Modeling the sensitivity of agricultural water use to price variability and climate change—An application to Swiss maize production

Robert Finger

Agricultural Water Management, 2012, vol. 109, issue C, 135-143

Abstract: We analyze the sensitivity of crop management under current and future climate scenarios to changes in economic boundary conditions. In particular, we focus on the effects of changing price risks. We combine a bio-economic modeling approach and a crop growth model CropSyst with an economic model that represents the decision making process of a risk-averse farmer. We apply the models to irrigated maize production in Switzerland. To analyze the sensitivity of optimal water and nitrogen use to likely future states of several economic variables, we conduct sensitivity analyses with respect to changes in price variability, the price–yield correlation, water and maize prices as well as farmers’ risk preferences. Results show that climate change leads to a strong increase in optimal water use for irrigation, with consequent increases in maize yields. However, our analysis also reveals that the consideration of economic drivers for farmers’ irrigation decisions is indispensable. Strong effects on optimal water use are found for changes in crop (positive) and water (negative) prices. We also find strong implications of risk aversion and price variability on irrigation decisions. A doubling of price variability, which would represent a shift from the current Swiss situation to price variability levels in its neighboring countries, could reduce optimal water use by up to 40%. We conclude that investigations of water demand should consider, beyond expectations on output and input price levels, also the variability of prices.

Keywords: Irrigation; Nitrogen; Price risk; Production risk; Switzerland (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0378377412000807
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:agiwat:v:109:y:2012:i:c:p:135-143

DOI: 10.1016/j.agwat.2012.03.002

Access Statistics for this article

Agricultural Water Management is currently edited by B.E. Clothier, W. Dierickx, J. Oster and D. Wichelns

More articles in Agricultural Water Management from Elsevier
Bibliographic data for series maintained by Catherine Liu ().