Please use this identifier to cite or link to this item: https://doi.org/10.48548/pubdata-1232
Resource typeWorking Paper
Title(s)Managing increasing environmental risks through agro-biodiversity and agri-environmental policies
DOI10.48548/pubdata-1232
Handle20.500.14123/1295
CreatorBaumgärtner, Stefan  0000-0001-8314-8462  121846857
Quaas, Martin F.  0000-0003-0812-8829
AbstractAgro-biodiversity can provide natural insurance to risk-averse farmers by reducing the variance of crop yield, and to society at large by reducing the uncertainty in the provision of public-good ecosystem services such as e.g. CO2 storage. We analyze the choice of agro-biodiversity by risk-averse farmers who have access to financial insurance, and study the implications for agri-environmental policy design when on-farm agro-biodiversity generates a positive risk externality. While increasing environmental risk leads private farmers to increase their level of on-farm agro-biodiversity, the level of agro-biodiversity in the laissez-faire equilibrium remains inefficiently low. We show how either one of two agri-environmental policy instruments can cure this risk-related market failure: an ex-ante Pigouvian subsidy on on-farm agro-biodiversity and an ex-post compensation payment for the actual provision of public environmental benefits. In the absence of regulation, welfare may increase rather than decrease with increasing environmental risk, if the agroecosystems is characterized by a high natural insurance function, low costs and large external benefits of agro-biodiversity.
LanguageEnglish
KeywordsBiodiversity; Ecosystem; Environmental Policy; Insurance; Risk Aversion; Biodiversität; Umweltpolitik; Risikoausschluss; Biologische Landwirtschaft; Biologischer Landbau
Year of publication in PubData2008
Publishing typeFirst publication
Publication versionPublished version
Date issued2008-03-12
Creation contextResearch
Published byMedien- und Informationszentrum, Leuphana Universität Lüneburg
Related resources Relations of this publication
Files in This Item:
File SizeFormat 

wp_80_Upload.pdf
MD5: 440e575109eef0dd28564d9635aaec1c
License:  Nutzung nach Urheberrecht
open-access

425.15 kB

Adobe PDF
View/Open

Items in PubData are protected by copyright, with all rights reserved, unless otherwise indicated.

Citation formats
Access statistics

Page view(s): 33

Download(s): 4