The Role of Production Risk in Sustainable Land-Management Technology Adoption in the Ethiopian Highlands
AbstractThis paper provides empirical evidence of production risk impact on sustainable land- management technology adoption, using two years of cross-sectional plot-level data collected in the Ethiopian highlands. We used a moment-based approach, which allowed a flexible representation of the production risk (Antle 1983, 1987). Mundlak’s approach was used to capture the unobserved heterogeneity along with other regressors in the estimation of fertilizer and conservation adoption. The empirical results revealed that impact of production risk varied by technology type. Production risks (variance and crop failure as measured by second and third central moments, respectively) had significant impact on fertilizer adoption and extent of adoption. However, this impact was not observed in adoption of conservation technology. On the other hand, expected return (as measured by the first central moment) had a positive significant impact on both fertilizer (adoption and intensity) and conservation adoption. Economic instruments that hedge against risk exposure, including downside risk and increase productivity, are important to promote adoption of improved technology and reduce poverty in Ethiopia.
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Bibliographic InfoPaper provided by Resources For the Future in its series Discussion Papers with number dp-08-15-efd.
Date of creation: 03 Apr 2008
Date of revision:
Production risk; sustainable land management technology adoption; moment based estimation; Ethiopia;
Other versions of this item:
- Kassie, Menale & Yesuf, Mahmud & Köhlin, Gunnar, 2009. "The Role of Production Risk in Sustainable Land-Management Technology Adoption in the Ethiopian Highlands," Working Papers in Economics 407, University of Gothenburg, Department of Economics.
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
- Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
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