LIVESTOCK PRODUCTION PLANNING UNDER ENVIRONMENTAL RISKS AND UNCERTAINTIES

In this paper we demonstrate the need for risk-adjusted approaches to planning expansion of livestock production. In particular, we illustrate that under exposure to risk, a portfolio of producers is needed where more efficient producers co-exist and cooperate with less efficient ones given that the latter are associated with lower, uncorrelated or even negatively correlated contingencies. This raises important issues of cooperation and risk sharing among diverse producers. For large-scale practical allocation problems when information on the contingencies may be disperse, not analytically tractable, or be available on aggregate levels, we propose a downscaling procedure based on behavioral principles utilizing spatial risk preference structure. It allows for estimation of production allocation at required resolutions accounting for location specific risks and suitability constraints. The approach provides a tool for harmonization of data from various spatial levels. We applied the method in a case study of livestock production allocation in China to 2030.