Farm-Level Risk Management Using Irrigation and Weather Derivatives

An agronomic crop growth model—the Decision Support System for Agro-Technology Transfer—and a constant relative risk aversion utility function are used to examine corn irrigation strategies in Mitchell County, Georgia. Precipitation contracts are designed to help farmers manage risk. Three conclusions originate from the findings. First, the optimal irrigation strategy can greatly increase producers’ certainty-equivalent revenue. Second, changes in water pricing policy would have a limited impact on the amount of water used. And third, across levels of risk preference, the precipitation contracts are not effective in increasing certainty-equivalent revenue or reducing cumulative water use.


Issue Date:
2008-08
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/46986
Published in:
Journal of Agricultural and Applied Economics, Volume 40, Number 2
Page range:
485-492
Total Pages:
8
JEL Codes:
D8; G22; Q15; Q25




 Record created 2017-04-01, last modified 2017-08-25

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