Cost-oriented evaluation of ecosystem services under consideration of income risks and risk attitudes of farmers

Abstract

Agri-environmental measures are often not as accepted among farmers as is expected. The present study investigates whether changes in income risks and the individual risk attitudes of farmers may constitute an explanatory approach for the low acceptance of the measures. For this purpose, a normative model is developed that calculates the premia claimed by the farmers for adopting environmental measures under the consideration of income risks and different risk attitudes. We apply this model to environmental measures aiming at an increase of the faunistic diversity of species on grassland and showing that changes in income risks and the decision makers' risk attitudes can significantly influence farmers' minimum compensation claims.

Keywords: Agri-environmental measures; Income risks; Minimum compensation claim; Premium for ecosystem services; Risk attitude.