FARM-LEVEL ECONOMIC-ANALYSIS INCORPORATING STOCHASTIC ENVIRONMENTAL RISK ASSESSMENT

A farm-level risk programming framework is presented which evaluates i ncome/environmental risk tradeoffs. This framework uses a time-series of environmental risk indices to incorporate the stochastic, multiattr ibute characteristics of environmental outcomes associated with agricu ltural production practices. The model is applied to a representative farm in the Oklahoma Panhandle region of the Central High Plains. Resu lts indicate that expected income is sensitive to nitrate loading rest rictions, and relatively less sensitive to pesticide loading restricti ons. Results also indicate that prescriptions derived using determinis tic environmental risk measures may ignore significant probabilities o f exceeding an environmental standard.