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The Role of Production Risk in Sustainable Land-Management Technology Adoption in the Ethiopian Highlands

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  • Kassie, Menale
  • Yesuf, Mahmud
  • Köhlin, Gunnar

Abstract

This paper provides empirical evidence of production risk impact on sustainable land- management technology adoption, using two years of cross-sectional plot-level data collected in the Ethiopian highlands. We used a moment-based approach, which allowed a flexible representation of the production risk (Antle 1983, 1987). Mundlak’s approach was used to capture the unobserved heterogeneity along with other regressors in the estimation of fertilizer and conservation adoption. The empirical results revealed that impact of production risk varied by technology type. Production risks (variance and crop failure as measured by second and third central moments, respectively) had significant impact on fertilizer adoption and extent of adoption. However, this impact was not observed in adoption of conservation technology. On the other hand, expected return (as measured by the first central moment) had a positive significant impact on both fertilizer (adoption and intensity) and conservation adoption. Economic instruments that hedge against risk exposure, including downside risk and increase productivity, are important to promote adoption of improved technology and reduce poverty in Ethiopia.

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  • Kassie, Menale & Yesuf, Mahmud & Köhlin, Gunnar, 2008. "The Role of Production Risk in Sustainable Land-Management Technology Adoption in the Ethiopian Highlands," RFF Working Paper Series dp-08-15-efd, Resources for the Future.
    • Handle: RePEc:rff:dpaper:dp-08-15-efd
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    Cited by:

    1. Samuel Sebsibie & Workineh Asmare & Tessema Endalkachew, 2015. "Agricultural Technology Adoption and Rural Poverty: a Study on Smallholders in Amhara Regional State, Ethiopia," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 23(2), December.
    2. Ogada, Maurice Juma & Nyangena, Wilfred & Yesuf, Mahmud, 2010. "Production risk and farm technology adoption in the rain-fed semi-arid lands of Kenya," Journal of Cooperatives, NCERA-210, vol. 4(2), June.
    3. Yesuf, Mahmud & Kassie, Menale & Köhlin, Gunnar, 2009. "Risk Implications of Farm Technology Adoption in the Ethiopian Highlands," Working Papers in Economics 404, University of Gothenburg, Department of Economics.
    4. Million Sileshi & Reuben Kadigi & Khamaldin Mutabazi & Stefan Sieber, 2019. "Impact of soil and water conservation practices on household vulnerability to food insecurity in eastern Ethiopia: endogenous switching regression and propensity score matching approach," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 11(4), pages 797-815, August.
    5. Martin Persson, U. & Alpízar, Francisco, 2013. "Conditional Cash Transfers and Payments for Environmental Services—A Conceptual Framework for Explaining and Judging Differences in Outcomes," World Development, Elsevier, vol. 43(C), pages 124-137.
    6. Juma, Maurice & Nyangena, Wilfred & Yesuf, Mahmud, 2090. "Production Risk and Farm Technology Adoption in Rain-Fed, Semi-Arid Lands of Kenya," RFF Working Paper Series dp-09-22-efd, Resources for the Future.
    7. Habtamu Nebere & Degefa Tolossa & Amare Bantider, 2021. "Analyzing Factors Affecting the Sustainability of Land Management Practices in Mecha Woreda, Northwestern Ethiopia," Sustainability, MDPI, vol. 13(13), pages 1-15, June.
    8. Kassie, Menale & Zikhali, Precious & Pender, John & Köhlin, Gunnar, 2008. "Organic Farming Technologies and Agricultural Productivity: The case of Semi-Arid Ethiopia," Working Papers in Economics 334, University of Gothenburg, Department of Economics.
    9. Suresh Kumar & Dharam Raj Singh & Alka Singh & Naveen Prakash Singh & Girish Kumar Jha, 2020. "Does Adoption of Soil and Water Conservation Practice Enhance Productivity and Reduce Risk Exposure? Empirical Evidence from Semi-Arid Tropics (SAT), India," Sustainability, MDPI, vol. 12(17), pages 1-16, August.
    10. Samson P. Katengeza & Stein T. Holden & Rodney W. Lunduka, 2019. "Adoption of Drought Tolerant Maize Varieties under Rainfall Stress in Malawi," Journal of Agricultural Economics, Wiley Blackwell, vol. 70(1), pages 198-214, February.
    11. AHMED, Musa H. & MELESSE, Kumilachew A. & TEREFE, Aemro T., 2015. "Valuing Soil Conservation Practices Using Contingent Valuation Technique: Evidence From The Central Rift Valley Of Ethiopia," Review of Agricultural and Applied Economics (RAAE), Faculty of Economics and Management, Slovak Agricultural University in Nitra, vol. 18(2), pages 1-11, October.
    12. Saul Ngarava & Abbyssinia Mushunje & Amon Taruvinga & Peter Mukarumbwa & Simbarashe Tatsvarei & Ebenezer T Megbowon, 2018. "Determinants of Risk Behaviour in Livestock Development Programs: Evidence from South Africa's Kaonafatso Yadikgomo (Kyd) Scheme," Journal of Economics and Behavioral Studies, AMH International, vol. 10(5), pages 7-15.
    13. Kassie, Menale & Zikhali, Precious & Manjur, Kebede & Edwards, Sue, 2008. "Adoption of Organic Farming Technologies: Evidence from Semi-Arid Regions of Ethiopia," Working Papers in Economics 335, University of Gothenburg, Department of Economics.
    14. Ogada, Maurice Juma & Nyangena, Wilfred & Yesuf, Mahmud, 2010. "Production risk and farm technology adoption in the rain-fed semi-arid lands of Kenya," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 4(2), pages 1-16, June.

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    More about this item

    Keywords

    Production risk; sustainable land management technology adoption; moment based estimation; Ethiopia;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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