A Bioeconomic Model of Plant Disease Management under Spatial-Dynamic Externalities: Grapevine Leafroll Disease

Grapevine leafroll disease (GLRD) presently threatens the grape and wine industry worldwide. We develop a cellular automata model of GLRD diffusion and control in two ecologically-connected, independently-managed vineyards. One vineyard produces high-value wine grapes whereas the other produces low-value wine grapes. Disease management is modeled as a two-agent bargaining game. We show that under nooncooperative disease management, it is optimal for neither vineyard manager to control the disease. We consider the case of cooperative disease management and compute the benefits accruing from cooperation. We find it optimal for the manager of the high-value vineyard to pay the low-value vineyard manager to exit production. We determine the size of a Pareto-efficient side payment that can remedy the negative spatial externality emerging from noncooperative disease control.