The agriculture sector in Ethiopia is characterized by low external input use and low productivity. It is also characterized by high nutrient depletion and soil erosion that limit farmers’ ability to increase agricultural production and reduce poverty and food insecurity.
In response to this, governmental and non-governmental institutions have invested substantial resources to promote land management technologies, extension and credit services and establish land management related projects such as soil and water conservation, fertilizer and soil laboratories. However, the adoption rates of technologies that reverse depletion of natural resources and improve agricultural productivity are very low. Low adoption rate by small-scale subsistence farmers might be due to low productivity or risks associated with the promoted land management technology. We hypothesize that the existence of risk in the production environment affects decision making. The effect of risk depends on decision makers’ attitudes toward risk. It is therefore important to analyze how risk and risk preferences affects farmers’ decisions on input allocations and how input allocation affects risk, risk preference and productivity. Knowledge of which technology has impact on household welfare and the role of production risk on technology adoption and the vice versa will assist policy makers in designing strategies to promote technologies. This project is developed to address these issues in the Ethiopian highlands using both parametric and non-parametric techniques. It will cover four regions of the country.
Menale Kassie Mahmud Yesuf Randall Bluffstone
