The importance of seasonal variability and tactical responses to risk on estimating the economic benefits of integrated weed management

Randall Jones, Oscar Cacho and Jack Sinden

Agricultural Economics, 2006, vol. 35, issue 3, 245-256

Abstract: Seasonal variability is an important source of risk faced by farmers and, regardless of an individual's attitude to risk, there are options to tactically adjust production strategies as the outcomes of risk become known. The objective of this article is to measure the economic benefits of alternative approaches to managing weeds, one of the most serious production problems in Australian cropping systems. A bioeconomic model that combines weed biology, crop growth and economics is developed to value the effects of seasonal variability and the role of tactical responses and sequential decision making in determining an optimal integrated weed management strategy. This shows that there are substantial differences in the measured long‐term benefits from deterministic and stochastic simulations. It is concluded that, for research evaluation of technologies that involve complex biological and dynamic systems, ignoring the impacts of seasonal variability, responses to risk and sequential decision making can lead to an incorrect estimate of the economic benefits of a technology. In this case study of optimal weed management strategies in Australia, the size of the error is high.

Date: 2006
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