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On Crop Biodiversity, Risk Exposure, and Food Security in the Highlands of Ethiopia
Salvatore Di Falco and Jean-Paul Chavas
American Journal of Agricultural Economics
Vol. 91, No. 3 (Aug., 2009), pp. 599-611
Stable URL: http://www.jstor.org/stable/20616222
Page Count: 13
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This paper investigates the effects of crop genetic diversity on farm productivity and production risk in the highlands of Ethiopia. Using a moment-based approach, the analysis uses a stochastic production function capturing mean, variance, and skewness effects. Welfare implications of diversity are evaluated using a certainty equivalent, measured as expected income minus a risk premium (reflecting the cost of risk). We find that the effect of diversity on skewness dominates its effect on variance, meaning that diversity reduces the cost of risk. The analysis also shows that the beneficial effects of diversity become of greater value in degraded land.
American Journal of Agricultural Economics © 2009 Agricultural & Applied Economics Association