Stochastic Technology, Risk Preferences, and Adoption of Site‐Specific Technologies

Işık, Murat; Khanna, Madhu

doi:10.1111/1467-8276.00121

Cited by 126 publications

(77 citation statements)

References 27 publications

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“…Since farmers are generally risk averse (e.g. Chavas and Holt, 1996;Lence, 2000;Isik and Khanna, 2003;Kumbhakar and Tveteras, 2003), and adverse outcomes can have large consequences for their welfare, they will try to mitigate these risks through input and output choices. Many farmers produce several outputs, and can be regarded as portfolio managers who, through input and output choices, balance the expected economic return and risk (e.g.…”

Section: Introductionmentioning

confidence: 99%

Production risk in multi-output industries: estimates from Norwegian dairy farms

Tveterås

Flåten²,

Lien³

2011

Applied Economics

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Abstract-Farmers who produce multiple outputs are portfolio managers in the sense that they use inputs to balance expected economic return and variance of return. This paper estimates the structure of the stochastic multi-output production technology in Norwegian dairy farming, allowing for a more flexible specification of the technology than previous studies. We find that an increase in input levels leads primarily to higher output variability, and that inputs also influence the covariance of shocks between outputs. Riskreducing effects of inputs on outputs are primarily present in the covariance functions. Technical change leads to shifts in the profit distribution over the data period, but no welfare improvement for risk-averse farmers.

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Section: Introductionmentioning

confidence: 99%

Production risk in multi-output industries: estimates from Norwegian dairy farms

Tveterås

Flåten²,

Lien³

2011

Applied Economics

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“…This form of the variance function is due to (Harvey, 1976) and subsequently employed by several studies (Isik and Devadoss 2006, Isik and Khanna 2003, Asche and Tveteras 1999. The main advantage of this form is that it ensures positive output variance.…”

Section: Methodsmentioning

confidence: 99%

A Hybrid Model to Quantify the Impact of Climate Change on Agriculture in Godavari Basin, India

Palanisami¹,

Ranganathan²,

Kakumanu³

et al. 2011

EER

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A hybrid model incorporating the econometric and programming models was developed to quantify the impact of climate change on agriculture in Godavari basin, India. The Just and Pope production function was used to estimate the mean yield of crops and the variance associated with the mean yield and using the estimated yield, the multiple goal programming model was used to optimize the land and water use under mid and end century climate change scenarios. The results indicated that rice production will reduce during mid and end-century periods by 16% and 36% respectively and by incorporating the water and labour saving technologies in the crop production, the reduction in rice production will be eliminated during mid-century and it will be only 19% during end-century period. The overall water saving will be about 20% due to the adoption of these technologies. Technology up-scaling programs are suggested. Areas for future research are also indicated.

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“…Previous results have shown that risk aversion will increase the adoption of a technology if it is risk reducing (Sandmo, 1971;Feder, 1980;Isik and Khanna, 2003;Koundouri, Nauges, and Tzouvelekas, 2006). Other than a few exceptions (Carey and Zilberman, 2002;Isik and Khanna, 2003;Koundouri, Nauges, and Tzouvelekas, 2006) much of this work measures the impact of uncertainty on the choice of capacity or capital (a continuous variable) and not on the choice between a small number of discrete technologies. In contrast to other articles our paper explicitly considers an individual's ability to temporarily suspend operations (we refer to this as the shutdown effect).…”

Section: Introductionmentioning

confidence: 97%

The impact of water price uncertainty on the adoption of precision irrigation systems

Schoengold

Sunding

2014

Agricultural Economics

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The paper examines whether a firm is more or less likely to adopt conservation technology when input prices are stochastic. The results are critical to determining whether programs and contracts that reduce input price uncertainty may deter the adoption of conservation practices. An economic model of the technology adoption decision shows that the net effect of input price risk is ambiguous and depends on several factors: the mean price effect, the shutdown effect, and the risk aversion effect. Results are estimated using water price and irrigation technology adoption data. The results show that a stable input price increases the adoption of conservation technology, but the impact depends on crop choice and land quality characteristics.

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Stochastic Technology, Risk Preferences, and Adoption of Site‐Specific Technologies

Cited by 126 publications

References 27 publications

Production risk in multi-output industries: estimates from Norwegian dairy farms

Production risk in multi-output industries: estimates from Norwegian dairy farms

A Hybrid Model to Quantify the Impact of Climate Change on Agriculture in Godavari Basin, India

The impact of water price uncertainty on the adoption of precision irrigation systems

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