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Managing Economic Risk from Invasive Species: Bug Options

Author

Listed:
  • Fournier, Valerie
  • Manfredo, Mark R.
  • Richards, Timothy J.
  • Eaves, James

Abstract

Invasive insect species cause billions of dollars of direct and indirect damage to U.S. crops each year. The market for insuring insect damage is, however, far from complete. The objective of this study is to design and value insect derivatives, or "bug options," which would offer growers a market-based means for transferring risk of pest damage to speculators or others who may profit from higher insect populations. A bug option valuation model is developed and applied to Bemesia tabaci infestation in cotton. The results show that insect derivatives may become important risk management tools for a wide range of growers.

Suggested Citation

  • Fournier, Valerie & Manfredo, Mark R. & Richards, Timothy J. & Eaves, James, 2005. "Managing Economic Risk from Invasive Species: Bug Options," 2005 Annual meeting, July 24-27, Providence, RI 19553, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea05:19553
    DOI: 10.22004/ag.econ.19553
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    References listed on IDEAS

    as
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