SABIIA - Sistema Aberto e Integrado de Informação em Agricultura (Sabiia)

Calatrava-Leyva, Javier; Garrido, Alberto.

Water availability in semiarid regions usually exhibits patterns of extreme variability. Even in intensively controlled basins, some users are subject to low levels of water reliability, and more vulnerable to periods of extreme scarcity. To reduce their risk exposure more flexible instruments, such as voluntary exchanges of water among users, are required. Recent changes in the Spanish water Law have given an initial impulse to allow for leases of water use rights. Properly designed and monitored, this instrument provides some flexibility to water management, and may increase the economic use efficiency as well as mitigate the adverse economic effects of droughts. This paper looks at the risks and uncertainty dimensions of water markets, which have not...

Incorporating issues of risk and uncertainty into Choice Modelling experiments

Palavras-chave: Uncertainty; Farm modelling; Water markets; Water supply; Resource /Energy Economics and Policy.

Ano: 2002

URL: http://purl.umn.edu/24820

Wang, Xuehong; Rolfe, John.

Many policy issues, as well as policy funding and management choices, have elements of risk and uncertainty. This means that choice experiments, such as those used in choice modelling (CM), may need to frame trade-offs so that risk and uncertainty are included. This research aims to explore some methodological approaches to identify and treat uncertainty in CM experiments. A review of theoretical models, as well as a case study application in the CM technique reported by Roberts et al. (2008), suggests that including uncertainty information in the choice sets should influence responses significantly. However, key challenges remain to define and describe the elements of risk and uncertainty that are to be included in a choice experiment, to communicate the...

Tipo: Report

Palavras-chave: Choice experiments; Risk; Uncertainty; Information; Framing.; Environmental Economics and Policy; Research Methods/ Statistical Methods.

Ano: 2009

URL: http://purl.umn.edu/94812

Strategy Development in a Turbulent Business Climate: Concepts and Methods

Boehlje, Michael; Gray, Allan W.; Detre, Joshua D..

The accelerating speed of change in the food and agribusiness industries is resulting in more risk and uncertainty the future is becoming much less predictable. The drivers of these uncertainties are also changing strategic risk which generally has a low probability of occurrence, but large consequences has begun to replace tactical risk. Managing these risks requires not only new assessment tools such as scorecarding and mapping, but also more systematic decision frameworks. In essence, strategic risk management involves using the proper assessment and management tools so as to truncate the loss exposure and capture the profit potential of these risks.

Tipo: Journal Article

Palavras-chave: Uncertainty; Real options; Risk scorecarding; Strategic risk; Strategy development; Agribusiness; Risk and Uncertainty.

Ano: 2005

URL: http://purl.umn.edu/8158

Land-use Change and Solar Energy Production: A Real Option Approach

Ardjan, Gazheli; Di Corato, Luca.

In this paper a real option model is developed to examine the critical factors affecting the decision to lease agricultural land to a company installing a PV power plant. The leasing payment is certain while the net revenues from agriculture are uncertain. We identify the profit values at which the farmer decides to lease his plot vs. continue farming it. By applying the model to the province of Bologna (Italy), we illustrate the possible land-use change scenarios in this area. We conclude by discussing the importance of PV energy production as a source of income for farmers and its implications from a social perspective.

Tipo: Working Paper

Palavras-chave: Land Allocation; Real Options; Renewable Energy; Solar farm; Uncertainty; Resource /Energy Economics and Policy; C61; D81; Q24; Q42.

Ano: 2011

URL: http://purl.umn.edu/120041

Integrating economic values and catchment modelling

Kragt, Marit Ellen; Bennett, Jeffrey W..

Integrated catchment policies are widely used to manage natural resources in Australian catchments. Decision support tools available to aid integrated catchment management are often limited in their integration of environmental processes with socio-economic systems. Fully integrated models are required to support assessments of the environmental and economic trade-offs of catchment management changes. A Bayesian Network (BN) model is demonstrated to provide a suitable approach to integrate environmental modelling with economic valuation. The model incorporates hydrological, ecological and economic models for the George catchment in Tasmania. Information about the non-market costs and benefits of environmental changes is elicited using Choice Experiments,...

Subjective Risk, Confidence, and Ambiguity

Palavras-chave: Integrated catchment modelling; Bayesian networks; Uncertainty; Environmental values; Non-market valuation; Choice Modelling..

