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Reductions of Agricultural Nitrogen Use Under Consideration of Production and Price Risks

  • Finger, Robert

Production and price risks affect optimal nitrogen use as well as the effects of nitrogen taxation if farmers’ risk aversion is taken into account. Our empirical analysis for Swiss maize production shows that risk-aversion leads to lower levels of nitrogen application, and nitrogen taxes lead to higher reductions of nitrogen use for risk-averse than for risk-neutral farmers. Moreover, risk-averse farmers face lower abatement costs. Sensitivity analyses, that consider expected shocks in price and yield variability in Swiss maize production, show that these differences between risk-averse and risk-neutral farmers will increase further. Thus, agricultural policies should consider farmers’ risk-preferences as well as potential increases in farmers’ income risks.

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File URL: http://purl.umn.edu/114356
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Paper provided by European Association of Agricultural Economists in its series 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland with number 114356.

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Date of creation: 2011
Handle: RePEc:ags:eaae11:114356
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  1. C. W. Rougoor & H. Van Zeijts & M. F. Hofreither & S. Backman, 2001. "Experiences with Fertilizer Taxes in Europe," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 44(6), pages 877-887.
  2. H. Von Blottnitz & A. Rabl & D. Boiadjiev & T. Taylor & S. Arnold, 2006. "Damage costs of nitrogen fertilizer in Europe and their internalization," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 49(3), pages 413-433.
  3. Rosenzweig, Mark R. & Binswanger, Hans P., 1989. "Wealth, Weather Risk and the Composition and Profitability of Agricultural Investments," Bulletins 7455, University of Minnesota, Economic Development Center.
  4. Robert Finger & Werner Hediger, 2008. "The Application of Robust Regression to a Production Function Comparison – the Example of Swiss Corn," IED Working paper 08-02, IED Institute for Environmental Decisions, ETH Zurich.
  5. Renan-Ulrich Goetz & Alois Keusch & Joan Ribas-Tur, 2005. "The Efficiency of Direct Payments versus Tax Reductions under Uncertainty," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 141(I), pages 115-127, March.
  6. Babcock, Bruce A. & Blackmer, A. M., 1992. "Value of Reducing Temporal Input Nonuniformities (The)," Staff General Research Papers Archive 10587, Iowa State University, Department of Economics.
  7. Moschini, Giancarlo & Hennessy, David A., 2001. "Uncertainty, risk aversion, and risk management for agricultural producers," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 2, pages 88-153 Elsevier.
  8. Finger, Robert & Schmid, Stephanie, 2007. "Modeling agricultural production risk and the adaptation to climate change," 101st Seminar, July 5-6, 2007, Berlin Germany 9270, European Association of Agricultural Economists.
  9. Alfons Weersink & Charry Dutka & Michael Goss, 1998. "Crop Price and Risk Effects on Farm Abatement Costs," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 46(2), pages 171-190, 07.
  10. Ben Groom & Phoebe Koundouri & Celine Nauges & Alban Thomas, 2008. "The story of the moment: risk averse cypriot farmers respond to drought management," Applied Economics, Taylor & Francis Journals, vol. 40(3), pages 315-326.
  11. Swinton, Scott M. & Clark, David S., 1994. "Farm-Level Evaluation Of Alternative Policy Approaches To Reduce Nitrate Leaching From Midwest Agriculture," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 23(1), pages -, April.
  12. Robert Finger, 2010. "Revisiting the Evaluation of Robust Regression Techniques for Crop Yield Data Detrending," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(1), pages 205-211.
  13. Babcock, Bruce A. & Blackmer, Alfred M., 1992. "The Value Of Reducing Temporal Input Nonuniformities," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 17(02), pages -, December.
  14. Choi, E. Kwan & Feinerman, Eli, 1995. "Regulation Of Nitrogen Pollution: Taxes Versus Quotas," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 20(01), pages -, July.
  15. Babcock, Bruce A., 1992. "Effects of Uncertainty on Optimal Nitrogen Applications (The)," Staff General Research Papers Archive 10588, Iowa State University, Department of Economics.
  16. Murat Isik, 2002. "Resource Management under Production and Output Price Uncertainty: Implications for Environmental Policy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 557-571.
  17. Chowdhury, Manzoor E. & Lacewell, Ronald D., 1996. "Implications Of Alternative Policies On Nitrate Contamination Of Groundwater," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 21(01), pages -, July.
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  20. Salvatore Di Falco & Jean-Paul Chavas & Melinda Smale, 2007. "Farmer management of production risk on degraded lands: the role of wheat variety diversity in the Tigray region, Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 36(2), pages 147-156, 03.
  21. Glenn Sheriff, 2005. "Efficient Waste? Why Farmers Over-Apply Nutrients and the Implications for Policy Design," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 27(4), pages 542-557.
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  23. Sarris, Alexander H., 2000. "Has world cereal market instability increased?," Food Policy, Elsevier, vol. 25(3), pages 337-350, June.
  24. Jules Pretty & Craig Brett & David Gee & Rachel Hine & Chris Mason & James Morison & Matthew Rayment & Gert Van Der Bijl & Thomas Dobbs, 2001. "Policy Challenges and Priorities for Internalizing the Externalities of Modern Agriculture," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 44(2), pages 263-283.
  25. Lambert, David K., 1990. "Risk Considerations In The Reduction Of Nitrogen Fertilizer Use In Agricultural Production," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 15(02), December.
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