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Exploring farmers? selection of crop protection levels as an adaptation strategy to climate risks

Author

Listed:
  • Sonia Quiroga

    (University of Alcala)

  • Emilio Cerdá

    (Universidad Complutense de Madrid)

Abstract

Among the challenges facing the European Union agricultural sector in the coming years, the impacts of climate change could lead to much greater variability in farmers? incomes. In this context, the insurance industry will have to develop new instruments to cover farmers? incomes against losses due to meteorological factors. Some protective technologies that farmers can use for climate risk management have associated costs that vary as a function of the losses involved. These sorts of instruments compete with other less flexible instruments such as crop insurance. We here analyse an issue of decision-making, where the farmer can decide how much to invest in protection, as in situations where the farmer chooses which portion of a loss to protect in the case of adverse weather conditions, and we propose optimal management to mitigate the increasing negative effects of climate uncertainty. By analysing the optimal policy in a continuous choice situation, we consider whether farmers, as part of their crop management duties, should opt to protect some portion of their harvest value with available technologies, or whether they should protect the entire crop. To analyse this decision-making problem, we employ the cost-loss ratio model and take risk aversion into account.

Suggested Citation

  • Sonia Quiroga & Emilio Cerdá, 2017. "Exploring farmers? selection of crop protection levels as an adaptation strategy to climate risks," Proceedings of Economics and Finance Conferences 4507414, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iefpro:4507414
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    References listed on IDEAS

    as
    1. Cerdá, Emilio & Quiroga, Sonia, 2015. "Analysing the economic value of meteorological information to improve crop risk management decisions in a dynamic context," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 15(02).
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    3. J. Hope & J. Lingard, 1992. "The Influence Of Risk Aversion On The Uptake Of Set‐Aside: A Motad And Crp Approach," Journal of Agricultural Economics, Wiley Blackwell, vol. 43(3), pages 401-411, September.
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    5. Quiroga, Sonia & Iglesias, Ana, 2009. "A comparison of the climate risks of cereal, citrus, grapevine and olive production in Spain," Agricultural Systems, Elsevier, vol. 101(1-2), pages 91-100, June.
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    9. Quiroga, Sonia & Cerda, Emilio, 2009. "Optimal crop protection against climate risk in a dynamic cost-loss decision-making model," 2009 Conference, August 16-22, 2009, Beijing, China 51702, International Association of Agricultural Economists.
    10. Gomez-Limon, Jose A. & Arriaza, Manuel & Riesgo, Laura, 2003. "An MCDM analysis of agricultural risk aversion," European Journal of Operational Research, Elsevier, vol. 151(3), pages 569-585, December.
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    More about this item

    Keywords

    Crop yield protection; climate risks; information value; cost-loss ratio; decision models;
    All these keywords.

    JEL classification:

    • Q00 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - General
    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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