This is a chapter in a book entitled "Agricultural Investment and Productivity: Building Sustainability in East Africa" edited by Gunnar Köhlin and Randall Bluffstone, 2011.
Difficult climatic conditions and lack of soil nutrients pose important challenges for farm households in Ethiopia. In isolated dry environments farmers rely heavily on genetic resources, and Ethiopia is a recognized global center of genetic diversity for several cereals.
This chapter investigates how crop biodiversity can contribute to farm productivity and assist with the management of risk. To investigate the potential role of crop biodiversity on risk management we adopt a stochastic production function similar to Antle (1983) that analyzes the impacts of biodiversity on mean, variance, and skewness of production, where skewness captures the effects of biodiversity on downside risk exposure (e.g., the probability of crop failure). The study used the determinants of mean output, variance, and skewness using data on barley and cereals production from the highlands of northern Ethiopia.
Results indicate that maintaining a larger number of barley varieties supports productivity and reduces the risk of crop failure.
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