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Estimating farmers’ risk attitudes and risk premiums for the adoption of conservation practices under different contractual arrangements: A stated choice experiment

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  • Canales, Elizabeth
  • Bergtold, Jason S.
  • Williams, Jeffery
  • Peterson, Jeffrey

Abstract

The diffusion of technologies is a gradual process; it takes time for the information about these new practices to be diffused (Jaffe et al., 2002). While the first assay examines adoption at a point in time, it is also possible to examine adoption in a dynamic setting using a duration model. Using duration models allows for the temporal aspect of adoption and the heterogeneity in the timing of adoption to be accounted for (Abdulai & Huffman, 2005). The second essay examines the timing of adoption of three conservation practices: continuous no-till, cover crops, and VRA of inputs. The timing of adoption was measured as the time it took for farmers to adopt a practice since they first started managing the farm or since the introduction of the practice if the practice was available after the farmer started farming. Findings in this study suggest that the adoption of certain practices delay the adoption of other conservation practices. In addition, the findings in this study suggest that risk aversion is not a significant factor in delaying the speed of adoption of continuous NT. Similar to the first paper, it is possible that farmers do not see NT as a risky practice, thus risk aversion may not affect its adoption or speed of adoption. However, risk aversion was found to delay the adoption of cover crops and VRA of inputs. In addition, the results in this study suggest that farmers who considered themselves innovators adopt the three conservation practices at a faster rate than their counterparts.

Suggested Citation

  • Canales, Elizabeth & Bergtold, Jason S. & Williams, Jeffery & Peterson, Jeffrey, 2015. "Estimating farmers’ risk attitudes and risk premiums for the adoption of conservation practices under different contractual arrangements: A stated choice experiment," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205640, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
  • Handle: RePEc:ags:aaea15:205640
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    Keywords

    Adoption; Carbon Market; Conservation; Contract; Risk; Stated Choice; Crop Production/Industries; Environmental Economics and Policy; Land Economics/Use; Risk and Uncertainty;

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