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Managing Irrigation Risk with Inflow-Based Derivatives: The Case of Rio Mayo Irrigation District in Sonora, Mexico

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  • Leiva, Akssell J.
  • Skees, Jerry R.

Abstract

Uncertain reservoir inflows represent a major source of risk for irrigated agriculture. A derivative instrument that uses reservoir inflows as the underlying variable is designed and tested with a recursive stochastic simulation of the Rio Mayo irrigations system. The results indicate that the instrument effectively protects against downside risk.

Suggested Citation

  • Leiva, Akssell J. & Skees, Jerry R., 2005. "Managing Irrigation Risk with Inflow-Based Derivatives: The Case of Rio Mayo Irrigation District in Sonora, Mexico," 2005 Annual meeting, July 24-27, Providence, RI 19448, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea05:19448
    DOI: 10.22004/ag.econ.19448
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    References listed on IDEAS

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    1. Taylor, R. Garth & Young, Robert A., 1995. "Rural-To-Urban Water Transfers: Measuring Direct Foregone Benefits Of Irrigation Water Under Uncertain Water Supplies," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 20(2), pages 1-16, December.
    2. Robert A. Young, 1986. "Why Are There So Few Transactions among Water Users?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(5), pages 1143-1151.
    3. Turner, Brenda & Perry, Gregory M., 1997. "Agriculture To Instream Water Transfers Under Uncertain Water Availability: A Case Study Of The Deschutes River, Oregon," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 22(2), pages 1-14, December.
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    Cited by:

    1. Turvey, Calum G. & Norton, Michael T., 2008. "An Internet-Based Tool for Weather Risk Management," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 37(1), pages 1-16, April.

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    Keywords

    Risk and Uncertainty;

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