Empirical results demonstrate that uncertainty about costs and requirements for environmental compliance is an important determinant of dairy producers… investment behavior. Ex ante forecasting of how uncertainty and irreversibility are likely to affect producers… responsiveness to agricultural technologies has implications for the design of environmental policies. Simulation modeling methods are described. The empirical analysis focuses on Texas producers… propensity to adopt free‐stall dairy housing. Free‐stall investments offer advantages for both productivity‐augmentation and pollution abatement, yet uncertainty and irreversibility are obstacles to adoption. Implications of this ex ante paradigm for policy design and implementation are discussed.
Performance of the Conservation Reserve Program (CRP) in meeting the political preferences of its administrators is highly sensitive to the choice of eligibility, bid solicitation, and bid selection criteria used in making program implementation decisions. Decisions made in the first year of CRP implementation led to suboptimal results; net government cost could have been reduced while simultaneously increasing the extent to which erosion and supply control objectives were met. Simulation of the outcomes for a fully enrolled reserve under alternative implementation schemes indicates that future performance can be improved by manipulating key control variables to directly target preferences.
Farm level risk analyses have used price and yield variability almost exclusively to represent risk. Results from a survey of 149 agricultural producers in 12 states indicate that producers consider a broader range of sources of variability in their operations. Significant differences exist among categories with respect to the importance of the sources of variability in crop and livestock production. Producers also used a variety of management responses to variability. There were significant difference among categories in the importance given to particular responses and their use of them. These results have implications for research, extension, and policy programs.
Despite the contention that risk and uncertainty play an important role in agriculture in North Florida and South Alabama, very little is known about producers' perceptions of risk. This paper describes the procedures used and the results obtained from a statistically random survey of farmers' perceptions of the importance of various sources of risk and alternative risk management practices. Initially, farmers were asked to define risk and then to rank various sources of risk and management responses to risk based on the relative importance of each to their operation. Summary statistics, Chi-square analyses, and logistic regression techniques were used to analyze the data.
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