Risk, Government Programs, and the Environment

Overview

Financial risk permeates nearly all farm business ventures. In some instances, private and public tools used to manage financial risks in agriculture may influence farmers' production decisions. These decisions, in turn, can influence environmental quality. This bulletin synthesizes several research literatures and provides some perspective on private and public attempts to cope with financial risks and their unintended environmental consequences. Specifically, it examines the conceptual underpinnings of risk-related research, challenges involved with measuring the consequences of risk for agricultural production decisions, government programs that influence the risk and return of farm businesses, and how production decisions influence both the environment and the risk and average returns to farming.