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Type: Journal article
Title: Farmers' exposure to risk and their temporary water trading
Author: Zuo, A.
Nauges, C.
Wheeler, S.
Citation: European Review of Agricultural Economics, 2015; 42(1):1-24
Publisher: Oxford University Press
Issue Date: 2015
ISSN: 0165-1587
Statement of
Alec Zuo, Céline Nauges and Sarah Ann Wheeler
Abstract: In this article, the role of water markets in helping farmers manage the risk of water shortage is studied. Using farm survey data from Australia's southern Murray–Darling Basin, one of the most active water markets in the world, we tested the relationship between farmers' exposure to risk and their decisions to purchase and sell water allocations (temporary water) on the market. Farmers experiencing higher variability in profit and facing more downside risk purchased greater volumes of water allocations in general. Purchasing water allocations on the market is found to be a risk-reducing strategy, in particular for farmers in the horticultural sector. There is only very weak evidence to support the notion that selling water allocations is associated with reduced risk exposure.
Keywords: Australia; irrigation water; risk aversion; water market
Rights: © Oxford University Press and Foundation for the European Review of Agricultural Economics 2014; all rights reserved. For permissions, please email
RMID: 0030031436
DOI: 10.1093/erae/jbu003
Appears in Collections:Global Food Studies publications

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