A Market-based Mitigation Program for Wind-borne Diseases

Abstract

Wind-borne diseases can spread rapidly and cause large losses. Producers may have little incentive to prevent disease spread because prevention may not be welfare-maximizing. This study proposes a market-based mitigation program that indemnifies producers against disease-related losses and provides an incentive to neighboring producers to take preventive action, which can substantially mitigate infestations, reduce the likelihood of catastrophic losses, and increase social welfare. An equilibrium displacement model simulates introduction of the program for U.S. soybeans. Simulations reveal that the market-based solution contributes to minor market distortions but also reduces social welfare losses and could succeed for other at-risk commodities.

Economics of invasive species policy and management

“…These include taxes on invasion population levels or activities that transport invaders, subsidies for control efforts, tradable risk permits, assurance bonds, and insurance and indemnification funds, among others (Richards et al 2008(Richards et al , 2010Bekkerman et al 2012;Goodwin and Piggott 2009;McDermott et al 2013;McDermott 2015;Fenichel et al 2014;Warziniack et al 2013).…”

“…Bekkerman et al (2012) examine a check-off program for at-risk commodities-a mandatory collection of funds from producers to help pay for private control efforts during an infestation. The collected funds would be allocated to producers incurring invasion, as well as those nearby, to encourage control of outbreaks and to prevent spread to larger areas.…”

Potential check-off benefits to farmers in the presence of wind-borne diseases

“…It was estimated that Alabama soybean producers saved over $2.5 million in costs (Sikora et al, 2009). The objective of this article is to highlight the potential check-off benefits to farmers in the presence of wind-borne to farmers in the presence of wind-borne diseases as discussed by Bekkerman et al (2011). Bekkerman et al (2011) proposed an alternative policy to purchasing an insurance plan in the event of any yield lost due to a wind-borne disease.…”

“…The objective of this article is to highlight the potential check-off benefits to farmers in the presence of wind-borne to farmers in the presence of wind-borne diseases as discussed by Bekkerman et al (2011). Bekkerman et al (2011) proposed an alternative policy to purchasing an insurance plan in the event of any yield lost due to a wind-borne disease. The researchers proposed a check-off program, which collects a small percentage of revenues and transfers into a fund.…”

Three essays on agricultural and environmental economics

“…These are the values we assume in our baseline calculations. Note that these values imply import demand functions that are quite a bit more elastic than in Bekkerman et al (2012) and Kim et al (2008), who do not consider the structural representation that we have discussed. Our elasticities are similar to the values reported by Piggott and Wohlgenant (2002), who again find somewhat more inelastic response than we do (although they pursue a structural representation similar to what we have provided, they assume no foreign supply response in their calculations).…”