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This paper analyzes the impact of CAP financial assistance on crop biodiversity underuncertainty. A stochastic production function is employed and estimated to assesswhether risk-averse farmers hedge risk by diversifying their portfolio of crops, thusincreasing crop biodiversity. The model is applied to farm-level data of organic cropfarms in Greece. Organic farming financial assistance poses a double-edged sword: eventhough it is considered agrobiodiversity enhancing as a cultivation method, subsidizing itcan become agrobiodiversity reducing, since farmers may select to cultivate only thesubsidized crops. The study shows that risk aversion leads to crop biodiversityconservation. However, providing CAP financial assistance on certain crops appears todecrease the relationship between revenue risk management and crop biodiversity,indirectly resulting in crop biodiversity loss.

Keywords: crop biodiversity ; agroecosystem ; risk management ; agricultural assistance

Subject(s): Crop Production/Industries

Farm Management

Resource /Energy Economics and Policy

Issue Date: Sep 02 2011

Publication Type: Conference Paper/ Presentation

PURL Identifier:

Total Pages: 9

JEL Codes: Q12; Q18; D80; Q24; Q57

Record appears in: European Association of Agricultural Economists (EAAE) > 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland

Autor: Nastis, Stefanos A. ; Michailidis, Anastasios ; Mattas, Konstadinos


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