Lukomska, Natalia Quaas, Martin F. Baumgärtner, Stefan
Year of Publication:
University of Lüneburg Working Paper Series in Economics 191
We study the role of bush encroachment control for a farmer's income and income risk in a stochastic ecological-economic model of grazing management in semiarid rangelands. In particular, we study debushing as an instrument of risk management that complements the choice of an adaptive grazing management strategy for that sake. We show that debushing, while being a good practice for increasing the mean pasture productivity and thus expected income, also increases the farmer's income risk. The optimal extent of debushing for a risk-averse farmer is thus determined from balancing the positive and negative consequences of debushing on intertemporal and stochastic farm income.
bush encroachment expected utility farm income intertemporal optimization risk aversion risk management semi-arid rangeland