Pesticide Use and Risk Aversion in the French Wine Sector

Abstract

AbstractThis paper studies the risk attitudes of winegrowers in France. In French viticulture, most of the production is done under an appellation regime that constrains maximum authorized yields. We consider a trans-log cost function under the constraint of this maximum yield and estimate winegrowers' attitudes to risk. Our estimates are based on the European Farm Accountancy Data Network database (2005–2014) and data from the French National Institute of Origin and Quality. We find that winegrowers are risk averse. For the majority of winegrowers, risk aversion is declining with expected profit. In the Champagne region, however, where expected profits are far higher than in the other regions, we observe the reverse relation: winegrowers become more risk averse as expected profits rise. (JEL Classifications: C13, C33, O33, Q16).