Technology Adoption under Production Uncertainty: Theory and Application to Irrigation Technology

We propose a theoretical framework to analyze the conditions under which a farmer facing production uncertainty (due to a possible water shortage) and incomplete information will adopt a more efficient irrigation technology. A reduced form of this model is empirically estimated using a sample of 265...

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Bibliographic Details
Published in:American journal of agricultural economics 2006-08, Vol.88 (3), p.657-670
Main Authors: Koundouri, Phoebe, Nauges, Céline, Tzouvelekas, Vangelis
Format: Article
Language:English
Subjects:
Agricultural economics
Agricultural production
Agricultural sciences
Agricultural technology
Agriculture
Agriculture, economy and politics
Corn
Cost control
Crete
Crop yield
Crops
D810
Decision making
econometric models
Economic models
Economic statistics
Economic theory
Emerging technology
Family farms
farm management
Farmers
Farms
Greece
Human capital
human resources
information value
Innovation adoption
Innovations
Irrigation
irrigation systems
irrigation technology adoption
Irrigation water
Life Sciences
Mathematical moments
model validation
production uncertainty
Profits
Q120
Q160
Risk
Risk aversion
Studies
Technological change
Technological innovation
Technology
Technology adoption
Uncertainty
Water conservation
water rights
Water shortages
water use
water use reduction
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Summary:We propose a theoretical framework to analyze the conditions under which a farmer facing production uncertainty (due to a possible water shortage) and incomplete information will adopt a more efficient irrigation technology. A reduced form of this model is empirically estimated using a sample of 265 farms located in Crete, Greece. The empirical results suggest that farmers choose to adopt the new technology in order to hedge against production risk. In addition, we show that the farmer's human capital also plays a significant role in the decision to adopt modern, more efficient irrigation equipment.
ISSN:0002-9092
1467-8276
DOI:10.1111/j.1467-8276.2006.00886.x