Factors underlying the investment decision in energy-saving systems in Dutch horticulture

In the Netherlands the greenhouse sector is a major user of energy. It accounts for 7% of the total national energy use and for 79% of the total energy use 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 by horticultural producers is investing in energy-saving systems. The purpose of this paper is to provide a better understanding of the investment behavior of firm operators in the adoption of energy-saving systems. Research objectives of the paper are (1) to analyze factors underlying the decision to invest, (2) to explore factors underlying the optimal size of investments. Three investment theories were used to construct an empirical model of investment. Consequently, this model was estimated in a two-stage procedure to analyze the factors influencing the decision of farmers to invest and the level of investments. The paper ends with policy implications.