Are Agricultural Extension Packages What Ethiopian Farmers Want? A Stated Preference Analysis

There is an evident dichotomy in many rural development policies in the world between extension driven adoption of modern inputs and community driven local public goods. However, the target populations of these policies seldom have the possibility to express their preference between these two policies. In this paper we report the results of a stated preference survey in the highlands of Ethiopia where the farmers are given a choice between an agricultural extension package and a local public good - health care or protected spring. The study finds that a majority of people prefers the public good. However, when the extension package is combined with insurance in terms of no payback of the credit in case of crop loss, then we find a significant increase in the choice of the extension package. The study thus sheds light on why Ethiopia’s major development strategy has had limited success and gives evidence of how stated preference methodologies can be utilized for development policy design.