As climate change increases the frequency of drought, excessive rainfall, and other extreme weather events, farmers face growing uncertainty about crop production. Understanding how farmers perceive and respond to that uncertainty can help improve agricultural policy and climate adaptation strategies. A new study from the University of Illinois Urbana-Champaign and Michigan State University examines farmer risk preferences when dealing with climate impacts.
“Crop yields depend not only on weather conditions, but also on the producer’s management decisions. We wanted to better understand how farmers perceive uncertainty under changing climate conditions,” said lead author Natalie Loduca, clinical assistant professor in the Department of Agricultural and Consumer Economics, part of the College of Agricultural, Consumer and Environmental Sciences at U. of I.
The researchers surveyed crop producers in Michigan to gauge their level of risk aversion in general, and within specific agricultural contexts. Using a choice experiment commonly employed in economics, participants selected between paired scenarios with different levels of uncertainty and potential returns. The aggregate results from a series of choices were then analyzed to estimate each respondent’s risk preferences.
Loduca and Scott Swinton, professor emeritus of agricultural economics at MSU, collaborated with Michigan State University Extension to recruit crop farmers across the state. They included corn/soybean farmers who operated at least 300 acres and relied on farming as a major source of income.
Read the full article from the College of ACES.
University of Illinois Extension develops educational programs, extends knowledge, and builds partnerships to support people, communities, and their environments as part of the state's land-grant institution. Extension serves as the leading public outreach effort for University of Illinois Urbana-Champaign and the College of Agricultural, Consumer and Environmental Sciences in all 102 Illinois counties through a network of 27 multi-county units and over 500 staff statewide. Extension’s mission is responsive to eight strategic priorities — community, economy, environment, food and agriculture, health, partnerships, technology and discovery, and workforce excellence — that are served through five program areas — 4-H youth development, agriculture and agribusiness, community and economic development, health and community wellness, and natural resources, environment, and energy.