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An ecological economic assessment of risk reducing effects of species diversity in grassland production

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  • Finger, Robert
  • Buchmann, Nina

Abstract

We investigate the relationship between yield stability and species diversity in managed grasslands. To this end, ecological economic and econometric frameworks are developed and applied to evaluate potential risk-reducing effects of species diversity from a farmer’s perspective. Our empirical analysis is based on a rich panel data set obtained from a diversity experiment covering in total 60 species and a period of 6 years. We find empirical evidence for the risk-reducing effect of species diversity and the economic assessment reveals significant insurance values associated with diversity for a risk averse decision maker. Thus, the economic value of diversity would be underestimated if not accounting for this property and species diversity serves as valuable ex-ante risk management strategy.

Suggested Citation

  • Finger, Robert & Buchmann, Nina, 2014. "An ecological economic assessment of risk reducing effects of species diversity in grassland production," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182681, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaae14:182681
    DOI: 10.22004/ag.econ.182681
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