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Role of Farmers’ Risk and Ambiguity Preferences on Fertilization Decisions: An Experiment

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  • Camille Tevenart

    (Université de Lorraine, Université de Strasbourg, AgroParisTech, CNRS, INRAE, BETA, 54000 Nancy, France
    Climate Economics Chair, 75002 Paris, France)

  • Marielle Brunette

    (Université de Lorraine, Université de Strasbourg, AgroParisTech, CNRS, INRAE, BETA, 54000 Nancy, France
    Climate Economics Chair, 75002 Paris, France)

Abstract

In the context of climate change, the agricultural sector offers a large number of mitigation possibilities through diverse practices, such as the reduction of pollutant inputs. However, most farmers do not adopt the mitigation practices recommended, including the reduction of nitrogen fertilization. At the same time, various uncertainties characterize agricultural production, so that the farmer’s risk and ambiguity preferences may be potential determinants to the adoption of mitigation practices. In this context, the objective of the article is to determine if the farmer’s risk and ambiguity preferences explain (or not) the fertilization decision. A questionnaire was submitted to French farmers to elicit risk and ambiguity preferences through lottery choices, and ask questions about fertilization. Two regressions were realized, the first to explain the total fertilization and the second to identify the determinants of the first fertilization application. The results reveal that respondents were mostly risk-averse and ambiguity-neutral. In addition, risk and ambiguity aversion impact fertilization practices through diverse drivers in opposite directions. Indeed, being risk-averse is associated with a lower level of total fertilization, whereas ambiguity aversion has a positive and significant impact on the level of fertilization at the first application. This last result highlights the need to reduce the uncertainty farmers face.

Suggested Citation

  • Camille Tevenart & Marielle Brunette, 2021. "Role of Farmers’ Risk and Ambiguity Preferences on Fertilization Decisions: An Experiment," Sustainability, MDPI, vol. 13(17), pages 1-27, August.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:17:p:9802-:d:626706
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    5. Edith Kouakou & Marielle Brunette & Richard Koenig & Philippe Delacote, 2023. "Crop Yield Risks and Nitrogen Fertilisation in French Agriculture: Implications for Crop Insurance," Working Papers of BETA 2023-38, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.

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