Modelling Individual Decisions to Support
the European Policies Related to Agriculture

Testing protocol of evaluating farmers' risk preferences in MIND STEP

Assessing risk management  is among the many topics that are dealth with during the model developments (e.g. climate change, crop management choices).

The main objective of the MIND STEP project is to design, implement and apply the MIND STEP model toolbox: an overarching model structure and a modular and customisable suit of individual decision models (IDM) with a clear focus on the behaviour of the individual farmer.

There is a need to improve the capacity to model CAP risk management policies by developing an IDM model which captures the acceptance and risk-reducing impacts of different risk management instruments (RMI). This work will be based on a large data set combining new survey data with existing data.

In the picture: On February 12 the UCSC team ran the first pilot for data collection and was testing the protocol of the experiment with some farmers to evaluate farmers' risk preferences and their propensity to insurance adoption. 

The output of this exercise will feed into a farm level simulation model to analyse the acceptance and risk-reducing impacts of different RMI. The model allows to analyse the propensity to adopt RMI for a range of behavioural theories and farm and farmers characteristics (e.g. household; off-farm income; wealth; personal traits), and to analyse the impact of RMI that reduce yield, price, and/or income volatility (e.g. diversification, (index) insurance, plant protection, financial instruments, mutual funds for income stabilization).

Text: GEO / Photo: UCSC