Are pesticides risk decreasing? The relevance of pesticide indicator choice in empirical analysis

Möhring, Niklas; Bozzola, Martina; Hirsch, Stefan; Finger, Robert

doi:10.1111/agec.12563

Cited by 50 publications

(38 citation statements)

References 76 publications

(105 reference statements)

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“…As discussed earlier the assumption of pesticides being risk decreasing applies only to some situations and there exists empirical evidence of pesticides being risk increasing or having no effect on risk (Möhring et al 2020). As said earlier we believe this assumption is not a major caveat of our study since the magnitude of the impact of risk aversion on input use is expected to be similar (but of the opposite direction) if pesticides were risk increasing instead.…”

Section: Robustness To the Assumptions On Technology And Risk Preferementioning

confidence: 72%

“…Moreover in our framework, pesticide use is measured with pesticide expenditure, which is a simplification. When available, information on both quantity and quality of pesticides should be considered since the risk properties of pesticides depend not only on the quantity used but also on their toxicity (Möhring, Gaba and Finger 2019;Möhring et al 2020).…”

Section: Robustness To the Assumptions On Technology And Risk Preferementioning

confidence: 99%

“…i Some empirical evidence of pesticides reducing production risk were found in Di Falco and Chavas (2006) using data from durum wheat farms in Sicily (Italy) and in Koundouri et al (2009) on a panel of Finnish crop farms but Serra et al (2006) and Serra, Zilberman, and Gil (2008), in a study of 596 farms from Kansas, found pesticides to be risk-increasing inputs. This discrepancy in findings may be explained by the effect of inputs varying depending on whether crop growth conditions are good or bad (Horowitz and Lichtenberg 1994) and/or by the use of different types of indicators of pesticide application (Möhring et al 2020).…”

Section: Endnotesmentioning

confidence: 99%

See 2 more Smart Citations

Do Risk Preferences Really Matter? The Case of Pesticide Use in Agriculture

Bontemps

Bougherara

Nauges

2021

Environ Model Assess

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Even if there exists an extensive literature on the modeling of farmers' behavior under risk, actual measurements of the quantitative impact of risk aversion on input use are rare. In this article we use simulated data to quantify the impact of risk aversion on the optimal quantity of input and farmers' welfare when production risk depends on how much of the input is used. The assumptions made on the technology and form of farmers' risk preferences were chosen such that they are fairly representative of crop farming conditions in the US and Western Europe. In our benchmark scenario featuring a traditional expected utility model we find that less than 4% of the optimal pesticide expenditure is driven by risk aversion and that risk induces a decrease in welfare that varies from -1.5% to -3.0% for individuals with moderate to normal risk aversion. We find a stronger impact of risk aversion on quantities of input used when farmers' risk preferences are modeled under the cumulative prospect theory framework. When the reference point is set at the median or maximum profit, and for some levels of the parameters that describe behavior toward losses, the quantity of input used that is driven by risk preferences represents up to 19% of the pesticide expenditure. Acknowledgements: Christophe Bontemps and Céline Nauges acknowledge funding from the French National Research Agency (ANR) under the Investments for the Future (Investissements d'Avenir) program, grant ANR-17-EURE-0010.Our (benchmark) situation is fairly simple: the representative farmer, who is risk averse, uses pesticides to produce some agricultural output (crop). Output is not known with certainty due to the presence of a random and unpredictable shock. In order to make the empirical analysis easy to follow and despite contrasting empirical evidence (e.g.; Pannell 1991; Möhring et al. 2020), we consider pesticides as a risk-decreasing input. i In the traditional Expected Utility (EU) framework, the optimal quantity of a risk-decreasing input used by a risk-averse farmer is above the risk-neutral optimum, since pesticides are used by risk-averse farmers to manage production risk. We compute the share of pesticide expenditure that is used by farmers for self-insurance by comparing the optimal level of input use under a risk neutrality assumption to the optimal level of input use under the assumption that the farmer is risk averse. We also report the change in farmer's welfare induced by risk aversion with respect to the risk-neutrality case. Along the lines of Pannell ( 2006) and Chavas (2019a) welfare is measured by the certainty equivalent, which is defined as the difference between the expected profit and the risk premium. If pesticides were assumed risk increasing instead, then risk-averse farmers would use less of the input to self-insure against production risk. We do not consider this case in the empirical analysis to follow. We argue this is not a major limitation of our work since the main outcome of interest, here the change in input use and welfare ind...

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Section: Robustness To the Assumptions On Technology And Risk Preferementioning

confidence: 72%

Section: Robustness To the Assumptions On Technology And Risk Preferementioning

confidence: 99%

Section: Endnotesmentioning

confidence: 99%

See 1 more Smart Citation

Do Risk Preferences Really Matter? The Case of Pesticide Use in Agriculture

Bontemps

Bougherara

Nauges

2021

Environ Model Assess

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“…Pest development and weather conditions are processes with major stochasticity, leading to uncertainties in crop growth and efficiency of pesticides 34 . Risk perception and preferences of farmers -and information about uncertainties -influence their evaluation of pest management costs and gains so that they may not follow a strictly profit maximizing rationale 35 . Further, behavioral factors, such as perception biases and habits influence the farmers' decisionmaking 36,37 .…”

Section: Farmer and Consumer Actionsmentioning

confidence: 99%

Pathways for advancing pesticide policies

et al. 2020

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“…Previous research showed that pest development, as well as weather conditions are processes with major underlying stochasticity, leading to uncertainties with regard to crop growth and efficiency of pesticides 10,11 . Studies have repeatedly shown that these uncertainties play an important role for farmers' pesticide application behaviour [12][13][14][15][16] . Further, such uncertainties potentially play an important role for farmers' rationale for pesticide timing -with large implications for agricultural pesticide use levels.…”

Section: Introductionmentioning

confidence: 99%

Why farmers deviate from recommended pesticide timing: the role of uncertainty and information

Möhring

Wuepper

Musa

et al. 2020

Pest Management Science

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BACKGROUNDPrecise timing of pesticide applications, as recommended by decision support systems, can ensure crop protection, while maintaining efficient use of pesticides. Yet, farmers often deviate from recommended timing strategies. Here, we assess and explain farmers' choices to follow or not follow recommendations for the timing of fungicide applications against potato late blight in Switzerland. RESULTBased on daily fungicide application records as well as regional application recommendations and disease pressure we found that 36% of applications take place earlier than recommended.Using regression analysis, we identified the exposure to economic risks of infection, susceptibility of the planted potato varieties to late blight infections, as well as yearly differences in disease occurrence as the most important determinants of farmers' application decision. CONCLUSIONOur results indicate that decisions to not follow application recommendations and apply early are linked to available information and uncertainty with respect to disease predictions. Based on our results, we make recommendations on how to account for farmers' uncertainty with regard to the timing of pesticide applications in the design of pesticide policies and agricultural decision support systems. These include the use of new technologies and data, mandatory reporting and tailor made taxes and insurance solutions. Although the focus of this article is on late blight in Switzerland, our analysis can easily be extended to other countries and important plant diseases like powdery mildew in grapevines or Fusarium head blight in winter wheat.

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Are pesticides risk decreasing? The relevance of pesticide indicator choice in empirical analysis

Cited by 50 publications

References 76 publications

Do Risk Preferences Really Matter? The Case of Pesticide Use in Agriculture

Do Risk Preferences Really Matter? The Case of Pesticide Use in Agriculture

Pathways for advancing pesticide policies

Why farmers deviate from recommended pesticide timing: the role of uncertainty and information

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