Legal risk in agriculture: right-to-farm laws and institutional change

This paper develops an economic model of producer and residential-neighbor behavior to investigate the ways producers balance the choice of management practices with the risk of agricultural-nuisance lawsuits. Right-to-farm laws have provided a false sense of security in what is, in fact, a risky situation. An interdependent-behavior model is developed to explain the conditions under which residents will sue and producers will shift costs. The sensitivity of these results to different judicial interpretations of right-to-farm laws and to institutional change is discussed.