Ano: 2009

URL: http://purl.umn.edu/48057

Traeger, Christian P..

Intertemporal risk aversion – or – wouldn’t it be nice to tell whether Robinson Crusoe is risk averse?

Palavras-chave: Ambiguity; Subjective beliefs; Expected utility; Intertemporal substitutability; Intertemporal risk aversion; Recursive utility; Uncertainty; Climate change; Risk and Uncertainty; D81; Q54; D90; Q01.

Ano: 2010

URL: http://purl.umn.edu/90461

Traeger, Christian P..

The paper introduces a new notion of risk aversion that is independent of the good under observation and its measure scale. The representational framework builds on a time consistent combination of additive separability on certain consumption paths and the von Neumann & Morgenstern (1944) assumptions. In the one-commodity special case, the new notion of risk aversion closely relates to a disentanglement of standard risk aversion and intertemporal substitutability.

Scale, productivity growth and risk response under uncertainty

Palavras-chave: Uncertainty; Expected utility; Recursive utility; Risk aversion; Intertemporal substitutability; Certainty additivity; Temporal lotteries; Gauge-freedom; Intertemporal risk aversion; Risk and Uncertainty.

Ano: 2010

URL: http://purl.umn.edu/90421

Hranaiova, Jana; Stefanou, Spiro E..

SUMMARY: This study focuses on the analysis of the production behavior and risk preferences in the presence of output price uncertainty. Following a theoretical model based on the assumption of maximization of expected utility of profits, the approach used in this study infers information about risk preferences from the production characteristics of the farm. In addition, the nonparametric method of estimating elasticity of scale and technical change eliminates the need to impose a uniform production or cost functions on individual producers. The approach is applied to a panel of dairy farms, which are evaluated for their elasticity of scale and the total productivity growth components of their operations. Estimates of farmers' risk attitudes...

Tipo: Journal Article

Palavras-chave: Uncertainty; Risk Aversion; Productivity Growth; Productivity Analysis; Q14.

Ano: 2002

URL: http://purl.umn.edu/28760

Investment in irrigation technology: an application of real options analysis

McClintock, Anthea.

Investment in irrigation infrastructure and technologies, particularly those that reduce on-farm water use have become a major focus of government programs both at a State and Commonwealth level. Particular attention has been given to increasing the uptake of water “saving” technologies among irrigators. The design of programs capable of achieving government objectives at least cost requires an understanding of farm level investment decisions. In this context, the influence of uncertainty on decisions to invest in irrigation technology and infrastructure is examined. The potential for uncertainty to influence investment decisions via strategies to manage risk is demonstrated using the method of real options valuation. The approach is applied to case...

Controlling Urban Air Pollution Caused by Households: Uncertainty, Prices, and Income

Palavras-chave: Investment; Irrigation technology; Real options; Uncertainty; Subsidy.

Ano: 2009

URL: http://purl.umn.edu/47934

Chavez, Carlos A.; Stranlund, John K.; Gomez, Walter.

We examine the control of air pollution caused by households burning wood for heating and cooking in the developing world. Since the problem is one of controlling emissions from nonpoint sources, regulations are likely to be directed at household choices of wood consumption and combustion technologies. Moreover, these choices are subtractions from, or contributions to, the pure public good of air quality. Consequently, the efficient policy design is not independent of the distribution of household income. Since it is unrealistic to assume that environmental authorities can make lump sum income transfers part of control policies, efficient control of air pollution caused by wood consumption entails a higher tax on wood consumption and a higher subsidy for...

Fiducial cost-benefit analysis research: with an application to weather modification

Palavras-chave: Efficiency; Urban air pollution; Nonpoint pollution; Environmental policy; Uncertainty; Environmental Economics and Policy; Public Economics; Risk and Uncertainty; L51; H23; Q28.

Ano: 2010

URL: http://purl.umn.edu/93964

Beare, Stephen; Chambers, Raymond.

Environmental intervention is often seen as being high risk and high return. Traditional scientific hypothesis testing provides limited guidance to policy makers unless there is a high level of certainty in the supporting scientific evidence. Traditional cost-benefit analysis under uncertainty has shortcomings when considering high-risk investment, largely due to the choice of how to discount uncertainty outcomes. A corollary is that traditional cost-benefit analysis does not place a value on increased certainty, an important outcome of successful scientific research. A fiducial costbenefit methodology is presented in this paper, which integrates hypothesis testing and traditional cost-benefit analysis. The fiducial approach is one way of objectively...

