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Compensation Payments and Animal Disease: Incentivising Farmers Both to Undertake Costly On-farm Biosecurity and to Comply with Disease Reporting Requirements

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  • Rob Fraser

    (University of Kent)

Abstract

This paper examines the issue of compensation payments for farmers affected by an animal disease outbreak. Recent literature has questioned the scope for the widely used “single mechanism” of compensation payments to incentivise farmers both to undertake costly on-farm biosecurity and to comply with disease reporting requirements. This paper develops a simple theoretical model of the farmer’s decision environment in this situation and uses a numerical analysis to illustrate both the potential for a range of levels of compensation payments to achieve this dual incentivising, and how this range is affected by changes in the parameter values of the farmer’s decision environment. The findings of the paper are used to suggest a range of policy implications in relation to compensation payments in the UK.

Suggested Citation

  • Rob Fraser, 2018. "Compensation Payments and Animal Disease: Incentivising Farmers Both to Undertake Costly On-farm Biosecurity and to Comply with Disease Reporting Requirements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 70(3), pages 617-629, July.
    • Handle: RePEc:kap:enreec:v:70:y:2018:i:3:d:10.1007_s10640-016-0102-7
    DOI: 10.1007/s10640-016-0102-7
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    References listed on IDEAS

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    1. Rob Fraser, 2015. "Arresting Contagion: Science, Policy, and Conflicts over Animal Disease Control," Journal of Agricultural Economics, Wiley Blackwell, vol. 66(3), pages 843-845, September.
    2. Rob Fraser, 2002. "Moral Hazard and Risk Management in Agri‐environmental Policy," Journal of Agricultural Economics, Wiley Blackwell, vol. 53(3), pages 475-487, November.
    3. Benjamin M. Gramig & Richard D. Horan & Christopher A. Wolf, 2008. "Livestock Disease Indemnity Design When Moral Hazard Is Followed by Adverse Selection," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(3), pages 627-641.
    4. Bardsley, Peter & Harris, Michael, 1987. "An Approach To The Econometric Estimation Of Attitudes To Risk In Agriculture," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 31(2), pages 1-15, August.
    5. Steven D. Hanson & George W. Ladd & Charles F. Curtiss, 1991. "Robustness of the Mean-Variance Model with Truncated Probability Distributions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(2), pages 436-445.
    6. Bicknell, Kathryn & Wilen, James E. & Howitt, Richard E., 1999. "Public policy and private incentives for livestock disease control," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 43(4), pages 1-21, December.
    7. Rulon D. Pope & Richard E. Just, 1991. "On Testing the Structure of Risk Preferences in Agricultural Supply Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(3), pages 743-748.
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    Cited by:

    1. Cristina Salvioni & Simone Cerroni, 2023. "Eliciting beekeepers’ preferences for the small hive beetle control policy in Italy: a contingent valuation survey approach," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 11(1), pages 1-20, December.

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