Responses to Risk in Weed Control Decisions Under Expected Profit Maximisation

David Pannell

No 232316, Discussion Papers from University of Western Australia, School of Agricultural and Resource Economics

Abstract: Risk is an important characteristic of decisions about weed control in crops. In this paper it is shown that risk can affect weed control decisions even if the objective of the decision maker is to maximise expected profits: that is, even if the decision maker is "risk neutral" in the usual economic sense. This is shown for two decision frameworks: 'the optimal rate approach and the economic threshold approach. Empirical results are presented for control of ryegrass in wheat in Western Australia. It is found that, in general, risk reduces the optimal level of herbicide use under expected profit maximisation. Although individual sources of risk have a small impact on the optimal decision rules, combinations of uncertain variables can have a relatively large effect.

Keywords: Crop; Production/Industries (search for similar items in EconPapers)
Pages: 21
Date: 1989
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Related works:
Journal Article: RESPONSES TO RISK IN WEED CONTROL DECISIONS UNDER EXPECTED PROFIT MAXIMISATION (1990)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwapdp:232316

DOI: 10.22004/ag.econ.232316

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