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

Menale Kassie (), Mahmud Yesuf () and Gunnar Köhlin ()
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Menale Kassie: Environmental Economics Policy Forum for Ethiopia, Ethiopian Development Research Institute, Postal: Blue Building/Addis Ababa near National Stadium, P.O. Box 2479, Addis Ababa, Ethiopia
Mahmud Yesuf: Environmental Economics Policy Forum for Ethiopia, Ethiopian Development Research Institute, Postal: Blue Building/Addis Ababa near National Stadium, P.O. Box 2479, Addis Ababa, Ethiopia
Authors registered in the RePEc Author Service: Menale Kassie Berresaw

No 407, Working Papers in Economics from University of Gothenburg, Department of Economics

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.

Keywords: Production risk; sustainable land management technology adoption; moment based estimation; Ethiopia (search for similar items in EconPapers)
JEL-codes: C33 D13 D81 O33 Q24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-afr, nep-agr, nep-dev, nep-eff and nep-res
Date: 2009-11-30
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Working Paper: The Role of Production Risk in Sustainable Land-Management Technology Adoption in the Ethiopian Highlands (2008)
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