smallholder market participation concepts and evidence from eastern and southern africa abstract this paper reviews the evidence on smallholder market participation with a focus on staple foodgrains i e cereals in eastern and southern africa in an effort to help better identify what interventions are most likely to break smallholders out of the semi subsistence poverty trap that appears to ensnare much of rural africa the conceptual and empirical evidence suggests that interventions aimed at facilitating smallholder organization at reducing the costs of intermarket commerce and perhaps especially at improving poorer households access to improved technologies and productive assets are central to stimulating smallholder market participation and escape from semi subsistence poverty traps macroeconomic and trade policy tools appear less useful in inducing market participation by poor smallholders in the region

option value empirical evidence from a case study of recreation and water quality a procedure for measuring option value and other preservation values of water quality is developed and applied to a case study area in the south platte river basin colorado benefits from water based recreation activities are the focus of the study the results provide an empirical test and confirmation of weisbrod s proposal that option value and other preservation values represent important social benefits and should be added to the aggregate consumer surplus of recreation activities to determine the total benefit of environmental amenities to society in the absence of such an estimate insufficient resources would be allocated by society to preservation of unique environments such as pristine mountain streams where mineral and energy development may irreversibly degrade water quality

arbitrary values good causes and premature verdicts abstract this paper offers an alternative interpretation of the conclusions kahneman and knetsch propose based on two contingent valuation cvm surveys the evaluation argues that while framing is important to cvm estimates the design implementation and empirical findings reported from these surveys do not support their judgments moreover with the exception of temporal embedding conventional economic descriptions of individual behavior can explain the response patterns that they suggest are at variance with standard value theory

assessment of public acceptance and willingness to pay for renewable energy sources in crete abstract the aim of this study is to analyse and to evaluate the citizens public acceptance and willingness to pay wtp for renewable energy sources res in crete for this purpose a contingent valuation study was conducted using a double bound dichotomous choice format to elicit people s wtp and factors affecting it residents of 1440 households all over crete were interviewed face to face major conclusions can be used as a basis for sustainable energy planning for policies and the formulation of awareness campaigns and for res investment programs and projects in order to prepare implementation conditions and enhance public acceptance of renewable energy investments and programmes mean wtp per household was found to be 16 33 to be paid quarterly as an additional charge on the electricity bill larger willingness to pay was reported by those with high family income and residence size those having a higher level of energy information and awareness concerning climatic change those who have invested in some energy saving measures and those who suffer from more electricity shortages than others

assessing the importance of health and nutrition related factors on food demand a variable preference investigation the importance of health nutrition related factors and demographics on food consumption is assessed based on consumer demand using a variable preferences approach results of the models show that diet disease individual s race region of residence urbanization education and perceived importance of taste influence the consumption of various food groups economic and policy implications of the results are discussed in the paper

a note on consistent estimation of mean wtp using a misspecified logit contingent valuation model abstract monte carlo evidence has shown that simple misspecified referendum contingent valuation cv models sometimes lead to good estimates of mean willingness to pay wtp empirical studies have found that estimates of mean wtp derived from simple parametric models often differ little from those derived from nonparametric methods this indicates that simple models can potentially yield wtp estimators that are relatively unbiased this note shows that very simple logit referendum cv models will estimate mean wtp consistently if the survey bids are drawn randomly from a uniform distribution

estimation using contingent valuation data from a dichotomous choice with follow up questionnaire reply abstract our original article proposed that the two yes no willingness to pay wtp responses produced by this survey format should be viewed as a pair of jointly distributed correlated discrete random variables the comparison model the conventional approach to estimation using these types of data contained a programming error correction alters the results from the comparison model but our original claim that estimation by conventional methods can produce misleading inferences if ours is the appropriate specification still stands this is especially true if negative wtp is precluded when e wtp is calculated

recreational demands for maintaining instream flows a contingent valuation approach recreational uses of streams although nonconsumptive increasingly conflict with traditional off stream uses of water in arid regions recreational demands for instream flows have collective good attributes such that the recreationists preferences may be inadequately reflected in water allocation decisions the contingent valuation approach was adapted to impute instream flow shadow prices from a sample of recreationists on the cache la poudre river in northern colorado during periods of relatively low flows the estimated instream flow marginal value exceeds the marginal value of water in irrigation suggesting a need for altered water allocation policies

