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

By Stein T. Holden, John Quiggin. 2016

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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.

Subfields: Economics and Econometrics, General Agricultural and Biological Sciences, Soil Science

View Paper: https://www.semanticscholar.org/paper/7cc3500dc7068f045eedaf8b1f9f6c8250590f3d