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On The Inclusion Of Nature And Its Dynamics In Farmers' Objective Functions For Eco-System Services Provision: A New Strategy In Bio-Economic Modeling

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  • Nuppenau, Ernst-August

Abstract

Because objectives influence behavior, there should be thoughtfulness of economists on stating objective functions. In contrast, most farm economists work with the assertion that farmers maximize income. A major question is, are there alternatives? It is the aim of this paper to get a deeper insight into deliberations on objective functions. We go beyond income maximization and show how a probabilistic approach on life-styles provides better insight. We suggest the use of probabilities, humans face if they do not know the status in which they live. Labor intensive and nature providing farming is contrasted with intensive, eco-system service extracting farming and put into a dynamic bio-economic approach. Life-styles occur with probability π and (1-π). The occurrence is modeled dynamically making probabilities endogenous. A programming approach is suggested to depict behavioral equations of life-styles. Finally, we discuss how farmers, by the help of an eco-system services planner, learn and change probabilities.

Suggested Citation

  • Nuppenau, Ernst-August, 2008. "On The Inclusion Of Nature And Its Dynamics In Farmers' Objective Functions For Eco-System Services Provision: A New Strategy In Bio-Economic Modeling," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6653, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaa107:6653
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    File URL: http://ageconsearch.umn.edu/record/6653/files/cp08nu01.pdf
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    References listed on IDEAS

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    1. de Janvry, Alain & Fafchamps, Marcel & Sadoulet, Elisabeth, 1991. "Peasant Household Behaviour with Missing Markets: Some Paradoxes Explained," Economic Journal, Royal Economic Society, vol. 101(409), pages 1400-1417, November.
    2. Naevdal, Eric, 1999. "Optimal Regulation Of Eutrophying Lakes, Fjords And Rivers In The Presence Of Threshold Effects," 1999 Annual meeting, August 8-11, Nashville, TN 21619, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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    Keywords

    Farm Management; Institutional and Behavioral Economics; Research Methods/ Statistical Methods; Risk and Uncertainty;

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