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2012-08-09 | Peer Reviewed

The impact of shadow prices and farmers' impatience on the allocation of a multipurpose renewable resource in Ethiopia

Teklewold, Hailemariam. 2012. “The impact of shadow prices and farmers' impatience on the allocation of a multipurpose renewable resource in Ethiopia.” Environment and Development Economics 17:04: 479-505.
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In a mixed farming system in which farmyard manure (FYM) is considered an important multipurpose renewable resource that can be used to enhance soil organic matter, provide additional income and supply household energy, soil fertility depletion could take place within the perspective of the household allocation pattern of FYM. This paper estimates a system of FYM allocation regressions to examine the role of returns to FYM and farmers’ impatience on the propensity to allocate FYM to different uses.

We parameterize the model using data from a sample of 493 households in Ethiopia. Results
indicate a heightened incentive for diverting FYM from farming to marketing for burning
outside the household when returns to selling FYM and the farmer’s discount rate are
high. These reveal the need for policies that will help to reduce farmers’ impatience and
encourage the substitution of alternative energy sources to increase the use of FYM as a
sustainable land management practice.