Assessment of risk premium in farm technology adoption as a climate change adaptation strategy in the dryland systems of India
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Kakumanu Krishna Reddy, Kuppannan Palanisami, CR Ranganathan, Kumar Shalander, Amare Haileslassie. (31/10/2015). Assessment of risk premium in farm technology adoption as a climate change adaptation strategy in the dryland systems of India. International Journal of Climate Change Strategies and Management, 8(5), pp. 689-717.
Abstract
Purpose: Changing climate has increasingly become a challenge for smallholder farmers.
Identification of technical, institutional and policy interventions as coping and adaptation
strategies, and exploring risks of their adoption for smallholder farms, are the important areas
to consider. The present study carried out an in-depth analysis of adaptation strategies
followed and the associated risk premium in technology adoption.
Design/methodology/approach: The study was carried out in the dryland systems of three
Indian states - Andhra Pradesh, Karnataka and Rajasthan, and was based on a survey of 1,019
households in 2013. The flexible moment-based approach was used for estimating the
stochastic production function, which allowed estimation of the relative risk premium that
farmers are willing to pay while adopting the technologies to avoid crop production risks.
Findings: In all three states, the risk premium (INR ha-1) was higher for farm mechanization
compared to supplemental irrigation, except in the case of Andhra Pradesh. The higher the
level of technology adoption, the higher the risk premium that households have to pay. This
can be estimated by the higher investment needed to build infrastructure for farm
mechanization and supplemental irrigation in the regions. The key determinants of
technology adoption in the context of smallholder farmers were climatic shocks, investment
in farm infrastructure, location of the farm, farm size, household health status, level of
education, married years, expected profit and livestock ownership.
Originality/value: Quantification of the risk premium in technology adoption, and
conducting associated awareness programs for farmers and decision makers are important to
strengthen evidence-based adoption decisions in the dryland systems of India.
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Author(s) ORCID(s)
Krishna Reddy, Kakumanu https://orcid.org/0000-0002-8177-1610
Palanisami, Kuppannan https://orcid.org/0000-0001-7330-7431
Shalander, Kumar https://orcid.org/0000-0001-8072-5674
Haileslassie, Amare https://orcid.org/0000-0001-5237-9006
Palanisami, Kuppannan https://orcid.org/0000-0001-7330-7431
Shalander, Kumar https://orcid.org/0000-0001-8072-5674
Haileslassie, Amare https://orcid.org/0000-0001-5237-9006