A bioeconomic simulation analysis of irrigation investments
1983
Boggess, W.G. | Amerling, C.B.
Extract: A bioeconomic simulation model is used to analyze the risks and returns of irrigation investments. Previous bioeconomic simulations of irrigation have been limited to irrigation scheduling and optimum cropping pattern analyses. This analysis assesses the impact of variations in weather patterns on the profitability of irrigation investments in humid regions. Specific results are generated to evaluate the relative importance of soil type, crop yield response to irrigation, future prices, financial parameters and weather patterns on the net present value. Cumulative probability functions of the net present value of investing in four alternative irrigation systems for irrigating three alternative crops are calculated. The results indicate that irrigation reduces poduction risk but that irrigation investment increases financial risk. The net effect on risk depends on the specific situation and weather. The best that can be done is to present sufficient information for farmers to evaluate the probability of making a "succesful" investment. Bioeconomic simulation models provide that capability.
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