Abstract
AbstractThis article develops a stochastic dynamic model of irrigation technology adoption. It predicts that farms will not invest in modern technologies unless the expected present value of investment exceeds the cost by a potentially large hurdle rate. The article also demonstrates that, contrary to common belief, water markets can delay adoption. The introduction of a market should induce farms with abundant (scarce) water supplies to adopt earlier (later) than they would otherwise. This article was motivated by evidence that, contrary to NPV predictions, farms wait until random events such as drought drive returns significantly above costs before investing in modern irrigation technologies.
Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
