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Willingness to Pay for Sensor-Controlled Irrigation

Author

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  • Lichtenberg, Erik
  • Majsztrik, John
  • Saavoss, Monica

Abstract

Water scarcity is likely to increase in the coming years, making improvements in irrigation efficiency increasingly important. An emerging technology that promises to increase irrigation efficiency substantially is a wireless irrigation sensor network that uploads sensor data into irrigation management software, creating an integrated system that allows real-time monitoring and control of moisture status that has been shown in experimental settings to reduce irrigation costs, lower plant loss rates, shorten production times, decrease pesticide application, and increase yield, quality, and profit. We use an original survey to investigate likely initial acceptance, ceiling adoption rates, and profitability of this new sensor network technology in the nursery and greenhouse industry. We find that adoption rates for a base system and demand for expansion components are decreasing in price, as expected. The price elasticity of the probability of adoption suggests that sensor networks are likely to diffuse at a rate somewhat greater than that of drip irrigation. Adoption rates for a base system and demand for expansion components are increasing in specialization in ornamental production: Growers earning greater shares of revenue from greenhouse and nursery operations are willing to pay more for a base system and willing to purchase larger numbers of expansion components at any given price. We estimate that growers who are willing to purchase a sensor network expect investment in this technology to generate significant profit, consistent with findings from experimental studies.

Suggested Citation

  • Lichtenberg, Erik & Majsztrik, John & Saavoss, Monica, 2014. "Willingness to Pay for Sensor-Controlled Irrigation," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 168211, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea14:168211
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    File URL: http://purl.umn.edu/168211
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    References listed on IDEAS

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    More about this item

    Keywords

    irrigation technology adoption; precision irrigation; sensor network; moisture sensor; water saving technology; willingness to pay; Research and Development/Tech Change/Emerging Technologies; Resource /Energy Economics and Policy; Q25; Q16;

    JEL classification:

    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services

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