Latent vs. Observed Variables: Analysis of Irrigation Water Efficiency Using SEM and SUR

Jianjun Tang*, Henk Folmer

*Bijbehorende auteur voor dit werk

OnderzoeksoutputAcademicpeer review

18 Citaten (Scopus)
120 Downloads (Pure)


In this paper we compare conceptualising single factor technical and allocative efficiency as indicators of a single latent variable, or as separate observed variables. In the former case, the impacts on both efficiency types are analysed by means of structural equationmodeling (SEM), in the latter by seemingly unrelated regression (SUR). We compare estimation results of the two approaches based on a dataset on single factor irrigation water use efficiency obtained from a survey of 360 farmers in the Guanzhong Plain, China. The main methodological findings are that SEM allows identification of the most important dimension of irrigation water efficiency (technical efficiency) via comparison of their factor scores and reliability. Moreover, it reduces multicollinearity and attenuation bias. It thus is preferable to SUR. The SEM estimates show that perception of water scarcity is the most important positive determinant of both types of efficiency, followed by irrigation infrastructure, income and water price. Furthermore, there is a strong negative reverse effect from efficiency on perception.

Originele taal-2English
Pagina's (van-tot)173-185
Aantal pagina's13
TijdschriftJournal of Agricultural Economics
Nummer van het tijdschrift1
StatusPublished - feb.-2016

Citeer dit