This paper studies the diffusion of greenhouse agriculture in a watershed in the northern uplands of Thailand by applying econometrics and agent-based modeling in combination. Adoption has been rapid by farmers in the central valley of the watershed, while farmers at higher altitudes, lacking transferable land titles that could serve as mortgage collateral, have been unable to obtain loans for greenhouse investment. The objectives of the paper are both methodological and empirical. On the methodological side, it shows that econometrically estimated models of farm household behavior are useful to design and to parameterize an agent-based model. On the empirical side, simulation results show that if mortgage collateral would not be required, then adoption in the upper part of the watershed could reach nearly 77 percent of farm households by 2020, as compared to about 36 percent under current conditions. Further results suggest a significant increase in incomes related to the innovation and a substantially greater irrigation water use, especially in the central part. As bell pepper under greenhouses has replaced pesticide-intensive chrysanthemum, it has declined average levels of pesticide use. Nevertheless, pesticide use is high and farmers are struggling to control pests, which raises questions about the long-term sustainability of the innovation.


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