Irrigation Technology Adoption and Gains from Water Trading under Asymmetric Information

Chokri Dridi and Madhu Khanna

American Journal of Agricultural Economics, 2005, vol. 87, issue 2, 289-301

Abstract: We develop a water allocation and irrigation technology adoption model under the prior appropriation doctrine with asymmetric information among heterogeneous farmers and between farmers and water authorities. We find that adverse selection reduces the adoption of modern irrigation technology. We also show that even with asymmetric information, incentives for water trade exist and lead to additional technology adoption with gains to all parties. This suggests that under asymmetric information, a thin secondary market improves the allocation of water resources and induces additional adoption of modern irrigation technologies. Copyright 2005, Oxford University Press.

Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:87:y:2005:i:2:p:289-301

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American Journal of Agricultural Economics is currently edited by Madhu Khanna, Brian E. Roe, James Vercammen and JunJie Wu

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