IDEAS home Printed from https://ideas.repec.org/a/wly/ajagec/v104y2022i4p1327-1342.html
   My bibliography  Save this article

Trading risk for ambiguity: Production versus health under pesticide application

Author

Listed:
  • Daniel C. Voica
  • Troy G. Schmitz

Abstract

Pesticide use reduces the variation in crop yields at the expense of potentially negative consequences to farmers and their family members. This article examines the trade‐off between decreasing production risk and increasing health ambiguity because of pesticide use. We find that under ambiguity, pesticide application decreases the variation in health outcomes, whereas under risk, it decreases the expected value of health outcomes. Health insurance protects health from the pesticide damage but not from the ambiguity effect of pesticide application, and the optimal choice of pesticide application does not depend on the farmer's health preferences over risk or ambiguity. However, in the absence of health insurance, ambiguity can increase or decrease the optimal choice of pesticide compared to the risk case. This suggests that public policies around pesticide usage should be designed to reflect and account for the multitude of behavioral responses in the presence of ambiguity and risk.

Suggested Citation

  • Daniel C. Voica & Troy G. Schmitz, 2022. "Trading risk for ambiguity: Production versus health under pesticide application," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(4), pages 1327-1342, August.
    • Handle: RePEc:wly:ajagec:v:104:y:2022:i:4:p:1327-1342
    DOI: 10.1111/ajae.12266
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/ajae.12266
    Download Restriction: no
    File URL: https://libkey.io/10.1111/ajae.12266?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Ashley E. Larsen & Steven D. Gaines & Olivier Deschênes, 2017. "Agricultural pesticide use and adverse birth outcomes in the San Joaquin Valley of California," Nature Communications, Nature, vol. 8(1), pages 1-9, December.
    2. Robert G. Chambers & Giannis Karagiannis & Vangelis Tzouvelekas, 2010. "Another Look at Pesticide Productivity and Pest Damage," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(5), pages 1401-1419.
    3. Chambers, Robert G., 2007. "AJAE Appendix: Valuing Agricultural Insurance," American Journal of Agricultural Economics APPENDICES, Agricultural and Applied Economics Association, vol. 89(3), pages 1-2, August.
    4. Itzhak Gilboa & Fabio Maccheroni & Massimo Marinacci & David Schmeidler, 2010. "Objective and Subjective Rationality in a Multiple Prior Model," Econometrica, Econometric Society, vol. 78(2), pages 755-770, March.
    5. Douadia Bougherara & Xavier Gassmann & Laurent Piet & Arnaud Reynaud, 2017. "Structural estimation of farmers’ risk and ambiguity preferences: a field experiment," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 44(5), pages 782-808.
    6. Chambers, Robert G. & Melkonyan, Tigran, 2017. "Ambiguity, reasoned determination, and climate-change policy," Journal of Environmental Economics and Management, Elsevier, vol. 81(C), pages 74-92.
    7. Carolyn R. Harper & David Zilberman, 1989. "Pest Externalities from Agricultural Inputs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(3), pages 692-702.
    8. Robert G. Chambers & John Quiggin, 2001. "Decomposing Input Adjustments under Price and Production Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(1), pages 20-34.
    9. Douadia Bougherara & Xavier Gassmann & Laurent Piet & Arnaud Reynaud, 2017. "Corrigendum: Structural estimation of farmers’ risk and ambiguity preferences: a field experiment," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 44(5), pages 809-809.
    10. Wilson, Clevo & Tisdell, Clem, 2001. "Why farmers continue to use pesticides despite environmental, health and sustainability costs," Ecological Economics, Elsevier, vol. 39(3), pages 449-462, December.
    11. Alpizar, Francisco & Carlsson, Fredrik & Naranjo, Maria A., 2011. "The effect of ambiguous risk, and coordination on farmers' adaptation to climate change — A framed field experiment," Ecological Economics, Elsevier, vol. 70(12), pages 2317-2326.