bias and efficiency of single vs double bound models for contingent valuation studies a monte carlo analysis the dichotomous choice contingent valuation method can be used either in the single or double bound formulation the former is easier to implement while the latter is known to be more efficient we analyse the bias of the ml estimates produced by either model and the gain in efficiency associated to the double bound model in different experimental settings we find that there are no relevant differences in point estimates given by the two models even for small sample size the greater efficiency of the double bound is confirmed although differences tend to reduce by increasing the sample size provided that a reliable pretest is conducted and the sample size is large use of the single rather than the double bound model is warranted

social demand for electricity from forest biomass in spain does payment periodicity affect the willingness to pay in this article we analyze social preferences for a partial substitution programme of electricity generated by conventional energy sources for energy generated from a local renewable energy source such as forest biomass this analysis sets arguments in favour of accelerating the introduction of this renewable technology in the spanish electricity system simultaneously two methodological goals concerning the contingent valuation method are discussed in the first one we analyze if there are statistical differences in the willingness to pay wtp when a single or a double bounded format is employed to ask the valuation question results show that wtp estimates from single and double bounded significantly differ in the second one we analyze the effect of the periodicity of the payment vehicle on the estimates of welfare change the timeframe specification of the payment vehicle has been scarcely studied and this fact constitutes the main contribution of this paper to the specialized literature results show that periodicity influences upon the probability to favour the proposed change the periodicity does not affect to the mean wtp obtained in the single bounded format but there are statistical differences in the double bounded format these results might be explained by the presence of yea saying and payment scale bias

a structural time series approach to modelling multiple and resurgent meat scares in italy this paper exploits a structural time series approach to model the time pattern of multiple and resurgent food scares and their direct and cross product impacts on consumer response a structural time series almost ideal demand system sts aids is embedded in a vector error correction framework to allow for dynamic effects vec sts aids italian aggregate household data on meat demand is used to assess the time varying impact of a resurgent bse crisis 1996 and 2000 and the 1999 dioxin crisis the vec sts aids model monitors the short run impacts and performs satisfactorily in terms of residuals diagnostics overcoming the major problems encountered by the customary vector error correction approach

risk aversion and credit constraints in farmers decision making a reinterpretation in 1976 the agricultural development council sponsored a conference on risk uncertainty and agricultural development which has been summarised in a volume edited by james roumasset jean marc boussard and inderjit singh 1979 the volume provides an excellent review of the state of the art at that time however as discussed in the summary chapters of that volume there were few theoretical empirical or policy issues on which clear conclusions could be reached on the basis of knowledge then available in the intervening years progress has been made on a number of issues as a result of both empirical investigations and theoretical advances this paper concentrates on advances which have relevance to the controversy about the relative roles of risk aversion and credit constraints in limiting farmers investment levels especially for purchased inputs such as seeds or fertilizers in particular we review recent experimental studies on the extent of risk aversion among farmer populations in developing

renewables portfolio individual preferences and social values towards res technologies abstract the massive deployment of renewable energy sources represents a high priority for greece in order to comply with the directive 2009 28 ec on the promotion of the use of energy from renewable sources by 2020 in this perspective aegean islands especially lesvos are endowed with a considerable potential of a portfolio of renewables a fact that the entrepreneurial interest has already been targeted however regulatory attempts for a massive penetration of renewables do not take seriously into account preferences and risk perceptions of local communities where the proposed projects are to be installed the aim of this study is to investigate individual preferences and social values towards specific technologies of renewables in lesvos island we apply an open ended contingent valuation survey in order to analyze factors shaping public attitudes towards a portfolio of renewable technologies and estimate the economic welfare willingness to pay of the preferred technologies we argue that such information is relevant for energy policy design and the establishment of effective measures for the promotion of renewable energy sources

