Sodbusting, Crop Insurance, and Sunk Conversion Costs
构建实物期权模型，分析风险干预如何降低土地用途转换成本，从而激励开垦草地。基于北达科他州1989-2012年数据模拟发现，风险干预显著提高开垦成本阈值，低估风险会低估开垦规模。
We build a real option model that articulates sodbusting incentives arising from risk interventions in the presence of conversion costs. The model shows that risk interventions reduce expected costs of switching land use between cropping and noncropping activities and, hence, incentivize sodbusting. Based on data for south-central North Dakota over 1989–2012, our simulations show that offsetting 20% of a cropping-return shortfall by a risk intervention increases the sodbusting cost threshold, below which sodbusting will occur, by 41% (or $43.7/acre). Omitting cropping-return risk across time underestimates the sodbusting cost threshold by 23% (or $24.35/acre) and hence underestimates sodbusting caused by crop production. <i></i>