Information Spillovers in Irrigation Technology Diffusion: Social Learning, Extension Visits and Spatial Effects

In this article we investigate the role of information spillovers in promoting irrigation technology adoption and diffusion. In particular, we investigate the effect of different channels of information spillovers, namely informal social learning and formal extension services, while acknowledging that this effect is a function of farm-speci c spatial, environmental and socioeconomic characteristics, the latter including the efficient identification of the farmers' influential peers. For doing so, we develop a theoretical model of irrigation technology adoption and diffusion, which we then empirically apply using duration analysis on a micro-dataset of olive producing farms in Crete. Because unobserved variables are potentially relevant for quantifying the effect of information provision (formal and informal) we use observable indicators in a factor analytic model to proxy the unobserved latent variables used in our econometric estimation of the duration model. To the best of our knowledge, this is the first paper that brings together, both theoretically and empirically,three strands of the adoption and diffusion literature: (i) the literature on social learning, (ii) the literature on extension services, while (iii) proposing an econometric approximation of the involved unobserved variables that crucially contribute in the identification of informational cascades among rural population. The paper concludes with policy recommendations based on our empirical results, which suggest that both formal and informal information spillovers are strong determinants of technology adoption and diffusion.