TREATMENT OF RISK IN A CROP PROTECTION INFORMATION SYSTEM

The importance of risk in a farm-level management information system designed to help farmers make spraying decisions relating to leaf rust of barley is examined. Using utility functions which were elicited for a small number of cereal growers, and probability distributions of yield losses generated using the information system, it was found that strategy assessment using the criterion of maximisation of expected monetary value or the criterion of maximisation of expected utility could be expected to lead to identical recommendations in most years, for a wide range of risk attitudes.     

RISK ATTITUDES AMONGST AUSTRALIAN FARMERS

A procedure for the measurement of risk attitudes is developed and applied. The data for the analysis were obtained from a survey in which 201 farmers throughout Australia were asked to provide points of indifference between sure amounts of income and risky prospects. Although the conclusions from this pilot study are of a tentative nature, it is suggested that risk aversion is the most prevalent risk attitude in the agricultural sector. However, the average degree of risk aversion is relatively small and, in an expected utility context, farmers gave a wide variety of responses. The latter result highlights the need to consider the size distribution of risk attitudes in economic modelling. Influences of socioeconomic and other variables on risk attitudes are examined. The results, when considered jointly with other studies, emphasise the desirability of further research into the determination of risk attitudes.     

基于序期望效用的洪水保险需求研究

在序期望效用决策框架下对洪水保险的投保行为进行建模,通过假设洪水保险的投保人的风险偏好是一阶风险厌恶的,得出和期望效用决策理论下不一致的结果,分析了序期望效用下的免赔额数学模型的经济学意义,并得出结论：免赔额的设置与保费附加费系数的高低将对洪水保险的有效需求造成影响。     

A NOTE ON DECREASING ABSOLUTE RISK AVERSION AMONG FARMERS IN NEPAL

Attitudes toward risk are explored for a sample of rice growers on small farms in Nepal, in the context of the subjective expected utility maximisation model. Farmers are found to be generally averse to risk, with diverse levels of absolute risk aversion that tend to diminish as wealth increases, both for individuals and in a cross-sectional sense. Relative risk aversion is argued to be the most comparable measure for contrasts of attitudes toward risk.     

THE OUTPUT RESPONSE OF THE RISK AVERSE FIRM: SOME COMPARATIVE STATICS FOR AGRICULTURAL POLICY

The policy conclusions which stem from the deterministic theory of the competitive firm are well known and unambiguous. However, once product price is regarded as stochastic, there exist several theories upon which to base an analysis of the impact of agricultural policy on the output response of the firm. The paper considers four models from the safety-first and expected utility frameworks. These models produce a diverse set of comparative statics results which in many instances conflict with those of the deterministic model. Hence, the paper concludes that it is important in agricultural policy analysis that greater consideration by given to the links between risk aversion, policy-induced uncertainty and output response than is conventionally the case.     

RISK,UTILITY AND STOCKING RATE*

A simple utility-based model of risky wool production is presented. Evaluation of the model indicates the effect on optimal stocking rate of changes in the degree of risk aversion, farm area, variable cost, fixed cost, wool cut, wool price, variance of wool price, climatic variability and tax rate. It is shown that the utility hypothesis implies a lower optimal stocking rate than does expected profit maximization and hence implies a discrepancy between private and public optimal resource use which it is suggested, might be mitigated by a progressive bounty on wool production.     

RISK EVALUATION IN FARM PLANNING* A STATISTICAL APPROACH

Economic planning implies decision-making based on the comparison of alternative courses of action, viewed against a background (in the real world at any rate) of uncertainty and imperfect knowledge. Successful planning is thus heavily dependent on the reliability of prediction which lea & inevitably to the domain of probability theory and its application to planning models. In spite of the considerable attention given to the application of mathematical models in farm management research work in recent times⁽¹⁾ to⁽⁹⁾ and ⁽¹⁵⁾ there is stilla paucity of applied work with respect to evaluating the nature of risk associated with planning projects at the individual farm level. In addition, very little published data is available on either a regional or production-type basis that gives a clear understanding of the nature of probability distributions for planning variables. This paper formulates a simple model which can be used in practical planning exercises and also demonstrates that with a new generation of statistically-processed planning data the application of the classical concepts of probability to routine economic planning is both practicable and worthwhile.     