Tipo: Presentation

Palavras-chave: Cost-benefit; Risk; Uncertainty; Cost-benefit; Fiducial inference; Research and Development/Tech Change/Emerging Technologies.

Ano: 2012

URL: http://purl.umn.edu/124232

Uncertainty and the Double Dividend Hypothesis

Sartzetakis, Eftichios S.; Tsigaris, Panagiotis D..

This paper examines the double dividend hypothesis in the presence of labour income uncertainty. Empirical evidence shows that uncertainty over labour income is particularly significant in developing, while not negligible in developed countries. Under uncertainty, and assuming incomplete capital markets, the tax system plays a role in providing social insurance and a green tax reform influences its effectiveness. We show that the increase in environmental tax reduces consumption risk while the balanced budget decrease in labour income tax increases income risk. We find that the total welfare effect of a green tax reform differs substantially from the case of certainty. The critical parameters determining the existence of a second dividend are the lump sum...

EFFECTIVENESS OF USE-VALUE ASSESSMENT IN PRESERVING FARMLAND: A SEARCH-THEORETIC APPROACH

Palavras-chave: Double Dividend Hypothesis; Environmental Taxation; Labor Income Taxation; Uncertainty; Tax Incidence Analysis; Labor and Human Capital; H21; H23; D62.

Ano: 2007

URL: http://purl.umn.edu/7445

Tavernier, Edmund M.; Li, Farong.

Search theory is used to present a theoretically defensible model to examine the effectiveness of use value assessment (UVA) in preserving farmland. The model is empirically tractable and supports the findings of past research. The analysis considers the impact of farm income, uncertainty, and the distribution of the offer price on the effectiveness of UVA in preserving farmland and shows, through the effect on the reservation price, that for a given distribution of the offer price, property-tax rate, and the difference between market-value and use-value of land, the preservation of agricultural land only takes place within a relevant range.

Tipo: Journal Article

Palavras-chave: Farmland preservation; Offer price; Reservation price; Search theory; Uncertainty; Use-value assessment; Land Economics/Use.

Ano: 1995

URL: http://purl.umn.edu/15258

Discounting the Distant Future: How Much Do Uncertain Rates Increase Valuations?

Newell, Richard G.; Pizer, William A..

Costs and benefits in the distant future-such as those associated with global warming, long-lived infrastructure, hazardous and radioactive waste, and biodiversity-often have little value today when measured with conventional discount rates. We demonstrate that when the future path of this conventional rate is uncertain and persistent (i.e., highly correlated over time), the distant future should be discounted at lower rates than suggested by the current rate. We then use two centuries of data on U.S. interest rates to quantify this effect. Using both random walk and mean-reverting models, we compute the certainty-equivalent rate that is, the single discount rate that summarizes the effect of uncertainty and measures the appropriate forward rate of...

International Environmental Agreements under Uncertainty: Does the Veil of Uncertainty Help?

Palavras-chave: Discounting; Uncertainty; Interest rate forecasting; Climate policy; Intergenerational equity; Risk and Uncertainty; D90; E47; C53; H43; Q28.

Ano: 2001

URL: http://purl.umn.edu/10743

Finus, Michael; Pintassilgo, Pedro.

Na and Shin (1998) showed that the veil of uncertainty can be conducive to the success of self-enforcing international environmental agreements. Later papers confirmed this negative conclusion about the role of learning. In the light of intensified research efforts worldwide to reduce uncertainty about the environmental impact of emissions and the cost of reducing them, this conclusion is intriguing. The purpose of this paper is threefold. First, we analyze whether the result carries over to a more general setting without restriction on the number of players and which considers not only no and full learning but also partial learning. Second, we test whether the conclusion also holds if there is uncertainty about abatement costs instead of uncertainty about...

An Analysis of the Effects of Uncertainty and Irreversibility on Farmer Participation in the Conservation Reserve Program

Palavras-chave: Transnational Cooperation; Self-enforcing International Environmental Agreements; Uncertainty; Learning; Environmental Economics and Policy; C72; D62; D81; H41; Q20.

Ano: 2010

URL: http://purl.umn.edu/91655

Isik, Murat; Yang, Wanhong.

