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

Robert Finger and Nina Buchmann

No 182681, 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia from European Association of Agricultural Economists

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.

Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Pages: 13
Date: 2014-08
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Persistent link: https://EconPapers.repec.org/RePEc:ags:eaae14:182681

DOI: 10.22004/ag.econ.182681

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