Risk aversion has generally been found to decrease in income. This may lead one to expect that people in poor countries will be more risk averse than inhabitants of rich countries. Recent comparative findings with students suggest the opposite, potentially giving rise to a risk-income paradox. Findings with students, however, may result from selection effects. We test whether a paradox indeed exists by measuring the risk preferences of over 500 household heads across several regions in the highlands of Ethiopia.
This paper tests the effect of stake size on ambiguity attitudes. Compared to a baseline condition, the paper find subjects to be more ambiguity seeking for small probability gains and large-probability losses under high stakes. They are also more ambiguity averse for large-probability gains and small-probability losses. the study traces these effects back to stake effects on decisions under risk (known probabilities) and uncertainty (unknown probabilities). For risk the paper replicates previous findings.
Does Adoption of Multiple Climate-Smart Practices Improve Farmers’ Climate Resilience? Empirical Evidence from the Nile Basin of Ethiopia
There is a paucity of information on the conditions under which multiple climate-smart practices are adopted and on the synergies among such practices in increasing household resilience by improving agricultural income. This study analyzes how heat, rainfall, and rainfall variability affect farmers’ choices of a portfolio of potential climate-smart practices – agricultural water management, improved crop seeds and fertilizer – and the impact of these practices on farm income in the Nile Basin of Ethiopia.
Mapping Vulnerability to Climate Change of the Farming Sector in the Nile Basin of Ethiopia A Micro-level Perspective
This paper analyzes vulnerability to climate change of the farming sector in the Nile Basin of Ethiopia across different agro-ecological zones. We construct composite vulnerability indices, which integrate both the bio-physical conditions of the farming regions and the socio-economic conditions of the farm households to investigate overall vulnerability as well as adaptive capacity, exposure and sensitivity.
Most hydrological studies do not account for the socio-economic influences on eco-hydrological processes. However, socio-economic developments often change the water balance substantially and are highly relevant in understanding changes in hydrological responses. In this study a multi-disciplinary approach was used to study the cascading impacts of socio-economic drivers of land use and land cover (LULC) changes on the eco-hydrological regime of the Lake Naivasha Basin. The basin has recently experienced substantial LULC changes exacerbated by socio-economic drivers.
The Effects of Groundwater and Surface Water Use on Total Water Availability and Implications for Water Management: The Case of Lake Naivasha, Kenya
This study discusses the effects of water abstractions from two alternative sources on the available water volume around Lake Naivasha, Kenya: the lake itself and a connected aquifer. An estimation of the water abstraction pattern for the period 1999–2010 is made and its effect on the available water volume in Lake Naivasha and its connected aquifer is evaluated using a simple water balance modeling approach.
Accounting for spatial non-stationarity to estimate population distribution using land use/cover. Case Study: the Lake Naivasha basin, Kenya
Remotely-sensed data can be used to overcome deficiencies in data availability in poorly monitored regions. Reliable estimates of human population densities at different spatial levels are often lacking in developing countries. This study explores the applicability of a geographically-weighted regression (GWR) model for estimating population densities in rural Africa using land use/cover data that have been derived from remote-sensing while accounting for spatial non-stationarity.
This study describes the mismatch between required knowledge and efforts by scientists and stakeholders in the Lake Naivasha basin, Kenya. In the basin, integrated water resources management (IWRM) suffers from the absence of critically relevant knowledge. This study further presents a spatial integrated assessment framework for supporting IWRM in the basin. This framework resulted from an ongoing debate between stakeholders and scientists studying the basin's issues. It builds on jointly identified indicators for sustainable governance, and their interdependency, and knowledge gaps.
Farm households' preferences for collective and individual actions to improve water-related ecosystem services: The Lake Naivasha basin, Kenya
Interventions in payment for ecosystem services (PES) programs can involve both collective and individual actions. This study explores the potential for the development of payment for water related ecosystem services (PWES) program in the Lake Naivasha basin, Kenya. Using a choice experiment approach, the willingness to accept compensation is estimated for three water-related ecosystem services (WES) attributes: one collective attribute (reforestation) and two individual attributes (environment-friendly agricultural practices and restoration of riparian land).
Firms’ willingness to invest in a water fund to improve water-related ecosystem services in the Lake Naivasha basin, Kenya
A valuation scenario was designed using a contingent-valuation approach and presented to decision makers in business firms in Kenya’s Lake Naivasha basin to test how applicable a water fund might be as a potential financing mechanism for a payment for water-related ecosystem services scheme. The findings indicate that measuring a firm’s willingness to invest in ecosystem services could help determine whether a firm would invest and engage with other stakeholders to pool their investments in ecosystem services.
