Using decision trees in a potential pest disaster in a farm.
A farmer has detected a certain strange insect in her crop at an early stage of the season. It could be nothing or it could be a signal of a potential – yet unlikely – pest that could damage her whole annual crop valued at $500,000. She considers that if she does nothing, there is a 30% chance that there will be no pest development and consequently no damages to her crop. On the other hand, damages could accumulate to a total disaster.
The farmer has deemed that the potential damage on her crop could be categorized into four ranges or intervals. She would consider a low damage to her crop any impact from $0 to $20,000. The likelihood of such a scenario is 20%. A most likely scenario of a moderate impact (60% probability) would imply a damage quantified between $20,000 to $50,000. A high damage to her crop is less likely (15% probability) ranging from $50,000 to $100,000. Finally, she also considers that a catastrophic scenario would damage her crop at any number between $100,000 to $500,000, which is the total value of her annual crop. This scenario, however, is only likely in 5% of the instances.
The first decision she has to make is whether to pay $1,000 to a field consultant to recommend what type of pest control mitigation strategy – if any – to apply. The consultant could either tell her to do nothing, to apply some chemical mitigation or to go for biocontrol mitigation.
Three different alternative chemical strategies could be recommended: either applying an organic pest control method, a weak chemical or a strong chemical. Applying an organic chemical would cost $5,000 but its probability of being effective is only 30%. Applying a weak chemical costs $7,000 and is generally effective only in once every three cases; whereas applying a strong chemical method would cost $9,000 and its effectiveness probability is 70%.
Alternatively, there are two general biocontrol methods that could be relevant to mitigate potential damages on this crop. One consists of buying lady beetles. This is relatively cheap costing $1,000 and has an effectiveness ratio of 30%. Also, a conservation approach might only cost $1,500 and its effectiveness ratio is just higher at 35%.