Agricultural Risk Management and Technology

This chapter provides an overview of the economics of risk in agriculture. It develops a farm-level model of agricultural risk with a focus on price risk and production risk. The analysis examines the role of aversion to risk and downside risk, followed by an evaluation of the cost of risk under general conditions. It reviews methods used in assessing risk exposure, with a special emphasis on the role of downside risk (including the risk of crop failure). Implications for risk management and the role of technology are discussed.