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Self-protection and self-insurance in pest management: The role of risk preferences and beliefs

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  • Bougherara, Douadia
  • Nauges, Céline
  • Salanié, François
  • Féménia, Fabienne

Abstract

Farmers worldwide manage yield risk mostly by applying pesticides, with possible negative impacts on human health and the environment. To analyse these decisions, we set up a two-period model in which a farmer first decides whether to adopt preventive measures that lower the risk of pest infestation (self-protection), before deciding ex-post about pesticides application (self-insurance). These two decisions are found to be substitutes in most cases. Under some conditions, we show that more risk-averse farmers apply more pesticides (i.e., more self-insurance) and exert fewer preventive efforts (i.e., less self-protection). We illustrate these theoretical findings using simulations calibrated from real data on crop producers from France. Decisions seem primarily driven by the costs of prevention and pesticides and by farmers' risk beliefs, while farmers' risk aversion plays a relatively minor role.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Bougherara, Douadia & Nauges, Céline & Salanié, François & Féménia, Fabienne, 2026. "Self-protection and self-insurance in pest management: The role of risk preferences and beliefs," TSE Working Papers 26-1719, Toulouse School of Economics (TSE).
    • Handle: RePEc:tse:wpaper:131481
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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