Discussion Papers,
Statistics Norway, Research Department

Abstract: This paper studies soil depletion incentives in a dynamic economic model under two different sources of revenue uncertainty (production- and output price risk). The focus is on the long-term effects of risk averse preferences. The land manager is assumed to posses three classes of instruments to control natural topsoil fertility over time. Each instrument is also assumed to have implications for expected short-run production. The analysis shows that the forces at play are different across the three agricultural activities considered and varies for the two sources of risk analysed. In order to predict how risk aversion may influence soil conservation incentives detailed information is needed about input use and cultivation practices and the farmers' perception of their risk implications. If higher output is associated with higher levels of soil degradation, risk averse preferences will strengthen the incentives for soil conservation under output price uncertainty, and the same outcome is likely under production uncertainty. If higher levels of outputs is associated with lower levels of soil degradation, risk averse preferences will induce a farmer to conserve less soil under output price uncertainty, while the likely outcome of production uncertainty is the opposite

Keywords: Risk aversion; farm behaviour; resource management.

JEL-codes: Q12; Q20; D81 January 1997

Full text files

dp186.pdf  

Download statistics

• Statistics Norway, Research Department
• Home page for this series

Questions (including download problems) about the papers in this series should be directed to L Maasø ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:ssb:dispap:186This page generated on 2024-10-30 04:36:18.