TY - JOUR
T1 - Incorporating risk in a positive mathematical programming framework: a dual approach
AU - Arata, Linda
AU - Donati, Michele
AU - Sckokai, Paolo
AU - Arfini, Filippo
PY - 2017
Y1 - 2017
N2 - In this study we develop a new methodological proposal to incorporate risk into a farm-level positive mathematical programming (PMP) model. We estimate simultaneously the farm nonlinear cost function and a farmer-specific coefficient of absolute risk aversion as well as the resource shadow prices. The model is applied to a sample of representative arable crop farms from the Emilia-Romagna region in Italy. The estimation results confirm the calibration ability of the model and reveal the values of the individual risk aversion coefficients. We use the model to simulate different scenarios of crop price volatility, in order to explore the potential risk management role of an agri-environmental scheme.
AB - In this study we develop a new methodological proposal to incorporate risk into a farm-level positive mathematical programming (PMP) model. We estimate simultaneously the farm nonlinear cost function and a farmer-specific coefficient of absolute risk aversion as well as the resource shadow prices. The model is applied to a sample of representative arable crop farms from the Emilia-Romagna region in Italy. The estimation results confirm the calibration ability of the model and reveal the values of the individual risk aversion coefficients. We use the model to simulate different scenarios of crop price volatility, in order to explore the potential risk management role of an agri-environmental scheme.
KW - Agricultural and Biological Sciences (miscellaneous)
KW - Economics and Econometrics
KW - agri-environmental schemes
KW - farm behaviour
KW - positive mathematical programming
KW - risk aversion
KW - Agricultural and Biological Sciences (miscellaneous)
KW - Economics and Econometrics
KW - agri-environmental schemes
KW - farm behaviour
KW - positive mathematical programming
KW - risk aversion
UR - http://hdl.handle.net/10807/98617
UR - http://www.blackwellpublishers.co.uk/journals/ajare/descript.htm
U2 - 10.1111/1467-8489.12199
DO - 10.1111/1467-8489.12199
M3 - Article
SN - 1364-985X
VL - 61
SP - 265
EP - 284
JO - THE AUSTRALIAN JOURNAL OF AGRICULTURAL AND RESOURCE ECONOMICS
JF - THE AUSTRALIAN JOURNAL OF AGRICULTURAL AND RESOURCE ECONOMICS
ER -