IDEAS home Printed from https://ideas.repec.org/a/eee/agiwat/v136y2014icp52-58.html
   My bibliography  Save this article

How do farmers react to varying water allocations? An assessment of how the attitude to risk affects farm incomes

Author

Listed:
  • Schenk, Joep
  • Hellegers, Petra
  • van Asseldonk, Marcel
  • Davidson, Brian

Abstract

A risk farmers have to cope with is annual changes in the availability of irrigation water. In this paper the relationship between irrigation water allocated to farmers and the incomes they derive in the Coleambally Irrigation Areas (CIA) in Australia is quantified. It is shown empirically that farmers reduce the area cropped when faced with reduced water availability. Increasing the availability of water does not necessarily lead to more stable (less volatile) income streams, as it offers the opportunity to include more water intensive, yet also more risky, crops in the cropping pattern (e.g. rice). However, it does lead to an overall increase in incomes. It was found that rice is the dominant crop for all levels of risk aversion, as shown by a stochastic dominance approach and by the stochastic efficiency with respect to a function. The optimal farm plan portfolio besides rice also includes a substantial amount of wheat if irrigators are somewhat risk averse, while more risk-averse farmers prefer more maize in their farm crop plans. The relative reduction in expected income from the optimal farm plan chosen, given a rather risk averse farmer, compared to the expected income of the optimal farm plan chosen by a risk neutral farmer, is approximately 9%.

Suggested Citation

  • Schenk, Joep & Hellegers, Petra & van Asseldonk, Marcel & Davidson, Brian, 2014. "How do farmers react to varying water allocations? An assessment of how the attitude to risk affects farm incomes," Agricultural Water Management, Elsevier, vol. 136(C), pages 52-58.
  • Handle: RePEc:eee:agiwat:v:136:y:2014:i:c:p:52-58
    DOI: 10.1016/j.agwat.2014.01.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0378377414000067
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.agwat.2014.01.002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Schumann, Keith D. & Richardson, James W. & Lien, Gudbrand D. & Hardaker, J. Brian, 2004. "Stochastic Efficiency Analysis Using Multiple Utility Functions," 2004 Annual meeting, August 1-4, Denver, CO 19957, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Davidson, Brian & Hellegers, Petra & George, Biju & Malano, Hector, 2019. "The opportunity costs of increasing reliability in irrigation systems," Agricultural Water Management, Elsevier, vol. 222(C), pages 173-181.
    2. Rohrig, Maren B.K. & Hardeweg, Bernd & Lentz, Wolfgang, 2018. "Efficient farming options for German apple growers under risk – a stochastic dominance approach," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 21(1).
    3. Francesca Galli & Fabio Bartolini & Gianluca Brunori & Luca Colombo & Oriana Gava & Stefano Grando & Andrea Marescotti, 2015. "Sustainability assessment of food supply chains: an application to local and global bread in Italy," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 3(1), pages 1-17, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Williams, Jeffery R. & Llewelyn, Richard V. & Pendell, Dustin L. & Schlegel, Alan J. & Troy, Dumler, 2009. "A Risk Analysis of Converting CRP Acres to a Wheat-Sorghum-Fallow Rotation," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 45985, Southern Agricultural Economics Association.
    2. Dustin L. Pendell & Jeffery R. Williams & Scott B. Boyles & Charles W. Rice & Richard G. Nelson, 2007. "Soil Carbon Sequestration Strategies with Alternative Tillage and Nitrogen Sources under Risk," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 29(2), pages 247-268.
    3. Adusumilli, Naveen & Wang, Hua & Dodla, Syam & Deliberto, Michael, 2020. "Estimating risk premiums for adopting no-till and cover crops management practices in soybean production system using stochastic efficiency approach," Agricultural Systems, Elsevier, vol. 178(C).
    4. Fan, Yubing & Himanshu, Sushil K. & Ale, Srinivasulu & DeLaune, Paul B. & Zhang, Tian & Park, Seong C. & Colaizzi, Paul D. & Evett, Steven R. & Baumhardt, R. Louis, 2022. "The synergy between water conservation and economic profitability of adopting alternative irrigation systems for cotton production in the Texas High Plains," Agricultural Water Management, Elsevier, vol. 262(C).
    5. Yangxuan Liu & Michael R. Langemeier & Ian M. Small & Laura Joseph & William E. Fry & Jean B. Ristaino & Amanda Saville & Benjamin M. Gramig & Paul V. Preckel, 2018. "A Risk Analysis of Precision Agriculture Technology to Manage Tomato Late Blight," Sustainability, MDPI, vol. 10(9), pages 1-19, August.
    6. Williams, Jeffery R. & Saffert, Andrew T. & Barnaby, G. Art & Llewelyn, Richard V. & Langemeier, Michael R., 2014. "A Risk Analysis of Adjusted Gross Revenue-Lite on Beef Farms," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 46(2), pages 227-244, May.
    7. Williams, Jeffery R. & Pachta, Matthew J. & Claassen, Mark & Roozeboom, Kraig & Llewelyn, Richard, 2011. "Wheat Stubble To Burn or Not to Burn: An Economic Analysis," Western Economics Forum, Western Agricultural Economics Association, vol. 10(1), pages 1-11.
    8. Williams, Jeffery R. & Pachta, Matthew J. & Roozeboom, Kraig L. & Llewelyn, Richard V. & Claassen, Mark M. & Bergtold, Jason S., 2012. "Risk Analysis of Tillage and Crop Rotation Alternatives with Winter Wheat," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 44(4), pages 1-16, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:agiwat:v:136:y:2014:i:c:p:52-58. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/agwat .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.