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

Author

Listed:
  • Mykel R. Taylor

    () (School of Economic Sciences, Washington State University)

Abstract

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

  • Mykel R. Taylor, 2010. "An Operational Approach for Evaluating Investment Risk: An Application to the No-Till Transition," Working Papers 2010-17, School of Economic Sciences, Washington State University.
  • Handle: RePEc:wsu:wpaper:mtaylor-2
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    File URL: http://faculty.ses.wsu.edu/WorkingPapers/MTaylor/WP2010-17.pdf
    File Function: First version, 2005
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    More about this item

    Keywords

    food safety; discrete choice; information; consumer demand;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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