Production risk and productivity growth:: Some findings for Norwegian salmon aquaculture

This paper deals with estimation of primal panel data models of production risk, focusing on measurement of risk properties of inputs and productivity growth. Under production risk one should estimate technical change separately for the deterministic part and risk part of the technology, since risk averse producers will take into account both the mean and variance of output when they rank alternative technologies. For a panel of Norwegian salmon farms fish feed and fish input are found to increase output risk, while labor has a risk-decreasing effect on output. In the analysis of technical change by the first order stochastic dominance criterion the increase in mean output dominates the increase in output risk.