Investments In Energy-saving Systems In Dutch Horticultural Farms

In the Netherlands the greenhouse sector is a major user of energy. It accounts for 7% of the total amount of energy used in the Netherlands and for 79% of the total amount of energy used in agriculture. In order to sustain this sector on the long term, it is important that its use of energy is lowered. One way of reducing energy use for horticultural producers is investing in energy–saving systems. The purpose of this paper is to provide a better understanding of the investment behavior of farm operators. A two-stage econometric model has been applied to analyze the factors influencing the decision of farmers to invest and the level of investments. Keywords: investments, two-stage model, management theory, option value, adjustment costs.