consumer demand for nutrition versus taste in four major food categories this study addresses the trade off between nutrition and taste in expenditure on breakfast cereal milk bread and soft drinks within each category products have similar cost and convenience but have markedly different flavor and nutritional content using annual expenditure data for a large sample of households participating in the acnielsen homescan system we regress a measure of healthiness on household demographics and market prices and find that households with college educated heads and higher incomes made significantly healthier choices in all four categories these effects are puzzling in that the nutritional differences between products were well known to consumers and there are no cost or convenience differences between them the presence of children was associated with less healthy choices especially for cereal and bread while older households made healthier choices in all categories except milk

access to capital and its impact on agrarian structure and productivity in kenya access to capital and its distribution across agents can profoundly shape the structure and performance of an agrarian market economy it is conceptually useful to distinguish between ex ante and ex post capital access ex ante capital access denotes the ability of agents to finance production costs e g labor and purchased inputs costs which must be paid ex ante that is prior to the actual realization of production ex post capital access that is access to capital after the realization of the production process is of particular importance as an insurance substitute in low income agrarian economies where contingency markets are imperfect buoyant ex post capital access would permit an individual to stabilize consumption year to year even as production fluctuates annually a number of theoretical models have ex

the role of education on the adoption of chemical fertiliser under different socioeconomic environments in ethiopia studies on input adoption consider education as one of the most important factors that affect adoption decisions however very little is known about the spill over effect of intra household education on the adoption process and about the impact of education on adoption decisions under different socioeconomic conditions we investigate these two issues using a discrete choice model the results indicate that the decision making process is a decentralised one in which educated adult members of the household actively participate in the decision making process this casts doubt on the traditional assumption that the household head is the sole decision maker the results reveal that there is a substantial and statistically significant intra household spill over effect of education on the adoption decision of households the results of the study also show that the coefficient of the education and the environment interaction variable is negative and statistically significant this demonstrates that education and socioeconomic environments could be substitutes in modern environments and complementary in traditional ones this implies that the expansion of education in traditional areas may be more attractive than in modern areas since education is usually the only means to enhance the ability of farmers to acquire synthesise and respond to innovations such as chemical fertiliser

where and how index insurance can boost the adoption of improved agricultural technologies abstract remote sensing and other advances have led to an outpouring of programs that offer index insurance to small scale farmers with the expectation that this insurance will enable adoption of improved technologies and boost living standards despite these expectations the evidence to date on the uptake and impacts of insurance is mixed this paper steps back and considers theoretically where index insurance might be most effective and whether it should be offered as a standalone contract or explicitly interlinked with credit contracts emerging from this analysis is a set of nuanced recommendations based on the structure of risk and the property rights collateral environment

the impacts of multiperil crop insurance on indonesian rice farmers and production this article analyzes the effect of multiperil crop insurance policy for risk averse indonesian rice farmers located in tuban and gresik regencies of the east java province based on the model comparative static analysis of a change in policy variables coverage levels and premium subsidies on input use through the coupling wealth and insurance effects are presented the comparative static results are largely ambiguous and left as empirical questions consequently the model is numerically simulated to quantify the effects of different coverage levels and subsidy rates on input use expected net insurance payments and certainty equivalents the empirical analysis shows that mpci crop insurance results in a decline in expected yield for coverage levels above about 82 5 for both regencies furthermore higher subsidy rates amplify the reduction in input use and yield therefore incomplete coverage with relatively low premium subsidies is the best policy to minimize the impact on input use and yield however from the farmers perspective the optimal policy combination results from the highest coverage level and subsidy which offer the largest expected net insurance payments and certainty equivalent

on bias correction in the multivariate sample selection model heien and wessells two step estimator for the multivariate sample selection model has been used extensively during the past 15 years a modified version of it with slightly different selectivity regressors has also appeared in the empirical literature both estimators are unfounded and generally do not correct for the sample selectivity bias as intended but have continued to gain popularity in empirical applications the properties of the modified heien wessells procedure are investigated in both the bivariate and multivariate contexts and the conditions under which this estimator fails to correct for sample selectivity are examined the theoretical properties are demonstrated with a simulated random sample

