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Risk Implications of Farm Technology Adoption in the Ethiopian Highlands

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  • Yesuf, Mahmud
  • Kassie, Menale
  • Köhlin, Gunnar

Abstract

In countries where insurance and credit markets are thin or missing, production and consumption risks play a critical role in the choice and use of production inputs and adoption of new farm technologies. In this paper, we investigated impacts of chemical fertilizer and soil and water conservation technologies adoption on production risks, using a moment-based approach and two years of cross-sectional data. A pseudo-fixed-effect model was estimated to generate first, second, and third moments of farm production. Our results revealed that fertilizer adoption reduces yield variability, but increases the risk of crop failure. However, adopting soil and water conservation technology has no impact on yield variability, but reduces the downside risk of crop failure. The results underscore that the risk implications of farm technology adoption vary by technology type. Furthermore, policies that promote adoption of fertilizers should be complemented by desirable instruments that hedge against downside risk. In that respect, if properly implemented, the safety net program and the weather insurance programs currently piloted in some parts of Ethiopia are actions in the right direction.

Suggested Citation

  • Yesuf, Mahmud & Kassie, Menale & Köhlin, Gunnar, 2009. "Risk Implications of Farm Technology Adoption in the Ethiopian Highlands," RFF Working Paper Series dp-09-13-efd, Resources for the Future.
    • Handle: RePEc:rff:dpaper:dp-09-13-efd
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    Cited by:

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    2. Ojo, T.O. & Baiyegunhi, L.J.S., 2020. "Determinants of climate change adaptation strategies and its impact on the net farm income of rice farmers in south-west Nigeria," Land Use Policy, Elsevier, vol. 95(C).
    3. Mwaura, Francis M. & Muwanika, Fred R., 2018. "Providing irrigation water as a public utility to enhance agricultural productivity in Uganda," Utilities Policy, Elsevier, vol. 55(C), pages 99-109.
    4. Gharad Bryan & Shyamal Chowdhury & A. Mushfiq Mobarak, 2011. "Seasonal Migration and Risk Aversion," Working Papers id:4650, eSocialSciences.
    5. Birthal, Pratap S. & Hazrana, Jaweriah & Negi, Digvijay S. & Mishra, Ashok K., 2022. "Assessing benefits of crop insurance vis-a-vis irrigation in Indian agriculture," Food Policy, Elsevier, vol. 112(C).
    6. Pratap S. Birthal & Jaweriah Hazrana & Digvijay S. Negi, 2021. "Effectiveness of Farmers’ Risk Management Strategies in Smallholder Agriculture: Evidence from India," Climatic Change, Springer, vol. 169(3), pages 1-35, December.

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    More about this item

    Keywords

    production risks; farm technology; moment-based approach; Ethiopia;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land

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