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An Operational Approach for Evaluating Investment Risk: An Application to the No-Till Transition

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  • Upadhyay, Bharat Mani
  • Young, Douglas L.

Abstract

Roy's safety-first rule is used to provide measures popular with farmers of short and long term business risk associated with various no-till transition strategies over an investment horizon. The short run rule provided more sensitivity to inter-year financial risk than other commonly used criteria. Results revealed that speed of adoption influenced the probability of successful transition more than did the sequence of drill acquisition methods. Higher equity and larger farms had a greater chance of transition success. Slow acreage expansion with a custom or rental drill reduces risk until a no-till yield penalty is eliminated.

Suggested Citation

  • Upadhyay, Bharat Mani & Young, Douglas L., 2005. "An Operational Approach for Evaluating Investment Risk: An Application to the No-Till Transition," Working Papers 12958, Washington State University, School of Economic Sciences.
    • Handle: RePEc:ags:wsuewp:12958
    DOI: 10.22004/ag.econ.12958
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    References listed on IDEAS

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    Cited by:

    1. Wauters, Erwin & De Cock, Lieve & Wit, Jan de & Lauwers, Ludwig H., 2011. "The foregone risk premium: a communicative and practical method for the evaluation of risk-return profiles in agriculture," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 115737, European Association of Agricultural Economists.

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    Farm Management; Risk and Uncertainty;

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