Modeling perceptions of climatic risk in crop production.

Abstract

In agricultural production, land-use decisions are components of economic planning that result in the strategic allocation of fields. Climate variability represents an uncertainty factor in crop production. Considering yield impact, climatic influence is perceived during and evaluated at the end of crop production cycles. In practice, this information is then incorporated into planning for the upcoming season. This process contributes to attitudes toward climate-induced risk in crop production. In the literature, however, the subjective valuation of risk is modeled as a risk attitude toward variations in (monetary) outcomes. Consequently, climatic influence may be obscured by political and market influences so that risk perceptions during the production process are neglected. We present a utility concept that allows the inclusion of annual risk scores based on mid-season risk perceptions that are incorporated into field-planning decisions. This approach is exemplified and implemented for winter wheat production in the Kraichgau, a region in Southwest Germany, using the integrated bio-economic simulation model FarmActor and empirical data from the region. Survey results indicate that a profitability threshold for this crop, the level of “still-good yield” (sgy), is 69 dt ha-1 (regional mean Kraichgau sample) for a given season. This threshold governs the monitoring process and risk estimators. We tested the modeled estimators against simulation results using ten projected future weather time series for winter wheat production. The mid-season estimators generally proved to be effective. This approach can be used to improve the modeling of planning decisions by providing a more comprehensive evaluation of field-crop response to climatic changes from an economic risk point of view. The methodology further provides economic insight in an agrometeorological context where prices for crops or inputs are lacking, but farmer attitudes toward risk should still be included in the analysis.