Managing increasing environmental risks through agrobiodiversity and agrienvironmental policies

Publikation: Beiträge in ZeitschriftenZeitschriftenaufsätzeForschungbegutachtet

Authors

Agrobiodiversity can provide natural insurance to risk-averse farmers by reducing the variance of crop yield, and to society at large by reducing the uncertainty in the provision of public-good ecosystem services, for example, CO 2 storage. We analyze the choice of agrobiodiversity by risk-averse farmers who have access to financial insurance, and study the implications for agrienvironmental policy design when on-farm agrobiodiversity generates a positive risk externality. While increasing environmental risk leads private farmers to increase their level of on-farm agrobiodiversity, the level of agrobiodiversity in the laissez-faire equilibrium remains inefficiently low. We show how either one of the two agrienvironmental policy instruments can cure this risk-related market failure: an ex ante Pigouvian subsidy on on-farm agrobiodiversity and an ex post payment-by-result for the actual provision of public environmental benefits. In the absence of regulation, welfare may increase rather than decrease with increasing environmental risk, if the agroecosystem is characterized by a high natural insurance function, low costs, and large external benefits of agrobiodiversity.

OriginalspracheEnglisch
ZeitschriftAgricultural Economics
Jahrgang41
Ausgabenummer5
Seiten (von - bis)483-496
Anzahl der Seiten14
ISSN0169-5150
DOIs
PublikationsstatusErschienen - 01.09.2010

Zugehörige Projekte

  • Nachhaltige Nutzung von Ökosystemdienstleistungen unter Unsicherheit. Ökologisch-ökonomische Modellierung und Evaluierung volkswirtschaftlicher Politikoptionen

    Projekt: Forschung

DOI

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