The production of forage in British Columbia plays and integral role in
sustaining livestock herds within the province. Forage is an important component
in the daily feed requirements of horses, sheep, and cattle. Fluctuations in the
availability of forage due to drought or bad weather conditions can impose
considerable costs on farmers who raise livestock. Wide—spread drought
conditions can significantly limit the availability of forage crops within
certain regions, causing prices within those regions to become inflated.
Under standard insurance in British Columbia, farmers are only insured
against shortfalls in production; there is no compensation provided against
increases in the price of forage. For those purchasing forage, a Wide—Spread
Drought (WSD) insurance scheme would provide insurance against the price—risk
associated with drastic weather conditions. However, since forage prices are
required to operate such a policy and are non—observable, a mechanism is needed
in order to estimate them. A regional spatial price—equilibrium model which
relates regional prices to regional production is developed in this thesis. The
model will eventually be used to predict prices and hence determine whether a
particular region is eligible for a payout under the WSD insurance scheme. A key
assumption behind the model is that according to the ‘Law of One Price’; prices
are perfectly arbitraged. In a competitive setting, in which agents maximize
individual welfare, total welfare is maximized and prices between regions will
not differ by more than the transportation costs.
This spatial price—equilibrium model is applied to British Columbia forage
production. The regions incorporated in the study include the Peace River,
Central Interior, Cariboo—Chilcotin, Thompson—Okanagan, and Kootenay Regions.
The Lower Mainland/Fraser Valley and Vancouver Island are excluded as they do not
typically fall under the forage crop insurance plan in British Columbia. / Land and Food Systems, Faculty of / Graduate
| Identifer | oai:union.ndltd.org:UBC/oai:circle.library.ubc.ca:2429/5358 |
| Date | 11 1900 |
| Creators | Haggard, Trenton John |
| Source Sets | University of British Columbia |
| Language | English |
| Detected Language | English |
| Type | Text, Thesis/Dissertation |
| Format | 1198340 bytes, application/pdf |
| Rights | For non-commercial purposes only, such as research, private study and education. Additional conditions apply, see Terms of Use https://open.library.ubc.ca/terms_of_use. |
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