ENVECON 162 Lecture Notes - Lecture 6: Econometrics
4 May 2018
School
Department
Course
Professor
Economics of Water Resources
Spring 2018
Lecture 6: Empirical Evidence on Irrigation Technology Adoption
Caswell-Zilberman Model Predictions
The Caswell-Zilberman model examines the profit-maximizing behavior of farmers with
respect to their water use decisions. Once the optimal applied water use has been
identified, the irrigation technology is then be chosen.
The Caswell-Zilberman model concludes that modern irrigation technology has higher
capital costs, uses less applied water per unit of effective water, and is land-quality
augmenting. Using these conclusions, there are two hypotheses that emerge about modern
irrigation technology:
❖ Modern technology will be adopted when the price of water is high.
❖ Modern technology will be adopted when land quality is low.
These hypotheses can be tested using data and econometric methods. We can also use
econometrics to evaluate whether water price or land quality is a more important
determinant of technology adoption.
In 1996, Green, Sunding, Zilberman, and Parker obtained detailed data on crops, irrigation
technology, water prices, and environmental quality (i.e. slope, soil permeability). Their
findings can be seen in the diagrams below.
Irrigation Technology by Slope
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Lecture 6: empirical evidence on irrigation technology adoption. The caswell-zilberman model examines the profit-maximizing behavior of farmers with respect to their water use decisions. Once the optimal applied water use has been identified, the irrigation technology is then be chosen. The caswell-zilberman model concludes that modern irrigation technology has higher capital costs, uses less applied water per unit of effective water, and is land-quality augmenting. Using these conclusions, there are two hypotheses that emerge about modern irrigation technology: Modern technology will be adopted when the price of water is high. Modern technology will be adopted when land quality is low. These hypotheses can be tested using data and econometric methods. We can also use econometrics to evaluate whether water price or land quality is a more important determinant of technology adoption. In 1996, green, sunding, zilberman, and parker obtained detailed data on crops, irrigation technology, water prices, and environmental quality (i. e. slope, soil permeability).
