IMPACTS OF WATER SUPPLY UNCERTAINTY AND STORAGE ON EFFICIENT IRRIGATION TECHNOLOGY ADOPTION
Article first published online: 28 MAY 2013
Copyright © 2013 Wiley Periodicals, Inc.
Natural Resource Modeling
Volume 27, Issue 1, pages 1–24, February 2014
How to Cite
BHADURI, A. and MANNA, U. (2014), IMPACTS OF WATER SUPPLY UNCERTAINTY AND STORAGE ON EFFICIENT IRRIGATION TECHNOLOGY ADOPTION. Natural Resource Modeling, 27: 1–24. doi: 10.1111/nrm.12016
- Issue published online: 23 JAN 2014
- Article first published online: 28 MAY 2013
- Manuscript Accepted: 16 APR 2013
- Manuscript Received: 22 FEB 2012
- Stochastic dynamic programming;
- water pricing;
- adoption of efficient irrigation technology
In the framework of a stochastic dynamic programming model, the paper investigates the impact of water supply uncertainty and storage at farm level on adoption of efficient irrigation technologies under a flexible water price regime. We find that even a flexible water pricing cannot guarantee higher adoption of efficient irrigation technology in all cases. Results of the paper indicate that if a farmer invests in water storage capacity, then the value of efficient usage of water increases, and the rate of adoption of efficient irrigation technology will be higher. It establishes a complementarity relationship between investments in storage capacity and adoption of efficient irrigation technology. The relationship becomes stronger with increasing variance in water supply. In a situation without any option to store water at the farm level, we find a negative relationship between investment in efficient irrigation technology and water variability. However, numerical analysis results suggest that a risk averse farmer may invest more in efficient irrigation only if the variance in water supply is very high.