A real options model is developed to examine the determinants of farmer participation in the Conservation Reserve Program (CRP). This study contributes to the literature by developing a framework for ex post analysis of uncertainty and irreversibility. It extends the applications of real options models to analyze farmer participation in the CRP. The model incorporates land and owner attributes, and determines whether uncertainty and irreversibility affect the probability of participation. Option values play a significant role in farmer decisions to retire land by reducing the probability of participation. These results have implications for the design and implementation of conservation programs.

Tipo: Journal Article

Palavras-chave: Conservation; CRP; Farmer participation; Land rental payments; Option values; Uncertainty; Agricultural and Food Policy.

Ano: 2004

URL: http://purl.umn.edu/31113

Did the Economic Conditions for Bt-maize in the EU Improve from 1995 to 2004? A MISTICs Perspective.

Scatasta, Sara; Wesseler, Justus; Demont, Matty.

The debate about the "quasi" moratorium on the release of GMOs in the European Union is on going. One of the major arguments that were put forward to delay the release of new traits was the one for more information. In this contribution we compare the situation for Bt-maize from the 1995 and 2004 perspective. The 2004 perspective differentiate between two scenarios: one without the CAP reform and one including the CAP reform. For the comparison we use an ex-ante assessment model based on real option theory that explicitly considers the irreversible costs and benefits of the technology. As empirical information about possible irreversible costs is scarce we identify the maximum incremental social tolerable irreversible costs, MISTICs, for Bt-maize, a...

EX-ANTE EVALUATION OF AGRI-ENVIRONMENTAL SCHEMES: COMBINING ELEMENTS OF PRIVATE AND PUBLIC DECISION MAKING

Palavras-chave: Bt-maize; Irreversibility; Real options; Uncertainty; Crop Production/Industries; Research and Development/Tech Change/Emerging Technologies.

Ano: 2006

URL: http://purl.umn.edu/25245

Bartolini, Fabio; Gallerani, Vittorio; Viaggi, Davide.

The objective of this paper is to set a complete ex-ante evaluation to support Decision Makers in designing more efficient and effective agri-environmental contracts, through an integrated modelling of elements of private and public decision making. Ex-ante comparison of policy design options in terms of overall effectiveness requires both simulations of farmers' behaviour and evaluation of the farms simulations outcomes. An intermediate step is the aggregation of single farms impacts at territorial level, in order to identify the aggregate impact of each alternative. Alternatives are several contract design, based on different levels of payments. Farm level analysis is based on a real options approach including in the simulations the timing of choice and...

Welfare Changes from the U.S. Ethanol Tax Credit: The Role of Uncertainty and Interlinked Commodity Markets

Palavras-chave: Agri-environmental schemes; Real Options; Investments; Decoupled payments; Uncertainty; Agricultural and Food Policy; Environmental Economics and Policy; Risk and Uncertainty.

Ano: 2008

URL: http://purl.umn.edu/6639

Baker, Mindy L..

A model of the corn, soybean, and wheat markets calculates welfare effects of the U.S. ethanol tax credit. Crop yields are uncertain, and demand consists of feed, food, energy, and exports. Modeling uncertainty in crop yields allows the valuation of deficiency payments as options. Disaggregating demand records who benefits from the tax credit and by how much; incorporating linked crop markets captures indirect effects important for determining the transfer from consumers to producers. There is $600 million in net welfare loss, increased taxpayer liability, and a large transfer from consumers to farmers. A brief comparison of recent literature is included.

Disadoption of Agricultural Practices by Livestock Farmers

Palavras-chave: Biofuel; Commodity; Ethanol; Tax credit; Uncertainty; Welfare.; Risk and Uncertainty; Resource /Energy Economics and Policy; Crop Production/Industries; Food Security and Poverty.

Ano: 2008

URL: http://purl.umn.edu/45627

Gedikoglu, Haluk; McCann, Laura M.J..

To be effective, policies that encourage farmers to use new technologies or practices need farmers both adopt and also keep using these technologies and practices. Adoption of new technologies has been widely analyzed in the literature. However, there is little known about the factors that cause farmers to keep using new technologies or quit using them. Using hazard function estimation, the current study investigates disadoption of Roundup Ready soybeans, injecting manure into the soil, and soil testing. The results of the current study show that over time farmers observe the true benefits and costs of these practices and they become more likely to disadopt these practices.