Mallawaarachchi, Thilak, Nauges, Céline, Quiggin, John and Sanders, Orion (2016) State-contingent analysis of farmers’ response to weather variability: Irrigated dairy farming in the Murray Valley, Australia. TSE Working Paper, n. 16-668, Toulouse

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Abstract

The agricultural sector is commonly regarded as one of the most vulnerable to climate change. Current understanding of the impact of climate change on this sector relies on the underlying assumptions about farmers’ possible responses to weather variability, including changes in crop choice, input combinations and land management practices. Many previous analyses rely on the implicit (and restrictive) assumption that farmers operate under a fixed technology set across different states of nature. This assumption, represented through stochastic production or profit functions, is commonly made but seldom tested, and may understate farmers’ responses to climate change if state-contingent production technologies are, in reality, more flexible. The potential for farmers to adapt production technologies in response to unforeseen events is at the core of the state-contingent approach. Advanced in Chambers and Quiggin (2000), the theory contends that producers can manage uncertainty through the allocation of productive inputs to different states of nature. In this article we test the assumption that farmers’ observed behaviour is consistent with the state-contingent production theory using farm-level data from Australia. More precisely, we estimate the milk production technology for a sample of irrigated dairy farms from the southern Murray–Darling Basin over the period from 2006-07 to 2009-10.

Item Type: Monograph (Working Paper)
Language: English
Date: July 2016
Place of Publication: Toulouse
Uncontrolled Keywords: dairy industry, Murray–Darling basin, state-contingent theory, weather variability
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 07 Jul 2016 13:09
Last Modified: 02 Apr 2021 15:53
OAI Identifier: oai:tse-fr.eu:30547
URI: https://publications.ut-capitole.fr/id/eprint/22203

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