Valuing Public Prevention of Insects and Diseases in Rice: An Application of Real-Option Theory to Economic Feasibility Study

초록

This paper analyzes economic feasibility of public prevention of insects anddiseases in rice sector using a real option approach. This study covers majorrice insects and diseases such as bacterial blight, lugens, and striatellus. Weanalyzes economic feasibility of public prevention over the area of 500hectare which is the Korea's average size of county. The sensitivity analysisuncovered that public prevention of bacterial blight is not considered to bean economically feasible investment. However, public prevention of otherinsects and diseases such as blast, lugens, striatellus was found to be aneconomically feasible investment. The sensitivity analysis also showed that thecosts of prevention are vital factors in public prevention investment.

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