Economic analysis of production and pest management decisions confronting greenhouse growers

This dissertation addresses selected economic problems facing the floriculture industry when producing ornamental crops in a controlled environment. It includes three different papers that focus on economic issues facing greenhouse growers. The first papers presents a conceptual bioeconomic model with an empirical application to determine optimal pest management rules within a discrete time framework that maximize a greenhouse growers objective of maximizing profits. The second paper involves estimation of two competing econometric models in a specific case study of willingness to accept payment for adoption of biological control methods by greenhouse growers, comparing traditional maximum likelihood to a novel empirical likelihood estimator that is robust to heteroskedasticity. The third paper involves estimation of a cost function for floriculture producers, and the related input demands, elasticities and scale economies.; In the first paper a conceptual bioeconomic model for a floriculture producer is specified, wherein optimal decision rules depend on an intertemporal economic objective to maximize profits subject to economic and biological processes. Conditions under which simultaneous or cyclical controls using chemicals and biologicals become optimal are derived, identifying circumstances and trajectories that may become relevant in the future due to pest resistance or governmental regulations. An empirical application of the model is developed which consists of a greenhouse-grown ivy geranium, one of its major pests, Tetranychus urticae Koch, and a potential predatory mite, Phytoseiulus persimilis. Optimal decision rules with respect to nutritional and pest management controls are determined from the empirical model. Results from the model demonstrate that there are indeed circumstances where combinations of introduced predators and chemical control are optimal.; The second paper focuses on estimating willingness to accept payment for using biologically based pest controls using a double-bounded contingent valuation method using both maximum likelihood and empirical exponential likelihood estimators. An empirical exponential likelihood estimator is specified that inherently accounts for heteroskedasticity. Accounting for heteroskedasticity is important because it can lead to inconsistent estimates in a limited dependent variable model. Both models indicate providing an incentive to growers to switch to biological control methods would be costly.; A cost function and the related economies of scale and input elasticities are estimated for floriculture producers in the third paper. The results indicate that economies of scale exist in the greenhouse floriculture industry. As horticultural producers become large and more automated, they have a cost advantage, due to size, than smaller producers who are producing the same output mix. Two models are estimated, one excludes nonprice variables and the other includes nonprice variables in the model. The existence of economies of scale in both models suggest that average grower size may increase in the future as growers increase in size to take advantage of cost efficiencies associated with larger producers.