Irrigation and Potential Diversification Benefits in Humid Climates

Abstract

AbstractIncome variability and means for managing risk continue to receive much attention in farm management research. In this paper, irrigation is presented as a risk-management strategy that offers potential diversification benefits. Potential diversification opportunities largely result from a wider range of enterprise production activities. A portfolio analysis of dryland and irrigated farm scenarios indicates that income stabilizing and diversification effects of irrigation substantially modify the risk-return position of a typical farm in northeast Louisiana. Safety-first considerations along with Target MOT AD programming procedures also are used to evaluate the impact of irrigation on the farm's financial performance.