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A micro-simulation model of irrigation farms in the southern Murray-Darling Basin

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  • Huong Dinh
  • Manannan Donoghoe
  • Neal Hughes
  • Tim Goesch

Abstract

This paper presents a farm level irrigation microsimulation model of the southern Murray-Darling Basin. The model leverages detailed ABARES survey data to estimate a series of input demand and output supply equations, derived from a normalised quadratic profit function. The parameters from this estimation are then used to simulate the impact on total cost, revenue and profit of a hypothetical 30 per cent increase in the price of water. The model is still under development, with several potential improvements suggested in the conclusion. This is a working paper, provided for the purpose of receiving feedback on the analytical approach to improve future iterations of the microsimulation model.

Suggested Citation

  • Huong Dinh & Manannan Donoghoe & Neal Hughes & Tim Goesch, 2019. "A micro-simulation model of irrigation farms in the southern Murray-Darling Basin," Papers 1903.05781, arXiv.org.
    • Handle: RePEc:arx:papers:1903.05781
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    1. Wallace E. Huffman & Robert E. Evenson, 1989. "Supply and Demand Functions for Multiproduct U.S. Cash Grain Farms: Biases Caused by Research and Other Policies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(3), pages 761-773.
    2. Carlos Arnade & David Kelch, 2007. "Estimation of Area Elasticities from a Standard Profit Function," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(3), pages 727-737.
    3. Donna Brennan, 2006. "Water policy reform in Australia: lessons from the Victorian seasonal water market ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 50(3), pages 403-423, September.
    4. Brennan, Donna C., 2006. "Water policy reform in Australia: lessons from the Victorian seasonal water market," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 50(3), pages 1-21, September.
    5. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275.
    6. Lau, Lawrence J., 1976. "A characterization of the normalized restricted profit function," Journal of Economic Theory, Elsevier, vol. 12(1), pages 131-163, February.
    7. C. Richard Shumway, 1983. "Supply, Demand, and Technology in a Multiproduct Industry: Texas Field Crops," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(4), pages 748-760.
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