no news is good news stochastic parameters versus media coverage indices in demand models after food scares we develop a stochastic parameter approach to model the time varying impacts of food scares on consumption as an alternative to the inclusion of news coverage indices in the demand function we empirically test the methodology on data from four food scares the 1982 heptachlor milk contamination in oahu hawaii and the bovine spongiform encephalopathy and two escherichia coli scares on u s meat demand over the period 1993 9 results show that the inclusion of time varying parameters in demand models enables the capturing of the impact of food safety information and provides better short term forecasts

five a day a price to pay an evaluation of the uk program impact accounting for market forces we provide an ex post assessment of the uk 5 a day information campaign where the positive effects of information are disentangled from potentially conflicting price dynamics using 4 years of data from the expenditure and food survey between 2002 and 2006 we estimate that the 5 a day program has lifted fruit and vegetable consumption by 0 3 portions on average we also provide quantitative evidence of a differentiated impact by income group ranging from 0 2 to 0 7 portions all impacts are larger than those observed by simply comparing pre policy and post policy intakes

state conditional fertilizer yield response on western kenyan farms 15 16 17 we acknowledge with gratitude support from the rockefeller foundation the united states agency for 18 international development usaid leadership enhancement in agriculture program leap and the 19 coupled natural and human systems program of the biocomplexity initiative of the national science 20 foundation through grant bcs 0215890 the world agroforestry center icraf graciously hosted 21 the lead author for part of the research and provided soil test results we are also grateful to james

on designing constructed markets in valuation surveys in this paper i consider some of the methodological issues involvedin designing valid contingent valuation cv scenarios i identifythe several parts of these scenarios and the design issues particularto those parts although my principal example is the scenario i andothers used in the exxon valdez oil spill study of the naturalresource damages to prince william sound alaska i generalize toother types of cv scenarios

access to capital and agrarian production organisation there are two problems both universal that entrepreneurs in any economy must contend with firstly an agent generally has access only to a limited amount of working capital secondly workers hired by an agent are subject to moral hazard and this necessitates their supervision this paper models for an agrarian economy the constraints imposed on entrepreneurs activities by these two problems and endogenously determines the various organisational forms of production as well as the allocation of resources that will obtain with a simple model we endeavour to explain a diverse set of empirical observations pertaining to the less developed countries in terms of the general processes that determine the distribution of income among the various agents and the hierarchical relationships that develop among them agricultural production typically involves a period of several months between the time the inputs are purchased and the time the output is marketed access to working capital and hence to the credit market thus plays an important role in a farmer s production decisions the distribution of access to credit in turn tends to be an important determinant of income distribution in poor agrarian economies credit is invariably rationed according to the ability to offer collateral the amount of working capital a farmer can mobilise therefore depends on the amount of land he owns which is often a good proxy for his overall wealth and thus his ability to offer collateral further since hired hands have a propensity to shirk they need to be supervised and therefore the

weather index insurance for agricultural development introduction and overview this introductory paper highlights the key attributes of weather index insurance and summarizes the major points and conclusions of the three subsequent papers included in the special issue

too certain to invest public safety nets and insurance markets in ethiopia researchers efforts to introduce index insurance in developing countries have met with little demand despite its great potential to help farmers mitigate economic risk i argue that researchers have overlooked institutional context s critical role in the formation of private markets when designing insurance contracts using micro level evidence from ethiopia i show that recipients of a preexisting effective large scale public safety net fail to take up a new highly subsidized private insurance offer government safety net programs can decrease demand for private index insurance forming an additional barrier to index insurance take up a direct implication of this research is that policymakers should design private and public insurance products that account for or even complement each other

fertilizer use risk and off farm labor markets in the semi arid tropics of india a two period model is developed in which a risk averse farmer uses off farm labor to smooth consumption leading to greater use of fertilizer fertilizer demand is shown to increase with the depth of the off farm labor market controlling for exogenous weather risk farmers use more fertilizer the lower the unemployment rate and the higher the share of nonagricultural work in total off farm labor the results suggest that off farm labor markets and own farm production may be complementary in risky production environments so that policies which promote the depth of the off farm labor market in low income areas may also bolster farm productivity copyright 2003 oxford university press

