Advanced Search
MyIDEAS: Login to save this article or follow this journal

Incentives for Technology Adoption Under Environmental Policy Uncertainty: Implications for Green Payment Programs

Contents:

Author Info

  • Murat Isik

    ()

Registered author(s):

    Abstract

    Water quality protection policy in the UnitedStates has been based on the provision offinancial incentives to farmers for adoptingimproved nutrient management practices.Increasing reliance on subsidy programs couldresult in expectations for such programs in thefuture. Using an option-value model thatindicates uncertainty can lead to a delay ininvestment, this paper analyzes the extent towhich uncertainty about cost-share subsidypolicies would impact adoption decision.Application of the model to adoption ofsite-specific technologies indicates thatuncertainty about subsidy policies has thepotential to impact the investment decision.When there is currently no cost-share subsidy,an increase in the probability of an expectedpolicy delays adoption. If the policy is ineffect, an increase in the probability of awithdrawal of the program encouragesinvestment. Cost-share subsidy policy is mosteffective when it is immediately offered andguaranteed that it will be removed soon. Copyright Kluwer Academic Publishers 2004

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://hdl.handle.net/10.1023/B:EARE.0000017624.07757.3f
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

    Volume (Year): 27 (2004)
    Issue (Month): 3 (March)
    Pages: 247-263

    as in new window
    Handle: RePEc:kap:enreec:v:27:y:2004:i:3:p:247-263

    Contact details of provider:
    Web page: http://www.springerlink.com/link.asp?id=100263

    Related research

    Keywords: cost-share subsidy; policy uncertainty; real options; site-specific technologies;

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Ribaudo, Marc & Horan, Richard D. & Smith, Mark E., 1999. "Economics of Water Quality Protection from Nonpoint Sources: Theory and Practice," Agricultural Economics Reports 33913, United States Department of Agriculture, Economic Research Service.
    2. Janis M. Carey & David Zilberman, 2002. "A Model of Investment under Uncertainty: Modern Irrigation Technology and Emerging Markets in Water," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(1), pages 171-183.
    3. Kevin Hassett & Gilbert E. Metcalf, 1994. "Investment with Uncertain Tax Policy: Does Random Tax Policy Discourage Investment?," NBER Working Papers 4780, National Bureau of Economic Research, Inc.
    4. Isik, Murat & Khanna, Madhu, 2002. "Stochastic Technology, Risk Preferences And Adoption Of Site-Specific Technologies," 2002 Annual meeting, July 28-31, Long Beach, CA 19858, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Abel, Andrew B, 1983. "Optimal Investment under Uncertainty," American Economic Review, American Economic Association, vol. 73(1), pages 228-33, March.
    6. Alex Winter-Nelson & Koffi Amegbeto, 1998. "Option Values to Conservation and Agricultural Price Policy: Application to Terrace Construction in Kenya," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(2), pages 409-418.
    7. Babcock, Bruce A. & Pautsch, Gregory R., 1998. "Moving from Uniform to Variable Fertilizer Rates on Iowa Corn: Effects on Rates and Returns," Staff General Research Papers 1121, Iowa State University, Department of Economics.
    8. Isik, Murat & Khanna, Madhu, 2002. "Variable-Rate Nitrogen Application Under Uncertainty: Implications For Profitability And Nitrogen Use," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 27(01), July.
    9. Isik, Murat & Khanna, Madhu & Winter-Nelson, Alex, 2001. "Sequential Investment In Site-Specific Crop Management Under Output Price Uncertainty," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(01), July.
    10. Hartman, Richard, 1972. "The effects of price and cost uncertainty on investment," Journal of Economic Theory, Elsevier, vol. 5(2), pages 258-266, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. repec:hal:journl:halshs-00343702 is not listed on IDEAS
    2. Steele, Scott R., 2009. "Expanding the solution set: Organizational economics and agri-environmental policy," Ecological Economics, Elsevier, vol. 69(2), pages 398-405, December.
    3. Viju, Crina & Kerr, William A. & Nolan, James F., 2006. "Subsidization of the Biofuel Industry: Security vs. Clean Air?," 2006 Annual meeting, July 23-26, Long Beach, CA 21321, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Asa Löfgren & Katrin Millock & Celine Nauges, 2008. "The effect of uncertainty on pollution abatement investments: measuring hurdle rates for Swedish industry," Working Papers 24847, Institut National de la Recherche Agronomique, France.
    5. LOFGREN Asa & MILLOCK Katrin & NAUGES Céline, 2007. "Using Ex Post Data to Estimate the Hurdle Rate of Abatement Investments - An application to the Swedish Pulp and Paper Industry and Energy Sector," LERNA Working Papers 07.06.227, LERNA, University of Toulouse.
    6. Baerenklau, Kenneth A. & Knapp, Keith C., 2005. "A Stochastic-Dynamic Model of Costly Reversible Technology Adoption," 2005 Annual meeting, July 24-27, Providence, RI 19156, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. López-Gamero, María D. & Molina-Azorín, José F. & Claver-Cortés, Enrique, 2011. "Environmental uncertainty and environmental management perception: A multiple case study," Journal of Business Research, Elsevier, vol. 64(4), pages 427-435, April.
    8. McClintock, Anthea, 2009. "Investment in irrigation technology: an application of real options analysis," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 47934, Australian Agricultural and Resource Economics Society.
    9. Isik, Murat, 2003. "Environmental Regulation And The Optimal Location Of The Firm Under Uncertainty," 2003 Annual meeting, July 27-30, Montreal, Canada 22066, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Isik, Murat & Yang, Wanhong, 2004. "An Analysis of the Effects of Uncertainty and Irreversibility on Farmer Participation in the Conservation Reserve Program," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(02), August.
    11. Ihli, Hanna Julia & Maart, Syster Christin & Musshoff, Oliver, 2012. "Investment and Disinvestment in Irrigation Technology – An Experimental Analysis of Farmers’ Decision Behavior –," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124532, Agricultural and Applied Economics Association.
    12. Constadina Passa & Anastasios Xepapadeas, 2008. "Regulation of Farming Activities: An Evolutionary Approach," Working Papers 0811, University of Crete, Department of Economics.
    13. repec:hal:journl:halshs-00261523 is not listed on IDEAS
    14. Llop Llop, Maria & Ponce Alifonso, Xavier,, 2012. "Agriculture, technological change and environmental sustainability: Looking for a win-win water policy strategy," Working Papers 2072/203158, Universitat Rovira i Virgili, Department of Economics.
    15. repec:hal:cesptp:halshs-00272041 is not listed on IDEAS
    16. repec:hal:journl:halshs-00272041 is not listed on IDEAS
    17. Bauner, Christoph & Crago, Christine, 2013. "Adoption of Residential Solar Power Under Uncertainty: Implications for Renewable Energy Incentives," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150641, Agricultural and Applied Economics Association.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:kap:enreec:v:27:y:2004:i:3:p:247-263. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F. Baum).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.