Differential Uncertainties and Risk Attitudes between Conventional and Organic Producers: The Case of Spanish COP Farmers

Abstract

The growing importance of economic factors in farmers decision to go organic has raised interest in characterizing the economic behavior of organic versus conventional farms. Published analyses so far have not considered differential uncertainties and farmers risk preferences between conventional and organic practices when comparing these techniques. Our article attempts to assess this issue. We use a model of farmer decision under risk to analyze the differential values between Spanish COP organic and conventional farms and to assess the incentives for adoption of organic practices. Results show that organic and conventional farms do have different abilities to control production risk as well as different risk preferences. Organic price premiums and subsidies are found to be powerful instruments to motivate adoption of organic techniques.Crop Production/Industries, Risk and Uncertainty,