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Irrigation and Potential Diversification Benefits in Humid Climates

Published online by Cambridge University Press:  05 September 2016

Lonnie R. Vandeveer ,
Kenneth W. Paxton  and
David R. Lavergne
Lonnie R. Vandeveer
Affiliation:
Department of Agricultural Economics and Agribusiness, Louisiana State University
Kenneth W. Paxton
Affiliation:
Department of Agricultural Economics and Agribusiness, Louisiana State University
David R. Lavergne
Affiliation:
Department of Agricultural Economics and Agribusiness, Louisiana State University
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Abstract

Income variability and means for managing risk continue to receive much attention in farm management research. In this paper, irrigation is presented as a risk-management strategy that offers potential diversification benefits. Potential diversification opportunities largely result from a wider range of enterprise production activities. A portfolio analysis of dryland and irrigated farm scenarios indicates that income stabilizing and diversification effects of irrigation substantially modify the risk-return position of a typical farm in northeast Louisiana. Safety-first considerations along with Target MOT AD programming procedures also are used to evaluate the impact of irrigation on the farm's financial performance.

Keywords

irrigationincome variabilityriskdiversificationMOTADTarget MOTADsafety-first
Type
Submitted Articles
Information
Journal of Agricultural and Applied Economics , Volume 21 , Issue 2 , December 1989 , pp. 167 - 174
Copyright
Copyright © Southern Agricultural Economics Association 1989

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