Incorporating risk in a positive mathematical programming framework: a dual approach

Linda Arata, Paolo Sckokai, Filippo Arfini, Michele Donati

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11 Citazioni (Scopus)

Abstract

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.
Lingua originaleEnglish
pagine (da-a)265-284
Numero di pagine20
RivistaTHE AUSTRALIAN JOURNAL OF AGRICULTURAL AND RESOURCE ECONOMICS
Volume61
DOI
Stato di pubblicazionePubblicato - 2017

Keywords

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics and Econometrics
  • agri-environmental schemes
  • farm behaviour
  • positive mathematical programming
  • risk aversion

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