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The impact of shadow prices and farmers' impatience on the allocation of a multipurpose renewable resource in Ethiopia

Published online by Cambridge University Press:  11 July 2012

Hailemariam Teklewold
Hailemariam Teklewold
Affiliation:
Department of Economics, School of Business, Economics and Law, University of Gothenburg, P.O. Box 640, 40530 Gothenburg, Sweden. Tel: + 46 76 5843729. Fax: +46 31 7731043. Email: Hailemariam.Teklewold@economics.gu.se
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Abstract

In a mixed farming system in which farmyard manure (FYM) is considered an important multipurpose renewable resource that can be used to enhance soil organic matter, provide additional income and supply household energy, soil fertility depletion could take place within the perspective of the household allocation pattern of FYM. This paper estimates a system of FYM allocation regressions to examine the role of returns to FYM and farmers' impatience on the propensity to allocate FYM to different uses. We parameterize the model using data from a sample of 493 households in Ethiopia. Results indicate a heightened incentive for diverting FYM from farming to marketing for burning outside the household when returns to selling FYM and the farmer's discount rate are high. These reveal the need for policies that will help to reduce farmers' impatience and encourage the substitution of alternative energy sources to increase the use of FYM as a sustainable land management practice.

Type
Theory and Applications
Information
Environment and Development Economics , Volume 17 , Issue 4 , August 2012 , pp. 479 - 505
Copyright
Copyright © Cambridge University Press 2012

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