Advanced Search
MyIDEAS: Login

Risk Belief, Producer Demand, and Valuation of Improved Irrigations: Results from Field Experiments in Mt. Kilimanjaro

Contents:

Author Info

  • Muamba, Francis
  • Kraybill, David S.
Registered author(s):

    Abstract

    This paper systematically estimates the potential benefit of introducing improved irrigation schemes in Mt. Kilimanjaro to help rain dependent farmers cope with the risks of climate change. The study uses Contingent Valuation Method (CVM) to elicit farmers’ Willingness to Pay (WTP) for eliminating the risks of crop loss by accessing improved irrigation schemes. Data for the analysis were gathered using a double bounded survey from over 200 randomly-sampled farmers in 15 villages. The study makes a contribution to the applied welfare literature and should also be useful for policymakers in Africa. The policy contribution consists of valuation of improved irrigation in the presence of climate change risks. The applied welfare contribution consists of empirical evidence about the impact of farmer’s risk aversion on welfare valuation. Pratt and Zeckhauser (1996) argue on conceptual grounds that in the absence of complete contingent claims market, individual WTP per unit of risk reduction will depend significantly on the level of risk and the magnitude of reduction that is offered. The present study captures individual farmer’s risk exposure by constructing an index for farmers’ expected rainfall. Since mean WTP is nonlinear in its parameters, mean WTP is computed based on the Krinsky and Robb (1986) method, which simulates the confidence interval and the achieved significance levels (ASL) for testing the null hypothesis that WTP≤0. The results show that farmers with lower expectations about future rainfall are willing to pay more for accessing the improved irrigation scheme. In addition, Mt. Kilimanjaro farmers are willing to pay up to 10% of their income to have access to improved irrigation canals. Assuming a 5% discount rate, the study found that farmers will reimburse the cost of building the irrigation scheme after 7 to 9 years.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://purl.umn.edu/61653
    Download Restriction: no

    Bibliographic Info

    Paper provided by Agricultural and Applied Economics Association in its series 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado with number 61653.

    as in new window
    Length:
    Date of creation: Apr 2010
    Date of revision:
    Handle: RePEc:ags:aaea10:61653

    Contact details of provider:
    Postal: 555 East Wells Street, Suite 1100, Milwaukee, Wisconsin 53202
    Phone: (414) 918-3190
    Fax: (414) 276-3349
    Email:
    Web page: http://www.aaea.org
    More information through EDIRC

    Related research

    Keywords: Willingness to Pay; Climate Change; Irrigation; Risk Belief; Agricultural and Food Policy; Environmental Economics and Policy; Food Security and Poverty; International Development; Q12; Q18; Q25; Q51; Q56;

    Find related papers by JEL classification:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Pratt, John W & Zeckhauser, Richard J, 1996. "Willingness to Pay and the Distribution of Risk and Wealth," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 747-63, August.
    2. Konishi, Yoshifumi & Coggins, Jay S., 2008. "Environmental risk and welfare valuation under imperfect information," Resource and Energy Economics, Elsevier, vol. 30(2), pages 150-169, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:ags:aaea10:61653. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.