    12. Tigran A. Melkonyan & Jens Schubert, 2009. "Food Safety Regulations under Ambiguity," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1389-1396.
    13. Perry, Edward D. & Moschini, GianCarlo, 2020. "Neonicotinoids in U.S. maize: Insecticide substitution effects and environmental risk," Journal of Environmental Economics and Management, Elsevier, vol. 102(C).
    14. Catherine J. Morrison Paul & V. Eldon Ball & Ronald G. Felthoven & Arthur Grube & Richard F. Nehring, 2002. "Effective Costs and Chemical Use in United States Agricultural Production: Using the Environment as a “Free” Input," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(4), pages 902-915.
    15. Robert G. Chambers & Tigran A. Melkonyan, 2007. "Pareto Optimal Trade in an Uncertain World: GMOs and the Precautionary Principle," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(2), pages 520-532.
    16. Glenn Fox & Alfons Weersink, 1995. "Damage Control and Increasing Returns," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(1), pages 33-39.
    17. Robert G. Chambers, 2007. "Valuing Agricultural Insurance," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(3), pages 596-606.
    18. Engle Warnick James C. & Escobal Javier & Laszlo Sonia C., 2011. "Ambiguity Aversion and Portfolio Choice in Small-Scale Peruvian Farming," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-56, November.
    19. Devi, P. Indira, 2009. "Health Risk Perceptions, Awareness and Handling Behaviour of Pesticides by Farm Workers," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 22(2), July.
    20. Chambers,Robert G. & Quiggin,John, 2000. "Uncertainty, Production, Choice, and Agency," Cambridge Books, Cambridge University Press, number 9780521622448, November.
    21. Cheve, Morgane & Congar, Ronan, 2000. "Optimal pollution control under imprecise environmental risk and irreversibility," Risk, Decision and Policy, Cambridge University Press, vol. 5(2), pages 151-164, June.
    22. Jean-Paul Chavas & Robert G. Chambers & Rulon D. Pope, 2010. "Production Economics and Farm Management: a Century of Contributions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(2), pages 356-375.
    23. Robert G. Chambers & Tigran A. Melkonyan, 2013. "Food Scares In An Uncertain World," Journal of the European Economic Association, European Economic Association, vol. 11(6), pages 1432-1456, December.
    24. Gilboa, Itzhak & Schmeidler, David, 1989. "Maxmin expected utility with non-unique prior," Journal of Mathematical Economics, Elsevier, vol. 18(2), pages 141-153, April.
    25. Seth Wechsler & David Smith, 2018. "Has Resistance Taken Root in U.S. Corn Fields? Demand for Insect Control," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 100(4), pages 1136-1150.
    26. Lingling Hou & Pengfei Liu & Jikun Huang & Xiangzheng Deng, 2020. "The influence of risk preferences, knowledge, land consolidation, and landscape diversification on pesticide use," Agricultural Economics, International Association of Agricultural Economists, vol. 51(5), pages 759-776, September.
    27. Norwood, F. Bailey & Marra, Michele C., 2003. "Pesticide Productivity: Of Bugs and Biases," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(3), pages 1-15, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Qizheng He & Yong Sun & Maoan Yi, 2023. "Evolutionary Game of Pesticide Reduction Management for Sustainable Agriculture: An Analysis Based on Local Governments, Farmers, and Consumers," Sustainability, MDPI, vol. 15(12), pages 1-19, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Adélaïde Fadhuile & Stéphane Lemarié & Alain Pirotte, 2016. "Disaggregating the Demand for Pesticides: Does it Matter?," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 64(2), pages 223-252, June.
    2. Robert Chambers & Teresa Serra & Spiro Stefanou, 2015. "Using ex ante output elicitation to model state-contingent technologies," Journal of Productivity Analysis, Springer, vol. 43(1), pages 75-83, February.