a heterogeneous agent model of credit linked index insurance and farm technology adoption abstract protection from downside risk is a determinant of technology uptake among subsistence agricultural households access to credit insurance and savings may stimulate technology adoption where new methods are riskier but higher yielding or require sunk costs in this paper we employ a dynamic stochastic heterogeneous agent model where farm households have access to contingent credit and make savings technology and loan repayment choices our approach is novel as insurance is modeled as a meso level product where the bank is indemnified before any payouts are distributed to borrowers thus it accounts for both supply and demand side concerns showing a flow of effects when index insurance contracts are sold to risk aggregators for whom basis risk is lower results show letting the lender lay first claim on indemnities lowers default which can decrease interest rates and expand credit access insurance and savings may also spur technology uptake

can renewable energy be financed with higher electricity prices evidence from a spanish region abstract in this paper we estimate the willingness to pay for mix of renewable sources of electric power by means of a discrete choice experiment survey conducted in spain in 2010 two main categories of power supply attributes are explored source of renewable power wind solar and biomass and the origin of such power the findings suggest that most consumers are not willing to pay a premium for increases in the shares of renewable in their electricity mix for two of the three renewable sources considered wind and biomass an increase of the renewable mix would require a discount instead we record positive willing to pay for increases in the share of both solar power and locally generated power however preferences for types of renewable solar and wind are found to be heterogeneous by classifying respondents in two groups according to the implied importance of the share of renewable sources in their power mix we identify a market segment consisting of 20 of respondents that could promote renewable energy in the absence of subsidies this is because such a segment shows willingness to pay higher than the current feed in tariffs

giving respondents time to think in contingent valuation studies a developing country application abstract this paper evaluates whether the time given people to think about their responses to cvm valuation questions influences their answers our study was conducted in nigeria as part of an evaluation of rural households willingness to pay for public taps and private connections to improved drinking water systems respondents who were allowed time to evaluate the proposed water system bid significantly less than those who did not have that time moreover this conclusion was upheld regardless of whether the water system was a public tap or a private connection

the relation between farm size and farm productivity the role of family labor supervision and credit constraints abstract the paper shows that if the performance of hired farmhands is affected by supervision from family members and if the availability of credit is dependent on the amount of land owned then a systematic positive or negative relationship between per acre yields and farm size will prevail a model with no supervision effects on labor productivity would predict that yields are unaffected by farm size the paper also investigates the relation between land utilization and owned holding size when land rental possibilities are limited results are shown to be compatible with various observed patterns in ldcs

insurance credit and technology adoption field experimental evidence from malawi this brief summarizes the insurance credit and technology adoption field experimental evidence from malawi the farmers were offered loans for the november 2006 planting season does production risk suppress the demand for credit the author implemented a randomized field experiment to ask whether provision of insurance against a major source of production risk induces farmers to take out loans to adopt a new crop technology the study sample was composed of roughly 800 maize and groundnut farmers in malawi where by far the dominant source of production risk is the level of rainfall the author randomly selected half of the farmers to be offered credit to purchase high yielding hybrid maize and groundnut seeds for planting in the november 2006 crop season the other half of farmers were offered a similar credit package but were also required to purchase at actuarially fair rates a weather insurance policy that partially or fully forgave the loan in the event of poor rainfall surprisingly take up was lower by 13 percentage points among farmers offered insurance with the loan take up was 33 0 percent for farmers who were offered the uninsured loan there is suggestive evidence that reduced take up of the insured loan was due to farmers already having implicit insurance from the limited liability clause in the loan contract insured loan take up was positively correlated with farmer education income and wealth which may proxy for the individual s default costs by contrast take up of the uninsured loan was uncorrelated with these farmer characteristics

starting point bias in dichotomous choice valuation with follow up questioning abstract follow up questions are frequently used to improve the efficiency of dichotomous choice contingent valuation questionnaires however a number of authors e g 12 16 have noted a significant difference between the wtp distributions implied by initial and follow up question responses this paper investigates starting point bias as one explanation for the phenomenon we develop a model of starting point bias in the context of dichotomous choice questioning with follow up using a monte carlo simulation to illustrate the potential bias imparted to wtp estimates an application is provided based on data from a cv study in northcentral iowa

