AN OPERATIONAL APPROACH FOR EVALUATING INVESTMENT RISK: AN APPLICATION TO THE NO-TILL TRANSITION

Bharat M. Upadhyay and Douglas L. Young
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Bharat M. Upadhyay: Agriculture & Agri-Food Canada
Douglas L. Young: Washington State University

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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.

Keywords: Investment risk; Monte Carlo simulation; no-till; rent- purchase; risk; safety-first; technology adoption; transition strategy (search for similar items in EconPapers)
JEL-codes: Q12 Q19 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2004-12-29
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Note: Type of Document - pdf; pages: 22. 22 pages, PDF format
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpot:0412002

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