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GENERALISED WHOLE-FARM STOCHASTIC DYNAMIC ...

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Description of the multi-period risk programming model 704.4 CALCULA TION OF RISK PARAMETERSA separate GAMS model was developed to generate the necessary variance-covanance matrixor deviation matrix for the Skeleton DLP model. These matrices are calculated fromappropriately correlated sequences of simulated crop yields over a period of 15 years for 100states of nature. Deterministic constant prices were assumed.Procedures developed by Richardson, Klose and Gray (2000) was used to simulate the cropyields from intra- and intertemporal correlation matrices. Since SAPWAT only includes normal,severe drought and favourable weather sets the triangle distribution is used to simulate thesequences.The cumulative probability distribution (F w ) of the triangular distribution is completely specifiedby the minimum (a), maximum (c) and the mode (b) (Hardaker, Huirne and Anderson, 1997).Through the use of the inverse transform method it is possible to simulate random values of xfor any uniformly distributed value (U) between zero and one. More specifically the inversetransform function of the triangular distribution is given by:x = a + (u(c - a\b - a)f s forO

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