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Sequential decision-making: Theory and evidence for irrigator water allocation trade participation and volumetric choices

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  • Loch, Adam

Abstract

Greater understanding of irrigator water trade decision-making processes provides insight into the efficient reallocation of water resources between competing uses. Water trade decisions are often modelled as single processes, although results in this paper suggest that sequential decision modelling is more appropriate. We devised a theoretical model of experienced and naïve irrigators based on the search literature, and observed sequential decision-making in water allocation trade decisions using sample-selection techniques. There is evidence of positive selection effects, which motivate different drivers for the decision to participate in water trade and the subsequent decision about how much water to buy or sell.

Suggested Citation

  • Loch, Adam, 2013. "Sequential decision-making: Theory and evidence for irrigator water allocation trade participation and volumetric choices," 2013 Conference (57th), February 5-8, 2013, Sydney, Australia 152199, Australian Agricultural and Resource Economics Society.
  • Handle: RePEc:ags:aare13:152199
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