IDEAS home Printed from https://ideas.repec.org/p/ags/aaea99/21494.html
   My bibliography  Save this paper

Trading Under Risk And Uncertainty In An Agricultural Water Market In Chile

Author

Listed:
  • Hadjigeorgalis, Ereney

Abstract

Risk and uncertainty in a water market will generate trading patterns that differ from those expected under conditions of perfect foresight. Although trades will occur based on differences in VMPs of water in both markets, they will also be generated by differences in risk. Some farmers will choose to reduce relative risk by purchasing additional water rights whereas others will hold few rights and rely on the spot market to meet their needs in dry years. Since spot markets are riskier than permanent rights markets, farmers who are better able to bear risk are more likely to participate in the spot market than those who are not. Farmers who face less risk will be sellers in both markets whereas farmers who face more risk will be buyers. Perennial crop producers with high VMPs of water and who face the highest risk from water deficits, will not participate in spot markets and will tend to be only buyers in permanent rights markets in an attempt to insure against potential losses in the future productivity of their capital stock of perennial crops. Using data on short-term leasing and permanent rights transactions collected from over 300 farmer surveys during the 1996/97 growing season, water market participation decisions for spot and permanent rights markets are modeled in a discrete choice framework. Results support the hypothesis that risk has a significant effect on which market a farmer will participate in and in whether they will be demanders or suppliers of water or water rights.

Suggested Citation

  • Hadjigeorgalis, Ereney, 1999. "Trading Under Risk And Uncertainty In An Agricultural Water Market In Chile," 1999 Annual meeting, August 8-11, Nashville, TN 21494, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea99:21494
    DOI: 10.22004/ag.econ.21494
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/21494/files/sp99ha04.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.21494?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea99:21494. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.