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Responses to Risk in Weed Control Decisions Under Expected Profit Maximisation

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  • Pannell, David J

Abstract

Risk is an important characteristic of decisions about weed control in crops. In this paper it is shown that risk can affect weed control decisions even if the objective of the decision maker is to maximise expected profits: that is, even if the decision maker is "risk neutral" in the usual economic sense. This is shown for two decision frameworks: 'the optimal rate approach and the economic threshold approach. Empirical results are presented for control of ryegrass in wheat in Western Australia. It is found that, in general, risk reduces the optimal level of herbicide use under expected profit maximisation. Although individual sources of risk have a small impact on the optimal decision rules, combinations of uncertain variables can have a relatively large effect.

Suggested Citation

  • Pannell, David J, 1989. "Responses to Risk in Weed Control Decisions Under Expected Profit Maximisation," Discussion Papers 232316, University of Western Australia, School of Agricultural and Resource Economics.
    • Handle: RePEc:ags:uwapdp:232316
    DOI: 10.22004/ag.econ.232316
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    1. is not listed on IDEAS
    2. Jones, Randall E. & Cacho, Oscar J., 2000. "A Dynamic Optimisation Model of Weed Control," 2000 Conference (44th), January 23-25, 2000, Sydney, Australia 123685, Australian Agricultural and Resource Economics Society.
    3. Chengzheng Yu & Madhu Khanna & Shady S. Atallah & Saurajyoti Kar & Muthukumar Bagavathiannan & Girish Chowdhary, 2024. "Herbicide‐resistant weed management with robots: A weed ecological–economic model," Agricultural Economics, International Association of Agricultural Economists, vol. 55(6), pages 943-962, November.
    4. Mitchell, Paul D., 2003. "Value of imperfect input information in agricultural production," Agricultural Systems, Elsevier, vol. 75(2-3), pages 277-294.
    5. Feng, Shuaizhang & Han, Yujie & Qiu, Huanguang, 2021. "Does crop insurance reduce pesticide usage? Evidence from China," China Economic Review, Elsevier, vol. 69(C).
    6. D. J. Pannell, 1991. "Responses To Risk In Weed Control Decisions Under Expected Profit Maximisation: Reply," Journal of Agricultural Economics, Wiley Blackwell, vol. 42(3), pages 407-408, September.
    7. David W. Archer & Jason F. Shogren, 1996. "Endogenous risk in weed control management," Agricultural Economics, International Association of Agricultural Economists, vol. 14(2), pages 103-122, July.
    8. Swinton, Scott M. & Lyford, Conrad P., 1992. "Parameter Identification in Nonlinear Statistical Models: A Monte Carlo Analysis of Crop-Pest Response Functions," Staff Paper Series 201146, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    9. Pannell, David J., 1995. "Optimal Herbicide Strategies Given Yield and Quality Impacts of Weeds," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 63(02), pages 1-7, August.
    10. repec:isu:genstf:1995010108000012033 is not listed on IDEAS
    11. Mitchell, Paul D., 2001. "Additive Versus Proportional Pest Damage Functions: Why Ecology Matters," 2001 Annual meeting, August 5-8, Chicago, IL 20775, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Davis, Rex & Tisdell, Clement A., 2001. "Alternative Specifications and Extensions of the Economic Threshold Concept and the Control of Livestock Pests," Economics, Ecology and Environment Working Papers 48381, University of Queensland, School of Economics.
    13. Schmidt, Carmel P & Pannell, David J, 1995. "The role and value of herbicide resistant lupins in Western Australian agriculture," 1995 Conference (39th), February 14-16, 1995, Perth, Australia 171100, Australian Agricultural and Resource Economics Society.
    14. S. M. Swinton, 1991. "Responses To Risk In Weed Control Decisions Under Expected Profit Maximisation: Comment," Journal of Agricultural Economics, Wiley Blackwell, vol. 42(3), pages 404-405, September.
    15. repec:ags:aare05:137931 is not listed on IDEAS
    16. Jones, Randall E., 2005. "Sustainability and integrated weed management in Australian winter cropping systems: a bioeconomic analysis," 2005 Conference (49th), February 9-11, 2005, Coff's Harbour, Australia 137930, Australian Agricultural and Resource Economics Society.
    17. Halil Kizilaslan & Nuray Kizilaslan, 2007. "Risk analysis in Turkey milk production," Czech Journal of Food Sciences, Czech Academy of Agricultural Sciences, vol. 25(3), pages 144-150.
    18. David W. Archer & Jason F. Shogren, 1994. "Nonpoint Pollution, Weeds And Risk," Journal of Agricultural Economics, Wiley Blackwell, vol. 45(1), pages 38-51, January.
    19. Fox, Glenn & Weersink, Alfons, "undated". "Can Increasing Returns Occur in Pest Management?," Department of Agricultural Economics and Business 258722, University of Guelph.
    20. Pannell, David J., 1994. "The Value Of Information In Herbicide Decision Making For Weed Control In Australian Wheat Crops," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 19(2), pages 1-16, December.
    21. Gorddard, Russell J. & Pannell, David J. & Hertzler, Greg, 1996. "Economic evaluation of strategies for management of herbicide resistance," Agricultural Systems, Elsevier, vol. 51(3), pages 281-298, July.

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