Read about EfD research applied around the developing world during 2017. Take a look at each EfD Center's Stories!
We investigate the effect of remittances from migrated family members on informal inter-household transfers, an issue that has received limited attention in the literature. Using rich panel data from urban Ethiopia, we show that receiving international remittances increases the value of private domestic inter-household transfers, whereas receiving domestic remittances does not have any e ect.
Even when communities do a good job of managing forests, additional incentives are needed to encourage them to store more carbon: A Study in Ethiopia
The United Nations Programme to Reduce Emissions from Deforestation and Degradation (REDD+) is a plan to mitigate climate change by making payments to developing countries that conserve forests. However, it is not yet clear whether it makes sense to bring in the approximately 25% of developing country forests that are managed by communities. We attempt to shed light on this question by examining whether forest collective action – cooperation to improve forests – is already sequestering carbon.
This paper contributes to a growing body of empirical literature relating credit constraints and incomplete insurance to investment decisions. We use panel data from rural Ethiopia to investigate whether participation in a safety net program enhances fertilizer adoption. Using a difference-in-difference estimator and inverse propensity score weighting, we found that participation in Ethiopia's food-for-work (FFW) program increased fertilizer adoption. Results also
This paper contributes to a growing body of empirical literature relating credit constraints and incomplete insurance to investment decisions. We use panel data from rural Ethiopia to investigate whether participation in a safety net program enhances fertilizer adoption. Using a difference-in-difference estimator and inverse propensity score weighting, we nd that participation in Ethiopia's food-for-work (FFW) program increased fertilizer adoption. Results also
ECRC Workshop Report:'Toward Developing Long-term Policy Research and Impact Evaluation Program in Support of the CRGE Strategy'
A workshop with a theme “Toward Developing Long-term Policy Research and Impact Evaluation Program in Support of the CRGE Strategy” was held where ECRC presented its five year research plan to stakeholders on 23 February 2016 at Hilton Hotel, Addis Ababa. The workshop was attended by high-level government officials, researchers, and experts from various ministries, universities, national and international research institutes, international organizations and partner institutes and embassy representatives.
The Impact of CO2 Emissions on Agricultural Productivity and Household Welfare in Ethiopia: A Computable General Equilibrium Analysis
Climate change has become one of the most important development challenges worldwide. It affects various sectors, with agriculture the most vulnerable. In Ethiopia, climate change impacts are exacerbated due to the economy’s heavy dependence on agriculture. The Ethiopian government has started to implement its Climate Resilient Green Economy (CRGE) strategy, which is planned to foster development and sustainability while limiting GHG emissions by 2030. However, to the best of our knowledge, research on estimating the economic impacts of CO2 emissions are limited.
On the Joint Estimation of Technology Adoption and Market Participation under Transaction Costs in Smallholder Dairying in Ethiopia
We investigated crossbreeding adoption and milk and milk product market participation using farm household survey data in the central highlands of Ethiopia. We estimated a multivariate probit model to account for correlations across the choice of crossbreeding technology and market participation and to study the effect of transaction costs on participation.
In this article, we study the impact of an institutional intervention on market efficiency in Ethiopia. More specifically, we study whether regional warehouses that are connected to a national commodity exchange reduce transaction costs and price dispersion between regions. In order to identify the causal effect, we take advantage of the fact that the warehouses that are connected to the Ethiopian Commodity Exchange were sequentially rolled out.
Abstract: Previous research studies suggest a lower degree of positional concerns among people from poor countries. Yet the evidence is limited and most often builds on the assumption that people's reference groups are the same across all individuals. We conduct a survey experiment in urban Ethiopia that is modified to include multiplicity of reference groups. We estimate positional concerns considering various reference groups to test whether the low positional concerns found in the literature are due to misspecification of the reference groups.
Land conflicts in developing countries are costly both directly and through increased land degradation. An important policy goal is to create respect for borders. This often involves mandatory, expensive interventions. We propose a new policy design, which in theory promotes neighborly relations at low cost. A salient feature is the option to by-pass regulation through consensus. The key idea combines the insight that social preferences transform social dilemmas into coordination problems with the logic of forward induction.
Disadoption, Substitutability, and Complementarity of Agricultural Technologies: A Random Effects Multivariate Probit Analysis.
In this paper, we analyze what drives farmers to disadopt green revolution technologies (inorganic fertilizer and improved seed) and whether the disadoption of green revolution technologies is related to adoption/non-adoption of other sustainable land management practices (such as farmyard manure and soil and water conservation practices). Random effects multivariate probit regression results based on rich plot level data suggest that black/brown soil type, flatter slope, shorter distance to homestead and extension centers, and access to water are negatively co
REDD + is one of the tools under development to mitigate climate change, but it is not yet clear how to appropriately bring in the approximately 25 per cent of developing country forests that are managed by communities. Drawing on the economics of collective action literature, the authors attempt to shed light on whether forest collective action itself sequesters carbon.
