Time discounting and implications for Chinese farmer responses to an upward trend in precipitation

Yihong Ding, Kelvin Balcombe and Elizabeth Robinson ()

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper studies Chinese grape growers’ time discounting and its implications for the adoption of technology that can reduce the negative effects of increasing precipitation. Using primary data collected in Xinjiang Province, we undertook a contingent valuation of rain covers that protect fruit from rain and estimated a discounted utility model using these data. Using a hierarchical Bayesian approach, we find that local grape growers discount the future very heavily, with a discount rate of 0.17 per year, which is almost four times higher than the Chinese market interest rate. Farmers also tend to underestimate the benefits of adopting covers, with their purchase decisions appearing to largely depend on their past actual losses rather than future anticipated losses. These findings have broader implications for policies promoting proactive adaptation in response to likely increased rainfall in the region. Targeting farmers who give lower weight to events far off in the future and understanding that many farmers may tend only to make adoption decisions that have strong short-term benefits could improve the efficacy of climate policies that target agricultural technologies.

Keywords: China; contingent valuation; grape; hierarchical Bayesian approach; increased rainfall; technology adoption; time discounting (search for similar items in EconPapers)
JEL-codes: C11 O13 Q12 Q16 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2021-08-04
New Economics Papers: this item is included in nep-agr, nep-cna and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in Journal of Agricultural Economics, 4, August, 2021, 72(3), pp. 916 - 930. ISSN: 0021-857X

Downloads: (external link)
http://eprints.lse.ac.uk/113546/ Open access version. (application/pdf)

Related works:
Journal Article: Time discounting and implications for Chinese farmer responses to an upward trend in precipitation (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:113546

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().