Elicitation of irrigators’ risk preferences from observed behaviour

Nauges, Celine, Wheeler, Sarah Ann and Zuo, Alec (2016) Elicitation of irrigators’ risk preferences from observed behaviour. Australian Journal of Agricultural and Resource Economics, 60 3: 442-458. doi:10.1111/1467-8489.12134

Author Nauges, Celine
Wheeler, Sarah Ann
Zuo, Alec
Title Elicitation of irrigators’ risk preferences from observed behaviour
Journal name Australian Journal of Agricultural and Resource Economics   Check publisher's open access policy
ISSN 1467-8489
Publication date 2016-07-01
Year available 2015
Sub-type Article (original research)
DOI 10.1111/1467-8489.12134
Open Access Status Not yet assessed
Volume 60
Issue 3
Start page 442
End page 458
Total pages 17
Place of publication Richmond, VIC, Australia
Publisher Wiley-Blackwell Publishing Asia
Collection year 2017
Language eng
Abstract Water trading in the Murray–Darling Basin of Australia has developed to the point where it is a common adaptation tool used by irrigators, making it an apt case study to elicit the marginal value of irrigation water and irrigators' risk preferences in two key industries with differing levels of water dependence. Our data come from large-scale and representative surveys of irrigated broadacre and horticultural farms in the Murray–Darling Basin over a 6-year period. The marginal contribution of irrigation water to profit is estimated at $547 and $61/ML on average in horticulture and broadacre, respectively. Horticultural irrigators are found to be averse to the risk of large losses (downside risk) while broadacre irrigators are averse to the variability (variance) of profit.
Keyword Irrigation
Marginal value of water
Murray–Darling Basin
Profit function
Risk preferences
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collections: HERDC Pre-Audit
School of Economics Publications
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