Alistair Campbell, M.Sc. Candidate
Business risk management (BRM) programs can help reduce the risk inherent in the agricultural industry that is associated with income variability. These programs are commonly in the form of insurance (yield insurance, net margin insurance, etc.). There is a vast literature on investment decision under risk and uncertainty, but there exists a gap in empirical analysis of the risk-reducing effect BRM programs have on investment. This project examines the relationship between Canadian BRM programs, specifically AgriStability/CAIS and production insurance, and on-farm capital investment. This is done using theory and empirical analysis under a risk-balancing framework put forward by Gabriel and Baker (1980). Previous papers have researched BRM programs using the risk-balancing approach, but do not separate investment from other factors that influence the level of financial risk (Uzea et al. 2014; de Mey et al. 2014). Analysis on repeated cross-sectional data from the Farm Financial Survey is conducted. Results show that there exists a significant and positive correlation between Canadian BRM programs and the decision to invest. Results also show that BRM program participation is positively correlated with higher levels of financial risk, consistent with the risk balancing theory, as well as findings by Uzea et al. (2014). Understanding the effects of BRM programs on investment is important for designing and directing Canadian agricultural policy, with implications for technology adoption and long-term farm productivity.
Many recreational fisheries are managed under regulated open access governed by seasonal closures and bag limits. This approach has often promoted a “race to the fish” with cascades of shorter seasons and shrinking bag limits. These effects have been particularly conspicuous in the Gulf of Mexico (GOM) red snapper fishery, where season lengths have fallen to weeks or even days per year. This paper uses data on recreation demand for for-hire offshore fishing trips in the GOM to understand the welfare implications of status-quo management. We estimate a travel cost demand model that focus on intertemporal substitution and incorporate a flexible, individualized approach to measuring how people value their leisure time. We find substantial improvements in angler welfare in moving towards a more efficient and flexible approach – such as a catch share system.