TECHNOLOGY ADOPTION DECISIONS UNDER IRREVERSIBILITY AND UNCERTAINTY -AN EX ANTE APPPROACH

Empirical results demonstrate that uncertainty about costs and require ments for environmental compliance is an important determinant of dair y producers' investment behavior. Ex ante forecasting of how uncertain ty and irreversibility are likely to affect producers' responsiveness to agricultural technologies has implications for the design of enviro nmental policies. Simulation modeling methods are described. The empir ical analysis focuses on Texas producers' propensity to adopt free-sta ll dairy housing. Free-stall investments offer advantages for both pro ductivity-augmentation and pollution abatement, yet uncertainty and ir reversibility are obstacles to adoption. Implications of this ex ante paradigm for policy design and implementation are discussed.