ON THE INCLUSION OF NATURE AND ITS DYNAMICS IN FARMERS' OBJECTIVE FUNCTIONS FOR ECO-SYSTEM SERVICES PROVISION: A NEW STRATEGY IN BIO-ECONOMIC MODELING

Because objectives influence behavior, there should be thoughtfulness of economists on stating objective functions. In contrast, most farm economists work with the assertion that farmers maximize income. A major question is, are there alternatives? It is the aim of this paper to get a deeper insight into deliberations on objective functions. We go beyond income maximization and show how a probabilistic approach on life-styles provides better insight. We suggest the use of probabilities, humans face if they do not know the status in which they live. Labor intensive and nature providing farming is contrasted with intensive, eco-system service extracting farming and put into a dynamic bio-economic approach. Life-styles occur with probability π and (1-π). The occurrence is modeled dynamically making probabilities endogenous. A programming approach is suggested to depict behavioral equations of life-styles. Finally, we discuss how farmers, by the help of an eco-system services planner, learn and change probabilities.