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Risk Preferences as Determinants of Soil Conservation Decisions in Ethiopia

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  • Teklewold, Hailemariam
  • Köhlin, Gunnar

Abstract

Soil degradation is one of the most serious environmental problems in the highlands of Ethiopia. The prevalence of traditional agricultural land use and the absence of appropriate resource management often result in the degradation of natural soil fertility. This has important implications for soil productivity, household food security, and poverty. Given the extreme vulnerability of farmers in this area, we hypothesized that farmers’ risk preferences might affect the sustainability of resource use. This study presents experimental results on the willingness of farmers to take risks and relates the subjective risk preferences to actual soil conservation decisions. The study looks at a random sample of 143 households with 597 farming plots. We found that a high degree of risk aversion significantly decreases the probability of adopting soil conservation. This implies that reducing farmers’ risk exposure could promote soil conservation practices and thus more sustainable natural resource management. This might be achieved by improving tenure security, promoting access to extension services and education, and developing off-farm activities that generate income.

Suggested Citation

  • Teklewold, Hailemariam & Köhlin, Gunnar, 2010. "Risk Preferences as Determinants of Soil Conservation Decisions in Ethiopia," RFF Working Paper Series dp-10-19-efd, Resources for the Future.
    • Handle: RePEc:rff:dpaper:dp-10-19-efd
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    File URL: http://www.rff.org/RFF/documents/EfD-DP-10-19.pdf
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    References listed on IDEAS

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    1. Mette Wik & Tewodros Aragie Kebede & Olvar Bergland & Stein Holden, 2004. "On the measurement of risk aversion from experimental data," Applied Economics, Taylor & Francis Journals, vol. 36(21), pages 2443-2451.
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    Cited by:

    1. Beyene, Abebe D. & Bezabih, Mintewab & Gebreegziabher, Zenebe, 2012. "Contract Duration under Incomplete Land Ownership Rights: Empirical Evidence from Rural Ethiopia," RFF Working Paper Series dp-12-09-efd, Resources for the Future.
    2. Kathleen Brüssow & Anja Faße & Ulrike Grote, 2017. "Implications of climate-smart strategy adoption by farm households for food security in Tanzania," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 9(6), pages 1203-1218, December.
    3. Ayenew, Habtamu Yesigat & Sauer, Johannes & Abate-Kassa, Getachew, 2015. "Expossure To Risk And Risk Management In Smallholder Agriculture," 55th Annual Conference, Giessen, Germany, September 23-25, 2015 209211, German Association of Agricultural Economists (GEWISOLA).
    4. Shikuku, Kelvin M. & Largerkvist, Carl Johan & Okello, Julius J. & Karanja, Nancy & Ackello-Ogutu, Chris, 2013. "Assessment of the influence of attitude and benefit-risk perceptions on yield variability among smallholder peri-urban commercial kale farmers in Wangige, Kenya," 2013 Fourth International Conference, September 22-25, 2013, Hammamet, Tunisia 161283, African Association of Agricultural Economists (AAAE).
    5. Cenacchi, Nicola, 2014. "Drought risk reduction in agriculture: A review of adaptive strategies in East Africa and the Indo-Gangetic plain of South Asia:," IFPRI discussion papers 1372, International Food Policy Research Institute (IFPRI).
    6. Tingting Liu & Randall J. F. Bruins & Matthew T. Heberling, 2018. "Factors Influencing Farmers’ Adoption of Best Management Practices: A Review and Synthesis," Sustainability, MDPI, vol. 10(2), pages 1-26, February.
    7. Getnet, Kindie & Pfeifer, Catherine & MacAlister, Charlotte, 2014. "Economic incentives and natural resource management among small-scale farmers: Addressing the missing link," Ecological Economics, Elsevier, vol. 108(C), pages 1-7.
    8. Mintewab Bezabih & Mare Sarr, 2012. "Risk Preferences and Environmental Uncertainty: Implications for Crop Diversification Decisions in Ethiopia," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 53(4), pages 483-505, December.
    9. Neitzel, K. Christoph & Caro-Borrero, Angela Piedad & Revollo-Fernandez, Daniel & Aguilar-Ibarra, Alonso & Ramos, Alya & Almeida-Leñero, Lucia, 2014. "Paying for environmental services: Determining recognized participation under common property in a peri-urban context," Forest Policy and Economics, Elsevier, vol. 38(C), pages 46-55.
    10. Sundar, B. & Virmani, Vineet, 2013. "Attitudes towards Risk of Forest Dependent Communities - Evidence from Andhra Pradesh," IIMA Working Papers WP2013-12-01, Indian Institute of Management Ahmedabad, Research and Publication Department.

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    More about this item

    Keywords

    adoption; Ethiopia; risk preference; soil conservation;
    All these keywords.

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • 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
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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