Technology Adoption under Production Uncertainty: Theory and Application to Irrigation Technology |
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Authors: | Phoebe Koundouri Céline Nauges Vangelis Tzouvelekas |
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Institution: | While writing this paper, Phoebe Koundouri was lecturer (with tenure) at the Department of Economics, University of Reading, U.K. and affiliated research fellow at the Department of Economics, University College London, U.K. She is currently Assistant Professor at the Department of International and European Economic Studies, Athens University of Economics and Business, Greece. Céline Nauges is permanent researcher, National Institute for Research in Agriculture, Toulouse, France. Vangelis Tzouvelekas is assistant professor at the Department of Economics, University of Crete, Greece. |
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Abstract: | We propose a theoretical framework to analyze the conditions under which a farmer facing production uncertainty (due to a possible water shortage) and incomplete information will adopt a more efficient irrigation technology. A reduced form of this model is empirically estimated using a sample of 265 farms located in Crete, Greece. The empirical results suggest that farmers choose to adopt the new technology in order to hedge against production risk. In addition, we show that the farmer's human capital also plays a significant role in the decision to adopt modern, more efficient irrigation equipment. |
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Keywords: | human capital information value irrigation technology adoption production uncertainty |
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