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Estimating irrigation farm production functions using ABARES irrigation survey data

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  • Hughes, Neal

Abstract

The ABARE (now ABARES) survey of irrigation farms in the Murray–Darling Basin began in 2006–07 and provides a comprehensive farm-level panel dataset, which, to date, has seen limited econometric analysis (Ashton et al. 2009). At present, three complete years of irrigation survey data are available: 2006–07, 2007–08 and 2008–09. In each year, approximately 850 farms are sampled. As with the ABARES broadacre surveys, the irrigation survey is a rotating (unbalanced) panel dataset. This study makes use of the irrigation survey data to estimate production functions at both the farm and enterprise (crop/livestock activity) level. In addition to the traditional categories of input use (land, labour, capital and materials), the study incorporates measures of water use, tree and vine capital and local seasonal rainfall. The analysis incorporates fixed effects models to take advantage of the survey’s panel structure, as well as consideration of potentially endogenous inputs via instrumental variable methods. The study focuses on the short-run marginal revenue product of water implied by the estimated production functions. The results provide an encouraging demonstration of the kind of analysis that can be undertaken with the irrigation survey dataset. The estimated marginal product curves showed horticulture farms to have the steepest marginal product curve and broadacre farms to have the most elastic. There remain a number of promising areas for potential future research using the dataset, particularly if the survey were to continue for a longer and more representative sample of years.

Suggested Citation

  • Hughes, Neal, 2011. "Estimating irrigation farm production functions using ABARES irrigation survey data," 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia 100564, Australian Agricultural and Resource Economics Society.
    • Handle: RePEc:ags:aare11:100564
    DOI: 10.22004/ag.econ.100564
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    References listed on IDEAS

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    1. Bell, Rosalyn & Gali, Jyothi & Gretton, Paul & Redmond, Ineke, 2007. "The responsiveness of Australian farm performance to changes in irrigation water use and trade," 2007 Conference (51st), February 13-16, 2007, Queenstown, New Zealand 9454, Australian Agricultural and Resource Economics Society.
    2. Pagan, Phil & Fagan, Margot & Crean, Jason & Jones, Randall E., 1997. "Short and Long Run Approaches to Water Demand Estimation," 1997 Conference (41st), January 22-24, 1997, Gold Coast, Australia 136499, Australian Agricultural and Resource Economics Society.
    3. Sarah Wheeler & Henning Bjornlund & Martin Shanahan & Alec Zuo, 2008. "Price elasticity of water allocations demand in the Goulburn-Murray Irrigation District ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(1), pages 37-55, March.
    4. Ejaz Qureshi, Muhammad & Ranjan, Ram & Ejaz Qureshi, Sumaira, 2010. "An empirical assessment of the value of irrigation water: the case study of Murrumbidgee catchment," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(1), pages 1-20.
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    Cited by:

    1. Wheeler, Sarah Ann & Zuo, Alec & Bjornlund, Henning, 2014. "Investigating the delayed on-farm consequences of selling water entitlements in the Murray-Darling Basin," Agricultural Water Management, Elsevier, vol. 145(C), pages 72-82.
    2. Kirby, Mac & Connor, Jeffery D. & Bark, Rosalind H. & Qureshi, Muhammad Ejaz & Keyworth, Scott W., 2012. "The economic impact of water reductions during the Millennium Drought in the Murray-Darling Basin," 2012 Conference (56th), February 7-10, 2012, Fremantle, Australia 124490, Australian Agricultural and Resource Economics Society.
    3. Zuo, Alec & Nauges, Celine & Wheeler, Sarah, 2012. "Water trading as a risk-management tool for farmers: new empirical evidence from the Australian water market," Risk and Sustainable Management Group Working Papers 149885, University of Queensland, School of Economics.
    4. Lin Crase & Eve Merton, 2013. "Correcting Misconceptions about Links between Water Planning and Food Security in the Murray–Darling Basin," Economic Papers, The Economic Society of Australia, vol. 32(3), pages 298-307, September.

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