Choice of utility function form: its effect on classification of risk preferences and the prediction of farmer decisions

In applications of expected utility analysis, researchers are confronted with a choice among several utility functional forms. Subjective utility values and probability distributions for price and yield were elicited from Sri Lankan producers of minor export crops. Exponential quadratic and cubic utility functions were estimated. The choice of functional form was found to affect both the classification of risk attitudes and the prediction of harvesting strategy. The exponential function was the best predictor of harvesting strategy because it was the best predictor of mature harvesting. All three functions were equally poor predictors of premature harvesting.     

A Simple Method of Incorporating Income Effects into Logit and Nested-Logit Models: Theory and Application

Substantive income effects are incorporated in a logit or nested-logit model by assuming that utility is a piece-wise linear spline function of residual income. Specific income data are not required, only income by category. Expected compensating variation is easily and accurately approximated by the difference between expected maximum utility in the proposed and initial state, multiplied by the inverse of the individual's initial marginal utility of money. This approximation is almost exact because although any policy can, in theory, cause an individual to jump income categories, for most policies this probability will be very small.     

RISK ATTITUDE,PLANTING CONDITIONS AND THE VALUE OF SEASONAL FORECASTS TO A DRYLAND WHEAT GROWER*

The value of a seasonal forecasting system based on phases of the Southern Oscillation was estimated for a representative dryland wheat grower in the vicinity of Goondiwindi. In particular the effects on this estimate of risk attitude and planting conditions were examined. A recursive stochastic programming approach was used to identify the grower's utility-maximising action set in the event of each of the climate patterns over the period 1894-1991 recurring in the imminent season. The approach was repeated with and without use of the forecasts. The choices examined were, at planting, nitrogen application rate and cultivar and, later in the season, choices of proceeding with or abandoning each wheat activity. The value of the forecasting system was estimated as the maximum amount the grower could afford to pay for its use without expected utility being lowered relative to its non-use.     

Multi‐Criteria Analysis of Input Use in Agriculture

In this paper we present a methodology for the analysis of input use in the agricultural sector. The novelty of the theoretical model described here is that it has been developed considering a multi‐criteria environment. Thus, the optimal input use condition is determined by evaluating “multi‐attribute utility” and “multi‐attribute marginal utility”. We show how the approach adopted in this paper is a generalisation of the single‐attribute expected utility theory. The theoretical model developed is thereafter implemented in an empirical application that studies water for irrigation use as a particular case. The results show how multi‐attribute utility functions elicited for a sample of 52 irrigators explain differences in irrigation water use in relatively homogeneous agricultural systems, albeit exhibiting dissimilar partial utility functions for water use. We conclude that these differences come from the dissimilar weights that farmers attach to each attribute in the aggregate utility function.     

RESPONSES TO RISK IN WEED CONTROL DECISIONS UNDER EXPECTED PROFIT MAXIMISATION

Risk is an important characteristic of decisions about weed control in crops. In this paper it is shown that risk can affect weed control decisions even if the objective of the decision maker is to maximise expected profits: that is, even if the decision maker is ‘risk-neutral’ in the usual economic sense. This is shown for two decision frameworks: the optimal rate approach and the economic threshold approach. Empirical results are presented for control of ryegrass in wheat in Western Australia. It is found that, in general, risk reduces the optimal level of herbicide use under expected profit maximisation. Although individual sources of risk have a small impact on the optimal decision rules, combinations of uncertain variables can have a relatively large effect.     

Consistency of risk premium measures

This research uses the results of a series of within‐sample experiments to elicit risk premium measures from agricultural producers. Results show that there is little consistency between measures in different contexts and using different elicitation methods, suggesting that underlying risk preferences are not consistent. These results highlight some of the difficulty with expected utility theory and risk measurement.     

RISK,UTILITY AND THE PALATABILTY OF EXTENSION ADVICE TO FARMER GROUPS

Using the results of an empirical study of farmers' utility functions, evidence is presented that risk plays a measurable role in farmer decision making. The extension implications of such risk influences are discussed with particular emphasis on the possible efficacy of using group utility functions as a basis for group recommendations.     

