Journal
AUSTRALIAN JOURNAL OF AGRICULTURAL AND RESOURCE ECONOMICS
Volume 60, Issue 3, Pages 442-458Publisher
WILEY
DOI: 10.1111/1467-8489.12134
Keywords
irrigation; marginal value of water; Murray-Darling Basin; profit function; risk preferences
Categories
Funding
- ARC [DP140103946, FT140100773, FT100100708]
- Australian Research Council [FT100100708] Funding Source: Australian Research Council
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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.
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