The effects of variation in management objectives on responses to invading diseases under uncertainty: Forest Pathogens

C.E. Dangerfield, A.E. Whalley, Nick Hanley, J.R. Healey and C.A. Gilligan

No 273501, 92nd Annual Conference, April 16-18, 2018, Warwick University, Coventry, UK from Agricultural Economics Society

Abstract: The real options approach provides a powerful tool for determining the optimal time at which to adopt disease control measures given uncertainty about the future spread of an invading pest/pathogen. We consider the management of disease invasions in the natural environment typified by woodlands. Previous studies considered the timing of control from the point of view of a central planner, for example a governmental decision making body. However, decisions regarding the deployment of control measures in the landscape are typically taken by individual land managers. Woodlands provide both marketable benefits, such as timber, and non-marketable benefits, for example biodiversity. The relative importance placed on these types of benefit depends on the land purpose, which is determined by a managers’ objectives. We investigate how management objectives influence the optimal timing of control adoption. Our results show that differences in objectives lead managers to exercise the option to control at different times, and potentially never adopt disease control. Since infection can spread from one region to another, managers who do not adopt control therefore transfer the risk of infection to other managers within the landscape. For landscapes composed of managers with divergent objectives, this creates conflict due to the transferable externality (the disease). We show targeted subsidies can reduce differences in the timing of control adoption between managers with divergent objectives. Both lump-sum subsidies and annual subsidies bring forward the adoption of control strategies, causing them to be implemented over a wider range of infection proportions in an individual woodland. However, the two types of subsidy have opposite effects on the decision to suspend control. Annual subsidies delay suspension and extend the region over which control continues to be implemented. In contrast, lump-sum subsidies slightly reduce the region over which control continues to be implemented. For high proportions of infection, this implies that a lump-sum subsidy can induce a value-maximising manager to suspend control earlier: the opposite effect to that presumably intended. Our results have important implications for national decision making bodies and suggest that incentives may need to be targeted at specific groups to ensure a coherent response to disease control.

Keywords: Agricultural; and; Food; Policy (search for similar items in EconPapers)
Pages: 40
Date: 2018-04-17
New Economics Papers: this item is included in nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aesc18:273501

DOI: 10.22004/ag.econ.273501

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