We employ a moment-based approach to empirically analyze farmer's decisions to adopt tube-well technology under the risk of groundwater depletion and associated production uncertainties from the Indus Basin of Pakistan. We use a cross-sectional farm level data from 200 farming households comprising of 100 adopters and 100 non-adopters. The results indicate that risk plays an important role in the farmer's adoption decisions. We find that the higher the expected profit the greater the probability of adoption. Similarly, with increasing variance of profit the probability of adopting a tube-well increases significantly. We further find that farmers generally do not consider downside profit risk when making adoption decisions and that the extreme events could decreases adoption significantly.
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