of that damage during the host’s growing season. We address our objectives within an empirical application to the olive fruit fly in California. In formulating the structural damage function, we draw from current scientific literature on olive fly and olive fruit phenology. The structural damage function takes into account the feedback between climate, host susceptibility, and pest populations. Moreover, the structural approach disaggregates damage rates across space and time, unlike the typical reduced form. The estimation results indicate that endogeneity is a salient concern in both the timing of initial crop damage, and in the levels of damage evidenced in some cultivars. The structural damage function dominates the trapping-based reduced form in terms of explanatory power in every model estimated.
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