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Managed honey bee colonies provide pollination services, which are an essential input in production of many crops in the United States. Over the last decade, U.S. honey bee colony populations have become volatile as a result of many colony health inhibitors. This paper investigates the impact that colony supply uncertainty has on the California almond pollination market, the largest user of managed pollinators in the world. I develop a theoretical model and find that almond growers can reduce moral hazard in pollination agreements by paying beekeepers according to delivered colony strength. Additionally, I utilize two unique datasets to empirically explore determinants of almond pollination fees. Using the California State Beekeeper's Association pollination fee survey for years 2008-2015, I find that providing low strength colonies for almond pollination results in lower fees collected by the beekeeper. I pair the beekeeper-reported data analysis with an empirical study of an almond grower pollination contract survey that I conducted at the 2015 Almond Conference. The results of the almond grower data analysis suggest that growers whose almond pollination contracts specify minimum colony strength requirements pay higher pollination fees compared to those who have no colony strength requirements. The empirical results support the theoretical model finding that almond growers use colony strength requirements to elicit optimal beekeeper effort. Since almond pollination represents a fraction of beekeepers' yearly income, this paper highlights the need for additional research on the total economic impact of volatility of U.S. honey bee colony populations to effectively implement policies that promote managed pollinator health.


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