Maize is a strategic commodity for improving food security and alleviating poverty in Tanzania, but its productivity remains low. The importance of improved maize varieties (IMVs) in increasing productivity is documented in existing literature. Previous adoption studies in Tanzania did not examine the factors that influence the speed/timing of adoption. This study examines the determinants of the speed of adoption of IMVs using a duration model and recently collected plot- and household-level data in rural Tanzania.
This study looks into the effect of resource collection (fuelwood collection and fetching water) on child education using data collected from rural Ethiopia. We find that, in general, natural resource scarcity contributes to child illiteracy by increasing the work burden on children in rural Ethiopia. In particular, children’s participation in fetching water is found to be one of the most important factors reducing children’s ability to read and write. There is greater child literacy when household heads have more education and when the family lives near a school.
Livestock and Private Tree Holdings in Rural Ethiopia: The Effects of Collective Action Institutions, Tenure Security and Market Access
This article uses househld panel data spanning the period 2000–2007 to test hypotheses from the literature that secure land tenure, market access and collective action promote accumulation of private capital assets in rural highland Ethiopia. The three natural capital assets analysed in the article, livestock, eucalyptus trees and non-eucalyptus trees on households’ farm plots, make up virtually 100 per cent of privately held disposable assets. Incomes and capital stocks are extremely low and constant and tree assets are at least as important as livestock. We find that collective action and secure land tenure have strong positive effects on accumulation of livestock and other trees, but not eucalyptus. We also find evidence that market access promotes eucalyptus holdings and that other types of wealth tend to be positively associated with private natural capital stocks.
Decentralization, Market Integration, and Efficiency-Equity Trade-Offs: Evidence from Joint Forest Management in Ethiopian Villages
Extant literature on Joint Forest Management (JFM) impact evaluation has concluded that it generally does not provide sufficient incentives to justify the costs that forest use restrictions impose on local people. However, there is a dearth of evidence concerning whether alternative JFM intervention with improved market linkages for non-timber forest products has similar implications. In this study, we evaluated the income and distributive effects of a JFM program in Ethiopia in which additional support for improved market linkages of non-timber forest products was provided.
The EfD Report 2014/15 gives you an excellent overview of the EfD centres´ achievements during 2014 and ongoing work during 2015. Ranging from interesting policy stories on how economic research is put to use around the world to collaborative research programs, a wide range of publications, and our academic capacity building program.
The paper analyzes the economic impacts of climate change-induced fluctuations on the performance of Ethiopia's agriculture, using a countrywide computable general equilibrium (CGE) model. We model the impacts on agriculture using a Ricardian model, where current agricultural production is modelled as a function of temperature and precipitation, among other things, and where future agriculture is assumed to follow the same climate function. The effect of overall climate change is projected to be relatively benign until approximately 2030, but will become considerably worse thereafter.
In developing countries such as Ethiopia, rural households spend a considerable part of their time in agriculture as well as resource collection. However, rigorous empirical studies on the impacts of scarcity of environmental resources on productive activities such as agriculture are very limited—in developing countries in general and Africa in particular. Using a panel data set collected from Ethiopia, this paper examines the effect of scarcity of fuelwood and water on time spent in agriculture.
Biofuels production has received increasing focus by developed and developing countries due to rising fossil fuel prices and the need to mitigate greenhouse gas emissions. The net economic and environmental impacts of biofuel programs have become an important question of public policy. In particular, the anticipation that biofuels may have a lower environmental footprint than fossil fuels is one of the important drivers. This study investigates the economy-wide impact of biofuel investment in Ethiopia with the focus on greenhouse gas (GHG) emissions and the forest sector.
This paper examines the causality between residential electricity consumption and GDP in Ethiopia by using time series data for the period 1970–2011. Examining the link between economic growth and energy consumption can help policy makers design appropriate policy instruments.
Using three rounds of survey data that cover a decade, we analyze household preferences for energy types and energy choice in urban Ethiopia. We find that, during 2000-2009, households in major cities of Ethiopia used multiple fuels as their income increased. Increased fuelwood prices encourage consumption of cleaner fuels, such as electricity, while increased kerosene prices encourage solid fuel consumption. Better educated households are more likely to consume cleaner fuels. While increased incomes are associated with consumption of cleaner fuels, households did not entirely shift to consumption of modern fuels as their income increased. This suggests that an energy transition did not take place following economic growth during the study period.