A Simple Duality Model of Production Incorporatin Risk Aversion and Price Uncertainty

Proceeding within the framework of a linear mean-variance utility function, this paper outlines a duality model of production that incorporates risk aversion and price uncertainty. In contrast to risk models based on an expected utility function, this model provides a practical alternative to standard duality models for econometric research.     

Measuring the effect of risk attitude on marketing behavior

Despite extensive study, researchers continue to search for consistent and reliable measures of risk preferences to explain market behavior. We find that a measure, combining experiments rooted in expected utility theory and measures derived from surveys, explains spot and contractual sales, but does not exhibit substantially greater explanatory power than its underlying components. Survey‐based measures are generally more significant indicators of marketing choices, but experimental measures reveal how risk attitudes vary over a range of probable outcomes, which is important in light of increased commodity price volatility. Given recently identified limitations on the applicability of expected utility theory, we suggest that researchers include survey methods to obtain low‐cost supplemental measures.     

ON RISK DEDUCTIONS IN PUBLIC PROJECT APPRAISAL

Project appraisal under uncertainty should, in general, be worked in terms of carefully computed expected or mean values of uncertain elements. The major exceptions are when: (a) project returns are large relative to national income; or (b) project returns are highly correlated with other national income. Approximate procedures have been developed for computing risk adjustments in each of these special cases singly, but here, a more comprehensive procedure is described that encompasses both cases separately and jointly.     

Using Consumption and Asset Return Data to Estimate Farmers' Time Preferences and Risk Attitudes

The generalized expected utility model is fitted to U.S. farm data to estimate farm operator's time preferences and risk attitudes. The estimated farmer's utility parameters are quite 'reasonable' and exhibit high accuracy. The forward-looking expected utility model is soundly rejected in favor of the generalized expected utility paradigm. Importantly, the generalized expected utility model is also found to fit the data better than the myopic model typically used to study agricultural production under risk. Finally, U.S. farmers' relative aversion to risk appears to have diminished significantly over time.     

福建省尤溪县金柑冻害风险分析与区划

[目的]为了趋利避害、合理利用闽中地区气候资源,减轻低温冻害对尤溪县金柑生产造成的危害,开展了金柑冻害的气候风险分析与区划。[方法]应用1957~2013年尤溪县气象站及2009~2013年乡镇自动气象站资料等,结合金柑生物学特性和农业生产实践,建立金柑冻害气候风险评估模式;采用概率移植方法,使乡镇自动气象站资料订正延长成为长序列资料,应用GIS对福建省尤溪县金柑低温冻害气候风险进行分析与区划。[结果]该县金柑越冬期树体冻害气候风险分布可划分为尤溪河两岸等低海拔地区所处的安全区、县内中海拔大部分乡镇所处的轻度冻害风险区以及高海拔地区所处的中度冻害风险区。中低海拔大部分地区金柑树体冻害风险指数低于0.2,中度冻害发生机率不到10%,可以安全越冬。[结论]该县海拔400~700m地区是金柑种植气候适宜区,金柑采果期冻害气候风险指数达到0.3~0.5,需在低温寒害到来之前及早采收,若要留树保鲜,则需采取塑料薄膜覆盖等防冻措施;海拔高度750m以上建设金柑果园,应避开北坡,尽量选择南坡和西南坡(背风坡),利用山体的屏障作用,减轻冻害;在850m以上种植金柑,其采果期受冻害风险大,经济效益差,一般不宜种植。     

PRODUCTION RISK AND INPUT USE: PASTORAL ZONE OF EASTERN AUSTRALIA

Few attempts have been made to estimate production functions for the Australian grazing industries. The question of the nature of the effect of input levels on production risk has been broached even more rarely. Previous investigators had to employ models and methods of estimation which embody highly restrictive implicit assumptions about the nature of risk effects. A typical restrictive feature has been the implication that increasing input intensity leads to increasing risk. In this paper, a much less restrictive model and corresponding estimation techniques are brought to bear on individual farm data for 38 properties with 10 continuous years of production records. Perhaps not surprisingly, it is found that some inputs (especially those capital inputs which might normally be thought of as increasing the safety of production) tend to reduce risk.