STOCHASTIC TECHNOLOGY, RISK PREFERENCES AND ADOPTION OF SITE-SPECIFIC TECHNOLOGIES

Murat Isik and Madhu Khanna

No 19858, 2002 Annual meeting, July 28-31, Long Beach, CA from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: This paper develops a model of farmer decision-making to examine the extent to which uncertainties about the performance of site-specific technologies (SSTs) and about the weather impact the value of these technologies. The model uses the jointly estimated risk and technology parameters to examine the impacts of SSTs on returns and nitrogen pollution. The availability of uncertain soil information and production uncertainty can lead risk-averse farmers to apply more fertilizers and generate more pollution. Ignoring the impact of uncertainty and risk preferences of farmers leads to a significant overestimation of the economic and environmental benefits of SSTs and underestimation of the required subsidy for inducing adoption of SSTs. The model that accounts for uncertainties about soil conditions and production as well as risk preferences of farmers provides an explanation for the low observed adoption rates of SSTs. Improvements in the accuracy of SSTs have the potential to increase the incentives for adoption.

Keywords: Research; and; Development/Tech; Change/Emerging; Technologies (search for similar items in EconPapers)
Pages: 35
Date: 2002
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Stochastic Technology, Risk Preferences, and Adoption of Site-Specific Technologies (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea02:19858

DOI: 10.22004/ag.econ.19858

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