What impact does increasing the rotor diameter have on a windmill's performance?

Increasing the rotor diameter of a windmill primarily has a positive impact on its performance by allowing it to capture more wind energy. As the rotor diameter expands, the area that the rotor sweeps increases, leading to a larger capture of the wind's kinetic energy. This larger area results in a higher energy output, provided that wind conditions are favorable.

In the context of agricultural applications, a windmill with a larger rotor can pump a greater volume of water. The increased area generates more lift in the blades, translating to better performance in water displacement and overall efficiency. This is crucial for applications where water needs to be moved from one location to another, such as irrigation or livestock watering.

The other options do not accurately reflect the benefits associated with increasing rotor diameter. For instance, stability is generally not reduced simply by increasing rotor diameter; in fact, it can improve overall energy capture efficiency. Similarly, energy output is actually increased, not decreased, with a larger rotor. Finally, the notion that there is no effect on performance is incorrect because a larger rotor directly enhances the capability and efficiency of the windmill.