Developing sustainable agricultural production: The diffusion of water conserving irrigation technology in Tunisia

The development of sustainable agricultural production depends on agricultural producers responding to a diminishing natural resource base by making timely investments in new resource conserving technologies. In many cases price distortions and government intervention destroy the link between resource scarcity and technology adoption decisions that normally takes place through changes in relative prices. The problems of a slow diffusion of new agricultural technologies has elicited a large literature within the economics profession. This dissertation expands that literature by using dynamic programming theory and econometric methods to investigate decisions by farmers in the Cap Bon region of Tunisia to invest in water-conserving drip irrigation technology. From an empirical standpoint this work develops policy prescriptions for the Tunisian government as to where to alleviate market imperfections and make government interventions less burdensome.;I present a dynamic programming model of farmer technology adoption decisions under imperfect information with imperfect credit and information markets. Using data collected from a stratified random sample of Tunisian farmers on: farm production, access to credit, farm characteristics, current state of the water table, and past and present irrigation technology investments; I test the propositions of this theoretical model. The econometrics uses limited dependent variable and switching regression function techniques to separate out the effects of credit access, natural resource status, and learning on farmer technology adoption decisions. I augment this with an investigation of how information about the technology diffuses among farmers, using spatial econometric models of farmer social networks.;The theoretical model advances our understanding of how farmers make technology adoption decisions under risk and uncertainty. It points out the importance of credit constraints and information diffusion in the propagation of a new technology. The empirical application allows a more thorough explanation of the current reticence of Tunisian farmers to make the necessary investments to conserve their water resource base.