designing transactions without framing effects in iterative question formats abstract several studies document that iterative question formats used in contingent valuation studies produce anomalies in respondent behavior that appear to threaten the validity of welfare estimates by decomposing iterative question formats into their ascending and descending sequences we show that these anomalies occur only in ascending sequences we describe the conditions under which comparable patterns of behavior are likely to be found in other iterative question formats that begin with a discrete willingness to pay question we then develop a unified explanation of these anomalies using our model of framing based on prospect theory we provide the first head to head test of rival explanations of these behavioral patterns by developing refutable hypotheses for the strategic behavior yea saying anchoring and cost expectations models finally based on our own statistically robust model we show how these anomalies can be eliminated without loss of the statistical efficiency of most iterative question formats

accelerating food production in sub saharan africa in 1982 26 countries in africa faced acute food shortages and nutrition problems during the 1960s the continents food production per person fell 7 and during the 1970s it fell an additional 15 in only 8 countries which account for less than 15 of the regions population did per capita agricultural production actually increase in the 1970s in view of the expectation that the urban population will quadruple during the last quarter of this century present trends are intolerable and must be reversed another disturbing problem that needs urgent attention is the rapid depletion of vital topsoil estimated by the director general of the un food and agriculture organization to be a frightening 6 million hectares per annum this volume provides up to date definitions of the food and nutrition problems that face africa now and in the medium term future the book also deals with the policy needs for promoting growth of food production the concept of solving our food shortages by increasing production is the policy of the southern african development coordination conference sadcc the book also examines food policy in the context of national development strategies though potentially rich sub saharan africa is at present extremely poor in 1979 per capita gross national product gnp in the whole area was only 411 compare this with a gnp per capita of 9440 in the countries of the industrialized world the demand for improved living standards presses from virtually every quarter while available resources are extremely limited without exception each country of the region faces the problem of determining food policy in the context of its overall national development strategy several chapters in this volume by representatives from both sub saharan africa and donor countries and agencies analyze past experiences and suggest aid strategies for accelerating agricultural growth in the region several stress the point that the aid most urgently required is that which would assist our region in greater utilization of its agricultural base in order to increase overall production and lessen dependence on food aid

market dynamism and international trade a case study of mediterranean agricultural products 1850 1935 this article concentrates on analysing the rightward shifts of the demand curve for mediterranean agricultural products from 1850 to 1938 we have found that such shifts were especially conditioned by the different income elasticities of demand and by changes or otherwise in consumer preferences our aim is to show that there was an initial conditioning factor for the producer countries to take full advantage of these potential growth opportunities namely the size of such shifts

how high are rates of return to fertilizer evidence from field experiments in kenya the idea that peasant farmers are rational profit maximizers has been a staple of development economics since theodore schultz 1964 it has also been influential in shaping policy for example agricultural experts have stressed the importance of fertilizer use in raising agricultural yields pointing to impressive results on experimental farms and to huge differences in agricultural productivity across countries with different levels of fertilizer use robert evenson and douglas gollin 2003 historically many countries subsidized fertilizer in response but economists have been skeptical of claims that farmers are leaving money on the table noting that fertilizer may not have the same returns on real world farms as on experimental farms that returns to fertilizer may be low for many farmers even if they are high on average tavneet suri 2007 that fertilizer may require complementary inputs or may be risky many countries have withdrawn or scaled back fertilizer psychology and development theory and experimental evidence

calories obesity and health in oecd countries theoretical models suggest that decisions about diet weight and health status are endogenous within a utility maximization framework in this article we model these behavioural relationships in a fixed effect panel setting using a simultaneous equation system with a view to determining whether economic variables can explain the trends in calorie consumption obesity and health in organization for economic cooperation and development oecd countries and the large differences among the countries the empirical model shows that progress in medical treatment and health expenditure mitigates mortality from diet related diseases despite rising obesity rates while the model accounts for endogeneity and serial correlation results are affected by data limitations

nudging farmers to use fertilizer theory and experimental evidence from kenya we model farmers as facing small fixed costs of purchasing fertil izer and assume some are stochastically present biased and not fully sophisticated about this bias such farmers may procrastinate post poning fertilizer purchases until later periods when they may be too impatient to purchase fertilizer consistent with the model many farmers in western kenya fail to take advantage of apparently profit able fertilizer investments but they do invest in response to small time limited discounts on the cost of acquiring fertilizer free deliv ery just after harvest calibration suggests that this policy can yield higher welfare than either laissez faire policies or heavy subsidies

