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A portfolio theory approach to crop planning under environmental constraints

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Abstract

This paper presents a multiobjective model for crop planning in agriculture. The approach is based on portfolio theory. The model takes into account weather risks, market risks and environmental risks. Input data include historical land productivity data for various crops, soil types and yield response to fertilizer/pesticide application. Several environmental levels for the application of fertilizers/pesticides, and the monetary penalties for overcoming these levels, are also considered. Starting from the multiobjective model we formulate several single objective optimization problems: the minimum environmental risk problem, the maximum expected return problem and the minimum financial risk problem. We prove that the minimum environmental risk problem is equivalent to a mixed integer problem with a linear objective function. Two numerical results for the minimum environmental risk problem are presented.

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Authors and Affiliations

  1. Institute of Mathematical Statistics and Applied Mathematics, Casa Academiei Romane, Calea 13, Septembrie nr. 13, 050711, Bucharest 5, Romania

    Marius Rădulescu

  2. National Institute for Research and Development in Informatics, 8-10 Averescu Avenue, 011455, Bucharest 1, Romania

    Constanta Zoie Rădulescu

  3. Faculty of Mathematics and Computer Science, University of Bucharest, Academiei 14, 010014, Bucharest, Romania

    Gheorghiţă Zbăganu

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  1. Marius Rădulescu
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  2. Constanta Zoie Rădulescu
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Correspondence to Marius Rădulescu.

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Rădulescu, M., Rădulescu, C.Z. & Zbăganu, G. A portfolio theory approach to crop planning under environmental constraints. Ann Oper Res 219, 243–264 (2014). https://doi.org/10.1007/s10479-011-0902-7

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