Implications of risk attitude and climate change for optimal grassland management: a case study for Switzerland
Robert Finger A D , Pierluigi Calanca B and Simon Briner C
+ Author Affiliations
- Author Affiliations
A University of Bonn, Meckenheimer Allee 174, 53115 Bonn, Germany.
B ART Research Station, ART Reckenholzstrasse 191, 8046 Zürich, Switzerland.
C ETH Zurich, Sonneggstrasse 33, 8092 Zurich, Switzerland.
D Corresponding author. Email: r.finger@ilr.uni-bonn.de
Crop and Pasture Science 65(6) 576-582 https://doi.org/10.1071/CP13392
Submitted: 14 November 2013 Accepted: 30 May 2014 Published: 27 June 2014
Abstract
We present a bio-economic model by combining a process-based grassland simulation model with an economic decision model that accounts for income risks and yield quality. The model is used to examine optimal nitrogen (N) application rates in a grass–clover system in Switzerland under current and future climatic conditions. Results for present-day climatic conditions suggest that an increase in N inputs has positive effects on yields but also leads to higher yield variability, yield distributions more skewed to the left and therefore higher downside risks. As a result, accounting for farmers’ risk aversion in solving the optimisation problem leads to lower optimal N inputs. Simulations with a climate change scenario that predicts higher temperatures throughout the year and lower rainfall amounts during the growing season indicate higher yields, increasing yield variability, and changes in yield quality. By allowing herbage prices to vary as a function of yield quality, we find overall lower optimal N inputs and more marked effects of risk aversion on optimal N levels under climate change than under present conditions. However, disregarding yield quality in solving the optimisation problem gives higher optimal N inputs under future conditions.
Additional keywords: bio-economic modelling, climate change, downside risks, grassland production, optimal management, risk aversion.
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