Climate risk and state-contingent technology adoption: shocks, drought tolerance and preferences

Stein Holden () and John Quiggin

European Review of Agricultural Economics, 2017, vol. 44, issue 2, 285-308

Abstract: Climate risk represents an increasing threat to poor and vulnerable farmers in drought-prone areas of Africa. This study assesses the maize adoption responses of food insecure farmers in Malawi, where drought-tolerant (DT) maize was recently introduced. A field experiment, eliciting relative risk aversion, loss aversion and subjective probability weighting parameters of farmers, is combined with a detailed farm household survey. A state-contingent production model with cumulative prospect theory preferences is estimated. More risk-averse households were more likely to have adopted DT maize, less likely to have adopted other improved maize varieties and less likely to have dis-adopted traditional local maize (LM). Exposure to past drought shocks stimulated adoption of DT maize and dis-adoption of LM.

Keywords: climate risk; state-contingent production; subjective probability weighting; loss aversion; technology adoption; adaptation; maize; drought-tolerant maize (search for similar items in EconPapers)
JEL-codes: C93 D03 O33 Q12 Q18 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (48)

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