Fertilizer use and risk: New evidence from Sub-Saharan Africa

Céline Nauges (), Douadia Bougherara () and Estelle Koussoubé ()
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Céline Nauges: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Douadia Bougherara: CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier
Estelle Koussoubé: LEDA-DIAL - Développement, Institutions et Modialisation - LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique

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Abstract: Using a large representative dataset of 4,428 maize farmers from Burkina Faso with information on over 7,800 plots, we study the role of risk and farmers' risk preferences in their use of nitrogen fertilizers. After characterizing the role of nitrogen on the moments of the maize yield distribution, we plug the plot-specific distributions into a structural model that allows for both risk preferences and probability distortion to elicit farmers' underlying behavioural model. We found farmers to be only moderately risk averse and to distort probabilities; i.e., farmers overweight the small probabilities of getting high yields. Finally, running simulations, we find that prices are a more important driver of the quantity of nitrogen used on maize plots than farmers' risk preferences. Our results suggest that input subsidy programs in this context, if well implemented, may have the potential to increase fertilizer use.

Date: 2022-06-02
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Published in 38èmes Journées de Microéconomie Appliquée, Jun 2022, Rennes, France

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