Abstract
Potato cyst nematodes (PCN) represent one of the most persistent biological threats to potato production, with economic consequences extending beyond farm-level yield losses to broader market and regional economic outcomes. This thesis examines the economic impacts of nematode infestations in the U.S. potato industry using two complementary analytical approaches.The first chapter analyzes how anticipated and unanticipated nematode-induced yield losses affect producer decisions, market prices, and welfare outcomes. A Cournot framework is combined with a structural supply and demand system estimated using Three-Stage Least Squares (3SLS) with monthly U.S. potato shipment and price data from 2013 to 2023. Simulation results show that biological shocks influence equilibrium prices, output, producer profits, and consumer surplus, with the magnitude and distribution of impacts depending on market structure and the degree to which infestations are anticipated. Reducing nematode damage generates significant gains in output and consumer welfare, particularly in concentrated markets where strategic behavior influences price adjustments.
The second chapter evaluates how nematode-induced production shocks propagate through regional economies in major potato-producing states. The analysis links econometric estimates of supply and demand responses with state-level Social
Accounting Matrix (SAM) and Input-Output (I-O) models for Idaho, Washington, Colorado, Wisconsin, and North Dakota. Two adjustment regimes are considered. In the short run, prices are assumed fixed, and yield losses lead to reductions in
producer revenue and regional economic activity. In the long run, prices adjust based on estimated demand elasticity, partially offsetting quantity losses through higher prices. Results indicate that short-run infestations generate substantial reductions in output and value added across regional economies, while long-run price adjustments redistribute income toward producers without improving overall economic welfare.
Together, the findings demonstrate that the economic impacts of agricultural pests depend critically on market structure, price adjustment mechanisms, and regional economic linkages. By integrating structural econometric modeling with regional economic impact analysis, this thesis provides a comprehensive framework for evaluating the broader economic consequences of biological shocks in agricultural markets and highlights the importance of effective pest management and biosecurity policies.