Farmers’ exposure to risk and their temporary water trading

Zuo, Alec, Nauges, Céline and Wheeler, Sarah Ann (2015) Farmers’ exposure to risk and their temporary water trading. European Review of Agricultural Economics, 42 1: 1-24. doi:10.1093/erae/jbu003


Author Zuo, Alec
Nauges, Céline
Wheeler, Sarah Ann
Title Farmers’ exposure to risk and their temporary water trading
Journal name European Review of Agricultural Economics   Check publisher's open access policy
ISSN 1464-3618
0165-1587
Publication date 2015-02-01
Year available 2014
Sub-type Article (original research)
DOI 10.1093/erae/jbu003
Open Access Status Not Open Access
Volume 42
Issue 1
Start page 1
End page 24
Total pages 24
Place of publication Oxford, United Kingdom
Publisher Oxford University Press
Language eng
Abstract In this article, the role of water markets in helping farmers manage the risk of water shortage is studied. Using farm survey data from Australia's southern Murray–Darling Basin, one of the most active water markets in the world, we tested the relationship between farmers' exposure to risk and their decisions to purchase and sell water allocations (temporary water) on the market. Farmers experiencing higher variability in profit and facing more downside risk purchased greater volumes of water allocations in general. Purchasing water allocations on the market is found to be a risk-reducing strategy, in particular for farmers in the horticultural sector. There is only very weak evidence to support the notion that selling water allocations is associated with reduced risk exposure.
Keyword Australia
Irrigation water
Risk aversion
Water markets
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2015 Collection
School of Economics Publications
 
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Created: Thu, 19 Feb 2015, 20:12:42 EST by Celine Nauges on behalf of School of Economics