1. David Adamson and Daniel Quiggin

2.  Pest management is part of the decision making process for producers  Crop choices and pest control decisions made jointly  $2,342 million spent by landowners annually on pest control (ABS, 2008)

3.  Pests occur in an agricultural landscape ◦ Hence the need to understand how they move and what impact they can have  Until both the distribution and density of a pest through time and space are understood, management expenditure may be misallocated (Adamson, 1996)

4.  Chalak, Pannell and Polyakov (2011) ◦ Optimal level of pest control  Epanchin-Niell and Wilen (2010) ◦ Optimal method of pest control

5.  “Rook Contiguity” – pest can move in four directions (North, South, East, West)  Pests can only spread to adjacent cells  Uniform density of infestation

6.  Removes rook contiguity ◦ Pest can move in nine directions, including worsening the infestation in the origin cell  Non-uniform density ◦ Pests have four levels of infestation (None, Low, Medium, Heavy)  Maximum range of pest increased to five cells  Two commodities ◦ Only one subject to pest damage  Control taken as given ◦ focus is on the effect of implementing the ability to switch commodities

7.  Pest originates in a single cell (with low density) ◦ Spreads to surrounding cells with an assigned probability (can also worsen its own infestation with the same probability)  Once new cells are infested, they also have probabilities of spreading  Eventually, all cells in landscape subject to high- density infestation ◦ This is the equilibrium state with control expenditure  Model yields estimated cost of pest introduction

8.  With a low probability of spread, it can happen that pests end up far from the origin with nothing in between ◦ Blackberries via birds  In this way, most of the landscape can be covered with low-density infestations  Once a cell becomes heavily infested, the spread can be rapid  Bypasses border controls

9.  Landscape has two commodities ◦ Could also represent different land conditions  Each cell represents one unit of one commodity ◦ Cells have different values depending on infestation  Variable of interest is value of landscape, measured by aggregating value of cells ◦ Gross Margin approach

10.  Pest introduced ◦ Only affects one commodity (say, potato bug in a landscape of potatoes and tomatoes)  Paper compares two scenarios ◦ Control only (producers incur fixed control costs) ◦ Control and switching

11. DensityCommodity 1 Commodity 2 None$100$75 Low$90$75 Medium$80$75 Heavy$70$75  Cells valued as in table  Decline in value of Commodity 1 reflects cost of pest control  Producers will switch when the benefits of controlling the pest are outweighed by the (opportunity) costs ◦ Economic Threshold (Headley)

14.  Analysis without commodity switching shows sharper decline and greater variance  In reality, farmers do switch commodities  Cost-benefit analysis without this option may thus be misleading

15.  Incorporating cost of capital ◦ Net Margin vs Gross Margin  Monitoring and eradication ◦ Interaction with Jump-Point Diffusion ◦ Stochastic control  “Pests With Benefits” ◦ Hunting or harvesting vertebrate pests

16. David Adamson and Daniel Quiggin