A Market-based Mitigation Program for Wind-borne Diseases

Wind-borne diseases can spread rapidly and cause large losses. Producers may have little incentive to prevent disease spread because prevention may not be welfare-maximizing. This study proposes a market-based mitigation program that indemnifies producers against disease-related losses and provides an incentive to neighboring producers to take preventive action, which can substantially mitigate infestations, reduce the likelihood of catastrophic losses, and increase social welfare. An equilibrium displacement model simulates introduction of the program for U.S. soybeans. Simulations reveal that the market-based solution contributes to minor market distortions but also reduces social welfare losses and could succeed for other at-risk commodities.


Issue Date:
2012-08
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/132528
Published in:
Agricultural and Resource Economics Review, Volume 41, Number 2
Page range:
175-188
Total Pages:
14




 Record created 2017-04-01, last modified 2017-08-26

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