Irrigation and farm level risks: A case study of the south saskatchewan river project

Abstract

The perception of dryland and irrigation farmers suggests that risk in production is a major factor affecting their adoption of irrigation. In this study empirical estimates of risks are provided, using data from a cross-section of farmers in the South Saskatchewan River Project. Results suggest that although physical risks of production may be lower, economic and financial risks are higher, making irrigation an option where there are trade-offs between returns and stability. Higher financial risks are reflected in higher debt-equity ratios for irrigated farmers relative to dryland farmers. Given that long-term returns from irrigation virtually equal those under dryland conditions, adoption of irrigation would be favored by risk takers in the industry. © 1989 Taylor & Francis Group, LLC.