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- Title
Production technology option value: the case of rbST in Michigan.
- Authors
Olynk, Nicole J.; Wolf, Christopher A.; Tonsor, Glynn T.
- Abstract
Agricultural producers are increasingly required to adjust production practices to satisfy retailer, and ultimately consumer, preferences. This article highlights the option value that underlies decisions related to production technologies using the case of Michigan dairy farmers and recombinant bovine somatotropin (rbST). Welfare impacts were calculated for dairy producers when milk production systems which allowed the use of rbST were eliminated from the producer choice set. Those dairy producers using rbST just before its elimination realized a higher welfare loss than those not using the technology. However, significant welfare impacts were found for all dairy producers indicating that all producers valued the option to use this production technology.
- Subjects
MICHIGAN; PRODUCTION (Economic theory); OPTION value; SOMATOTROPIN; PUBLIC welfare; ECONOMIC impact; FARMERS
- Publication
Agricultural Economics, 2012, Vol 43, p1
- ISSN
0169-5150
- Publication type
Article
- DOI
10.1111/j.1574-0862.2012.00615.x