the demand for microinsurance a literature review summary microinsurance has recently received much attention as a promising tool to protect poor individuals from important shocks yet voluntary demand from people has been low shedding doubt on the viability of microinsurance as a useful risk management tool to better understand this puzzle this paper reviews both the theoretical and empirical literature on the demand for insurance while people s lack of understanding of insurance does seem to limit the demand for it several more fundamental factors such as price quality limited trust in the insurer and liquidity constraints also seem to have an important role in explaining the puzzle

productivity credit risk and the demand for weather index insurance in smallholder agriculture in ethiopia the article explores the relationship between fertilizer use and the demand for weather index insurance wii among smallholder farmers in ethiopia we examine whether fertilizer use is profitable under current smallholder production conditions whether risk related factors affect fertilizer use and we estimate the returns to inputs in the agricultural production function in the absence of insurance we then study how these primitives of agricultural production functions relate to insurance demand the study compares a survey based estimate of willingness to pay with actual uptake for the weather insurance finding the stated and actual demand to be almost completely uncorrelated while those with high marginal returns to inputs say they would purchase insurance only those with low marginal returns actually do consistent with the stated purpose of the product as input insurance insurance demand proves to be highly responsive to the existence and amount of randomly allocated insurance vouchers jel classifications c83 g22 q12

experimental evidence on the drivers of index based livestock insurance demand in southern ethiopia while index based microinsurance has attracted considerable attention uptake rates have been weak in many low income countries we explore the purchase patterns of index based livestock insurance in southern ethiopia focusing on the role of accurate product comprehension and price we find that randomly distributed learning kits improve subjects knowledge of the products however we do not find strong evidence that the improved knowledge per se causes greater insurance uptake we also find that reduced price due to randomly distributed discount coupons has an immediate positive impact on uptake without dampening subsequent period demand due to reference dependence associated with price anchoring effects

overcoming the barriers for biodiesel use in spain an analysis of the role of convenience and price abstract the aim of the paper is to analyse biodiesel market acceptance in spain in particular we study the intention to use biodiesel by spanish diesel car drivers and the factors explaining this intention to achieve this goal we developed a model of the intention to use biodiesel based on the theory of planned behaviour but extended in two ways the first one consists of the inclusion of two new predictors of the intention to use environmental self identity and biodiesel knowledge and the second the extension of the model to take into account the two barriers in the adoption of biodiesel in the market potential price premium and limited availability in the petrol stations this model has been specified as an ordered probit and estimated using data from a survey conducted in spain results indicated that apart from the attitudes towards biodiesel use the most important factors explaining the intention to use biodiesel are the biodiesel knowledge and the environmental self identity in other words the new predictors in the theory of planned behaviour model in addition the effects of all the factors attitudes subjective norms perceived behavioural control biodiesel knowledge environmental self identity and socio demographic characteristics on the intention to use were different depending on the price and the availability of the biodiesel in the market thus we can conclude that to analyse the intention to use biodiesel different price and availability scenarios should be taken into account empirical results indicated that to increase biodiesel use the best option is to increase biodiesel knowledge and environmental self identity

sensitivity of contingent valuation to alternative payment schedules insensitivity to payment schedule wherein respondents do not adequately differentiate between a one time payment and a series of payments may be an important but often overlooked factor in the design interpretation and use of contingent valuation studies several contingent valuation experiments involving a familiar private good and a less familiar environmental commodity indicate that although respondents distinguished between lump sum and periodic payment schedules implicit discount rates were very high suggesting that sensitivity to payment schedule is an important subject for further study