    3. Perry, Edward D. & Moschini, GianCarlo, 2020. "Neonicotinoids in U.S. maize: Insecticide substitution effects and environmental risk," Journal of Environmental Economics and Management, Elsevier, vol. 102(C).
    4. Douadia Bougherara & Laurent Piet, 2018. "On the role of probability weighting on WTP for crop insurance with and without yield skewness," Working Papers hal-02790605, HAL.
    5. Serra, Teresa & Chambers, Robert G. & Oude Lansink, Alfons, 2014. "Measuring technical and environmental efficiency in a state-contingent technology," European Journal of Operational Research, Elsevier, vol. 236(2), pages 706-717.
    6. Loïc Berger & Massimo Marinacci, 2020. "Model Uncertainty in Climate Change Economics: A Review and Proposed Framework for Future Research," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 77(3), pages 475-501, November.
    7. Stéphane Couture & Stéphane Lemarié & Sabrina Teyssier & Pascal Toquebeuf, 2024. "The value of information under ambiguity: a theoretical and experimental study on pest management in agriculture," Theory and Decision, Springer, vol. 96(1), pages 19-47, February.
    8. Chen Li, 2017. "Are the poor worse at dealing with ambiguity?," Journal of Risk and Uncertainty, Springer, vol. 54(3), pages 239-268, June.
    9. Fadhuile, Adelaide & Lemarie, Stephane & Pirotte, Alain, 2011. "Pesticides Uses in Crop Production: What Can We Learn from French Farmers Practices?," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103654, Agricultural and Applied Economics Association.
    10. Loic Berger & Massimo Marinacci, 2017. "Model Uncertainty in Climate Change Economics," Working Papers 616, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    11. Christoph Duden & Oliver Mußhoff & Frank Offermann, 2023. "Dealing with low‐probability shocks: The role of selected heuristics in farmers’ risk management decisions," Agricultural Economics, International Association of Agricultural Economists, vol. 54(3), pages 382-399, May.
    12. Filiptseva, Anna & Filler, Günther & Odening, Martin, 2022. "Compensation Options for Quarantine Costs in Plant Production," 62nd Annual Conference, Stuttgart, Germany, September 7-9, 2022 329595, German Association of Agricultural Economists (GEWISOLA).
    13. Federica Ceron & Vassili Vergopoulos, 2020. "Recursive objective and subjective multiple priors," Post-Print halshs-02900497, HAL.
    14. Robert G. Chambers & John Quiggin, 2007. "Dual Approaches to the Analysis of Risk Aversion," Economica, London School of Economics and Political Science, vol. 74(294), pages 189-213, May.
    15. Greco, Salvatore & Ishizaka, Alessio & Tasiou, Menelaos & Torrisi, Gianpiero, 2018. "σ-µ efficiency analysis: A new methodology for evaluating units through composite indices," MPRA Paper 83569, University Library of Munich, Germany.
    16. Daniele Pennesi, 2013. "Endogenous Status Quo," Carlo Alberto Notebooks 314, Collegio Carlo Alberto.
    17. CARPENTIER, Alain & GOHIN, Alexandre & SCKOKAI, Paolo & THOMAS, Alban, 2015. "Economic modelling of agricultural production: past advances and new challenges," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 96(1), March.
    18. Nagisa Shiiba & Hide-Fumi Yokoo & Voravee Saengavut & Siraprapa Bumrungkit, 2023. "Ambiguity Aversion And Individual Adaptation To Climate Change: Evidence From A Farmer Survey In Northeastern Thailand," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 14(01), pages 1-29, February.
    19. Agnieszka Wiszniewska-Matyszkiel, 2016. "Belief distorted Nash equilibria: introduction of a new kind of equilibrium in dynamic games with distorted information," Annals of Operations Research, Springer, vol. 243(1), pages 147-177, August.
    20. Rasmussen, Svend, 2003. "Criteria for optimal production under uncertainty. The state-contingent approach," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(4), pages 1-30.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:ajagec:v:104:y:2022:i:4:p:1327-1342. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1111/(ISSN)1467-8276 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.