IDEAS home Printed from https://ideas.repec.org/a/eee/ecolec/v162y2019icp157-168.html
   My bibliography  Save this article

Estimating the economic value of climate services for strengthening resilience of smallholder farmers to climate risks in Ethiopia: A choice experiment approach

Author

Listed:
  • Tesfaye, Abonesh
  • Hansen, James
  • Kassie, Girma Tesfahun
  • Radeny, Maren
  • Solomon, Dawit

Abstract

This study estimated the economic value of agricultural climate services for strengthening the resilience of smallholder farmers to climate variability and risks in Ethiopia. Using a choice experiment approach, the study introduced a hypothetical package of improved climate services to 600 randomly selected smallholder farmers in three districts across three different agro-ecological zones in the Oromia Regional State. A generalized multinomial logit (G-MNL) model was used to estimate preferred attributes of climate services and willingness-to-pay (WTP) values. The results show that the preferred bundle of improved climate services among smallholder farmers was one that could be communicated in short text message system, provided along with credit facility, and market information and one that favors participatory decision making by smallholders. The results further reveal that the WTP value exhibited high implicit price for participatory decision-making. The study sheds light on important characteristics of agricultural climate services that may improve their acceptability and usability among smallholders. It also highlights the importance of packaging additional services including digital and ICT-based solutions, financial and market information along with climate services to promote demand-driven last mile delivery systems. Engaging smallholder farmers in a participatory manner in the decision-making process can help them make informed decision.