demand for a labor based drought insurance scheme in ethiopia a stated choice experiment approach index based weather insurance is increasingly used to manage weather related risks in smallholder agriculture however cash constrained smallholders often lack the resources to pay an insurance premium which may undermine its wider adoption this article investigates alternative insurance payment methods that may help to enhance the adoption of index based weather insurance we use a choice experiment to elicit smallholders willingness to pay in cash or labor for index based weather insurance in four districts in the south central highlands of ethiopia the insurance schemes were created using a fractional factorial design with three factors work cash and payout rate we analyze the choice data using a random parameter mixed logit model we find that the average participants need a subsidy to pay cash for insurance because their willingness to pay is less than the expected cost of the insurance on average they are willing to pay only 0 81 etb ethiopian currency to get an expected yearly payout of 1 etb however most are willing to participate in work for insurance programs at lower daily wage rates than is common for other work programs in ethiopia

how might climate change influence farmers demand for index based insurance the low observed uptake of non subsidised index based insurance policies in developing countries has been puzzling researchers for about a decade this paper analyses the role of drought frequency in farmers demand for index based insurance in developing countries while it is typically assumed that an increase in exposure to risk would result in higher demand for index insurance this paper finds the opposite an increase in drought frequency may result in lower demand for index insurance under fairly standard conditions in an expected utility model we show that the demand for insurance is an inverted u function of drought frequency we further show that downside basis risk decreases insurance demand under frequent drought conditions it implies that insurance against similar but more frequent events cannot meet large demand from farmers to check the empirical relevance of these effects we conduct an insurance field experiment in burkina faso with 205 farmers we analyse insurance demand for different drought frequencies different levels of basis risks and different loading factors through incentivised lottery choices this analysis confirms that for higher drought frequencies insurance demand is lower insurance demand also decreases with basis risk and the loading factor

bias in discrete response contingent valuation abstract the empirical literature on discrete response contingent valuation has found that seemingly innocuous changes in the statistical models estimated result in significantly different point estimates of willingness to pay this paper hypothesizes and tests several potential explanations for these results first it investigates and compares the biases inherent in single bounded and double bounded maximum likelihood estimation procedures and examines how they react to various bid designs and sample sizes then it examines the presence and identification of outliers in binary choice data and how these outliers influence estimation finally it presents an alternative approach to addressing the issue of outliers which explicitly acknowledges the possibility of upwardly biased response probabilities

credit market imperfections and the distribution of policy rents this article shows that credit market imperfections have important implications for the distribution of policy rents in a model with land as fixed factor and credit market imperfections when an area payment is given land rents go up by more than the subsidy on aggregate farms may lose from the subsidy the results depend on the extent to which subsidies have direct and indirect effects on the credit constraints on whether farms rent or own land and on farm heterogeneity

statistical approaches to the fat tail problem for dichotomous choice contingent valuation if a cumulative density function esti mated from dichotomous choice data has an unre alistically fat right hand tail mean willingness to pay wtp will be overestimated truncating the range of integration results in a lower bound esti mate of the true mean wtp a normalization pro cedure proposed by boyle welsh and bishop 1988 unnecessarily depresses the estimate further a new statistical approach is presented that allows a best guess estimate of mean wtp because this estimate involves extrapolation beyond the range of the data it tends to be highly variable jel q21

risk rationing and wealth effects in credit markets theory and implications for agricultural development we develop a model that shows that asymmetric information can result in two types of credit rationing conventional quantity rationing and risk rationing whereby farmers are able to borrow but only under high collateral contracts that offer them lower expected well being than a safe subsistence activity after exploring its incidence with respect to wealth we show that risk rationing has important policy implications specifically land titling will be only partially effective because it does not enhance producers willingness to offer up the collateral needed to secure loans under moral hazard constraints efforts to enhance agricultural investment and the working of agricultural credit markets must step beyond land titling and also deal with risk copyright 2008 oxford university press

consumption risk technology adoption and poverty traps evidence from ethiopia much has been written on the determinants of input and technology adoption in agriculture with issues such as input availability knowledge and education risk preferences profitability and credit constraints receiving much attention this paper focuses on a factor that has been less well documented the differential ability of households to take on risky production technologies for fear of the welfare consequences if shocks result in poor harvests building on an explicit model this is explored in panel data for ethiopia historical rainfall distributions are used to identify the counterfactual consumption risk controlling for unobserved household and time varying village characteristics it emerges that not just ex ante credit constraints but also the possibly low consumption outcomes when harvests fail discourage the application of fertilizer the lack of insurance causes inefficiency in production choices