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Does Fertilizer Use Respond to Rainfall Variability? Panel Data Evidence from Ethiopia

  • Alem, Yonas

    ()

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Bezabih, Mintewab

    ()

    (Department of Economics, University of Portsmouth, UK)

  • Kassie, Menale

    ()

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Zikhali, Precious

    ()

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

In this paper we use farmers' actual experiences with changes in rainfall levels and their responses to these changes to assess if patterns of fertilizer use are responsive to changes in rainfall patterns. Using plot and farm level panel data from the central Highlands of Ethiopia matched with corresponding village level rainfall data; results show that both the current year’s decision to adopt and the intensity of fertilizer adoption is positively associated with higher rainfall levels experienced in the previous year. Furthermore, we find a concave relationship between previous season rainfall levels and fertilizer adoption, indicating that too much rainfall discourages adoption. Abundant rainfall in the previous year could depict relaxed liquidity constraints and increased affordability of fertilizer, which makes rainfall availability critical in severely credit constrained environments. In light of similar existing literature, the major contribution of the study is its use of plot level panel data, which permits us to investigate the importance of plot characteristics in fertilizer adoption decisions.

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File URL: http://hdl.handle.net/2077/18935
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Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 337.

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Length: 22 pages
Date of creation: 05 Jan 2009
Date of revision:
Handle: RePEc:hhs:gunwpe:0337
Contact details of provider: Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/

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  1. Stefan Dercon, 2003. "Growth and Shocks: evidence from rural Ethiopia," CSAE Working Paper Series 2003-12, Centre for the Study of African Economies, University of Oxford.
  2. Clay, Daniel & Reardon, Thomas & Kangasniemi, Jaakko, 1998. "Sustainable Intensification in the Highland Tropics: Rwandan Farmers' Investments in Land Conservation and Soil Fertility," Economic Development and Cultural Change, University of Chicago Press, vol. 46(2), pages 351-77, January.
  3. Dercon, Stefan, 2002. "Income Risk, Coping Strategies and Safety Nets," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  4. Jonathan Morduch, 1995. "Income Smoothing and Consumption Smoothing," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 103-114, Summer.
  5. Seo, S. Niggol & Mendelsohn, Robert, 2008. "An analysis of crop choice: Adapting to climate change in South American farms," Ecological Economics, Elsevier, vol. 67(1), pages 109-116, August.
  6. Russell L. Lamb, 2003. "Fertilizer Use, Risk, and Off-Farm Labor Markets in the Semi-Arid Tropics of India," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(2), pages 359-371.
  7. John Hoddinott, 2006. "Shocks and their consequences across and within households in Rural Zimbabwe," Journal of Development Studies, Taylor & Francis Journals, vol. 42(2), pages 301-321.
  8. Shively, Gerald E., 1997. "Consumption risk, farm characteristics, and soil conservation adoption among low-income farmers in the Philippines," Agricultural Economics, Blackwell, vol. 17(2-3), pages 165-177, December.
  9. Paxson, Christina H, 1992. "Using Weather Variability to Estimate the Response of Savings to Transitory Income in Thailand," American Economic Review, American Economic Association, vol. 82(1), pages 15-33, March.
  10. Fufa, B. & Hassan, Rashid M., 2006. "Determinants of fertilizer use on maize in Eastern Ethiopia: A weighted endogenous sampling analysis of the extent and intensity of adoption," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 45(1), March.
  11. Demeke, Mulat & Kelly, Valerie A. & Jayne, Thomas S. & Said, Ali & Le Vallee, Jean-Charles & Chen, H., 1998. "Agricultural Market Performance and Determinants of Fertilizer Use in Ethiopia," Food Security Collaborative Working Papers 55599, Michigan State University, Department of Agricultural, Food, and Resource Economics.
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