Land tenure security has long been touted as key to increased performance of the agricultural sector in developing countries. At the same time, off-farm employment is seen as a strategy to diversify rural economies.
This research investigates the profitability of biofuels production in Africa, taking Ethiopia as a case in point, and suggests an oil price threshold beyond which biofuel may be profitable. Specifically, the study analyzes the viability of bioethanol from molasses and biodiesel from other feedstock in the context of Ethiopia, using data from a biofuels investment survey by EEPFE/EDRI in 2010, and makes estimates based on field visits.
Understanding the adoption of a portfolio of sustainable intensification practices in eastern and southern Africa
This paper explores smallholder farmers’ adoption decisions of multiple sustainable intensification practices (SIPs) in eastern and southern Africa. The authors develop a multivariate probit model using plot-level data gathered from maize–legume farming systems in Ethiopia, Kenya, Malawi, and Tanzania.
Forest Tenure Reform in Asia and Africa: Local Control for Improved Livelihoods, Forest Management, and Carbon Sequestration
Forest tenure reforms are occurring in many developing countries around the world. These reforms typically include devolution of forest lands to local people and communities, which has attracted a great deal of attention and interest. While the nature and level of devolution vary by country, all have potentially important implications for resource allocation, local ecosystem services, livelihoods and climate change.
Natural Resource Collection and Children’s Literacy: Empirical Evidence from Panel Data in Rural Ethiopia
Few studies have examined the dynamic aspect of the effect of natural resource collection on child education. This paper looks into the effect of resource collection on child education using panel data collected in four rounds from rural Ethiopia.
This paper assesses rural households’ decision to use improved maize varieties in Malawi and examines its impact on household welfare using a three-year household panel data.
Ethiopia has implemented one of the largest, fastest and least expensive land registration and certification reforms in Africa. While there is evidence that this ‘first-stage’ land registration has had positive effects in terms of increased investment, land productivity and land rental market activities, the government is now piloting another round of land registration and certification that involves technically advanced land survey methods and computer registration.
This study examines current land access and livelihood choices of rural youth in Southern Ethiopia. We found that youth in rural south have limited access to agricultural land because of land scarcity and land market restrictions.
Climate change is one of the most important challenges facing the world in general and Africa in particular. This article examines economic costs of climate change and climate finance with a focus on Africa.
Farmers’ Perceptions About The Influence Of Land Quality, Land Fragmentation And Tenure Systems On Sustainable Land Management In The North Western Ethiopian Highlands
Land is a scarce resource in the highlands of Ethiopia. Its sustainable use is highly affected by bio-physical and institutional factors. The purpose of this research is to investigate farmers' perceptions about land quality, land fragmentation and tenure systems and their influences on sustainable land management (SLM) investments in the North Western Ethiopian Highlands.
The Environment for Development Initiative: lessons learned in research, academic capacity building and policy intervention to manage resources for sustainable growth
This article reviews the history of the Environment for Development (EfD) initiative, its activities in capacity building and policy-oriented research, and case studies at its centres in Chile, China, Costa Rica, Ethiopia, Kenya, South Africa and Tanzania.
Previous studies on improved cook stove adoption in developing countries use cross-sectional data, which make it difficult to control for unobserved heterogeneity and investigate what happens to adoption over time. We use robust non-linear panel data and hazard models on three rounds of panel data from urban Ethiopia to investigate the determinants of adoption and disadoption of electric cook stoves over time.
Previous studies of poverty in developing countries have to a great extent focused on the characteristics of the household head and used these as proxies for the underlying ability of the household to generate income. This paper uses five rounds of panel data to investigate the persistence of poverty in urban Ethiopia, with a particular focus on the role of intra-household heterogeneity in occupations.
Weather fluctuations tend to be as important as climate change in farmers’ decision making in countries such as Ethiopia that have virtually no weather insurance. This paper assesses the distinct impacts of weather and climate change measures on agricultural productivity of households, measured in terms of crop revenue, in the Amhara region of Ethiopia.
The joint EfD Report 2013/14 showcases the work undertaken by the Environment for Development Initiative.
Biogas as a technology and the factors that affect its productivity have both been well studied. Research has previously been done to look at the impact of temperature, pH, organic loading rate, carbon-to-nitrogen ratios, microbial populations and hydraulic retention time on different scales of biogas operations. Small scale biogas installations, of which many millions have been constructed and seem to be performing well, have been chosen as the area of focus for this paper. Such systems allow energy generation on site, thereby eliminating the need for energy intensive transport.
Unobserved Household Differences Have a Significant Impact on Subjective Well-being, a Study Shows in Urban Ethiopia
Economic growth in industrialized countries over the past few decades did not result in improved subjective well-being (SWB) of citizens.