Suggested Citation

  • Tesfaye, Abonesh & Hansen, James & Kassie, Girma Tesfahun & Radeny, Maren & Solomon, Dawit, 2019. "Estimating the economic value of climate services for strengthening resilience of smallholder farmers to climate risks in Ethiopia: A choice experiment approach," Ecological Economics, Elsevier, vol. 162(C), pages 157-168.
  • Handle: RePEc:eee:ecolec:v:162:y:2019:i:c:p:157-168
    DOI: 10.1016/j.ecolecon.2019.04.019
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0921800918318925
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Tadesse, Getaw & Bahiigwa, Godfrey, 2015. "Mobile Phones and Farmers’ Marketing Decisions in Ethiopia," World Development, Elsevier, vol. 68(C), pages 296-307.
    2. Denzil G. Fiebig & Michael P. Keane & Jordan Louviere & Nada Wasi, 2010. "The Generalized Multinomial Logit Model: Accounting for Scale and Coefficient Heterogeneity," Marketing Science, INFORMS, vol. 29(3), pages 393-421, 05-06.
    3. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555.
    4. David P. Rogers & Vladimir V. Tsirkunov, 2013. "Weather and Climate Resilience : Effective Preparedness through National Meteorological and Hydrological Services," World Bank Publications, The World Bank, number 15932, June.
    5. Haile, Mekbib G & Kalkuhl, Matthias & Usman, Muhammed A, 2015. "Market information and smallholder farmer price expectations," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 10(4), pages 1-15, December.
    6. Tesfaye, Abonesh & Brouwer, Roy, 2012. "Testing participation constraints in contract design for sustainable soil conservation in Ethiopia," Ecological Economics, Elsevier, vol. 73(C), pages 168-178.
    7. Paul Evangelista & Nicholas Young & Jonathan Burnett, 2013. "How will climate change spatially affect agriculture production in Ethiopia? Case studies of important cereal crops," Climatic Change, Springer, vol. 119(3), pages 855-873, August.
    8. Haggblade, Steven & Hazell, Peter B. R. & Reardon, Thomas Anthony (ed.), 2007. "Transforming the rural nonfarm economy: Opportunities and threats in the developing world," IFPRI books, International Food Policy Research Institute (IFPRI), number 978-0-8018-8664-5.
    9. Barrett, C. B. & Reardon, T. & Webb, P., 2001. "Nonfarm income diversification and household livelihood strategies in rural Africa: concepts, dynamics, and policy implications," Food Policy, Elsevier, vol. 26(4), pages 315-331, August.
    10. Kassa Belay & Degnet Abebaw, 2004. "Challenges Facing Agricultural Extension Agents: A Case Study from South‐western Ethiopia," African Development Review, African Development Bank, vol. 16(1), pages 139-168.
    11. Riccardo Scarpa & Mara Thiene & Kenneth Train, 2008. "Utility in Willingness to Pay Space: A Tool to Address Confounding Random Scale Effects in Destination Choice to the Alps," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(4), pages 994-1010.
    12. Ian J. Bateman & Richard T. Carson & Brett Day & Michael Hanemann & Nick Hanley & Tannis Hett & Michael Jones-Lee & Graham Loomes, 2002. "Economic Valuation with Stated Preference Techniques," Books, Edward Elgar Publishing, number 2639.
    13. Hassan, Rashid M. & Nhemachena, Charles, 2008. "Determinants of African farmers’ strategies for adapting to climate change: Multinomial choice analysis," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 2(1), pages 1-22, March.
    14. Mathieu Ouédraogo & Silamana Barry & Robert B. Zougmoré & Samuel Tetteh Partey & Leopold Somé & Gregoire Baki, 2018. "Farmers’ Willingness to Pay for Climate Information Services: Evidence from Cowpea and Sesame Producers in Northern Burkina Faso," Sustainability, MDPI, Open Access Journal, vol. 10(3), pages 1-16, February.
    15. David A. Hensher & William H. Greene, 2011. "Valuation of Travel Time Savings in WTP and Preference Space in the Presence of Taste and Scale Heterogeneity," Journal of Transport Economics and Policy, University of Bath, vol. 45(3), pages 505-525, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yang, Yang & Hobbs, Jill E. & Natcher, David C., 2020. "Assessing consumer willingness to pay for Arctic food products," Food Policy, Elsevier, vol. 92(C).
    2. Ajayi, V. & Reiner, D., 2020. "Consumer Willingness to Pay for Reducing the Environmental Footprint of Green Plastics," Cambridge Working Papers in Economics 20110, Faculty of Economics, University of Cambridge.
    3. Kassie, Girma T. & Abdulai, Awudu & Greene, William H. & Shiferaw, Bekele & Abate, Tsedeke & Tarekegne, Amsal & Sutcliffe, Chloe, 2017. "Modeling Preference and Willingness to Pay for Drought Tolerance (DT) in Maize in Rural Zimbabwe," World Development, Elsevier, vol. 94(C), pages 465-477.
    4. Makriyannis, Christos & Johnston, Robert, 2016. "Welfare Analysis for Climate Risk Reductions: Are Current Treatments of Outcome Uncertainty Sufficient?," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235532, Agricultural and Applied Economics Association.
    5. Sauthoff, Saramena & Danne, Michael & Mußhoff, Oliver, 2017. "To switch or not to switch? – Understanding German consumers’ willingness to pay for green electricity tariff attributes," Department of Agricultural and Rural Development (DARE) Discussion Papers 260771, Georg-August-Universitaet Goettingen, Department of Agricultural Economics and Rural Development (DARE).
    6. Sandorf, Erlend Dancke & Aanesen, Margrethe & Navrud, Ståle, 2016. "Valuing unfamiliar and complex environmental goods: A comparison of valuation workshops and internet panel surveys with videos," Ecological Economics, Elsevier, vol. 129(C), pages 50-61.
    7. Kassie, Girma Tesfahun & Abdulai, Awudu & MacRobert, John F. & Abate, Tsedeke & Shiferaw, Bekele & Tarekegne, Amsal & Maleni, Debrah, 2014. "Willingness to pay for Drought Tolerance (DT) in Maize in Communal Areas of Zimbabwe," 88th Annual Conference, April 9-11, 2014, AgroParisTech, Paris, France 169747, Agricultural Economics Society.
    8. Soliño, M. & Alía, R. & Agúndez, D., 2020. "Citizens' preferences for research programs on forest genetic resources: A case applied to Pinus pinaster Ait. in Spain," Forest Policy and Economics, Elsevier, vol. 118(C).
    9. Zhifeng Gao & Lisa A. House & Jing Xie, 2016. "Online Survey Data Quality and Its Implication for Willingness-to-Pay: A Cross-Country Comparison," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 64(2), pages 199-221, June.
    10. Penn, Jerrod & Hu, Wuyang, 2016. "Making the Most of Cheap Talk in an Online Survey," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236171, Agricultural and Applied Economics Association.
    11. Bartczak, Anna, 2015. "The role of social and environmental attitudes in non-market valuation," Forest Policy and Economics, Elsevier, vol. 50(C), pages 357-365.
    12. Arne Hole & Julie Kolstad, 2012. "Mixed logit estimation of willingness to pay distributions: a comparison of models in preference and WTP space using data from a health-related choice experiment," Empirical Economics, Springer, vol. 42(2), pages 445-469, April.
    13. Santos, Jair Carvalho Dos, 2006. "Estimativa De Custo De Coleta E Rentabilidade Para Sistema Extrativo De Latex De Seringueira Na Amazonia," 44th Congress, July 23-27, 2006, Fortaleza, Ceará, Brazil 145689, Sociedade Brasileira de Economia, Administracao e Sociologia Rural (SOBER).
    14. Federico Pontoni & Daniel Vecchiato & Francesco Marangon & Tiziano Tempesta & Stefania Troiano, 2016. "Choice experiments and environmental taxation: An application to the Italian hydropower sector," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2016(3), pages 99-118.
    15. Kohei Imamura & Kohei Takenaka Takano & Nobuhito Mori & Tohru Nakashizuka & Shunsuke Managi, 2016. "Attitudes toward disaster-prevention risk in Japanese coastal areas: analysis of civil preference," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 82(1), pages 209-226, May.
    16. Juutinen, Artti & Kosenius, Anna-Kaisa & Ovaskainen, Ville, 2014. "Estimating the benefits of recreation-oriented management in state-owned commercial forests in Finland: A choice experiment," Journal of Forest Economics, Elsevier, vol. 20(4), pages 396-412.
    17. Kassie, Girma T. & Zeleke, Fresenbet & Birhanu, Mulugeta Y. & Scarpa, Riccardo, 2020. "Reminder Nudge, Attribute Nonattendance, and Willingness to Pay in a Discrete Choice Experiment," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304208, Agricultural and Applied Economics Association.
    18. William Greene & David Hensher, 2010. "Does scale heterogeneity across individuals matter? An empirical assessment of alternative logit models," Transportation, Springer, vol. 37(3), pages 413-428, May.
    19. Huh, Sung-Yoon & Jo, Manseok & Shin, Jungwoo & Yoo, Seung-Hoon, 2019. "Impact of rebate program for energy-efficient household appliances on consumer purchasing decisions: The case of electric rice cookers in South Korea," Energy Policy, Elsevier, vol. 129(C), pages 1394-1403.
    20. Fecke, Wilm & Danne, Michael & Mußhoff, Oliver, 2018. "E-commerce in agriculture: The case of crop protection product purchases in a discrete choice experiment," DARE Discussion Papers 1803, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolec:v:162:y:2019:i:c:p:157-168. 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: (Nithya Sathishkumar). General contact details of provider: http://www.elsevier.com/locate/ecolecon .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.