Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/127229
Authors: 
Quaas, Martin
Baumgärtner, Stefan
Becker, Christian
Frank, Karin
Müller, Birgit
Year of Publication: 
2004
Series/Report no.: 
Discussion Paper Series, University of Heidelberg, Department of Economics 414
Abstract: 
We analyze a dynamic and stochastic ecological-economic model of grazing management in semi-arid range lands. The non-equilibrium ecosystem is driven by stochastic precipitation. A risk averse farmer chooses a grazing management strategy under uncertainty such as to maximize expected utility from farming income. Grazing management strategies are rules about which share of the range land is given rest depending on the actual rainfall in that year. In a first step we determine the farmer’s short-term optimal grazing management strategy. We show that a risk-averse farmer chooses a strategy such as to obtain insurance from the ecosystem: the optimal strategy reduces income variability, but yields less mean income than possible. In a second step we analyze the long-run ecological and economic impact of different strategies. We conclude that the more risk-averse a farmer is, the more conservative and sustainable is his short-term optimal grazing management strategy, even if he has no specific preference for the distant future.
Subjects: 
Ecological-economic model
semi-arid range land
grazing management
risk aversion
uncertainty
sustainability
JEL: 
Q57
Q12
Q24
Document Type: 
Working Paper

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