Abstract

It is well known the fact that in many situations farmers make their economic decisions by considering market risk. Unfortunately the existing economic frameworks that incorporate this type of risk and that can be used into biophysical economic models have important potential biases that can affect the predictive power of them. The objective of this paper is to provide a critical review of these approaches and to propose a novel technique that can be used to minimize these potential biases. The paper finishes with the analysis of a pilot study that provides some empirical support to the underlying theory of our technique.