Option Values to Conservation and Agricultural Price Policy: Application to Terrace Construction in Kenya

Policy reforms to liberalize agricultural markets in developing countries are likely to influence both the level and the variability of prices. While considerable attention has been given to the impact of changes in price level on soil and water conservation, there has been relatively little analysi...

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Bibliographic Details
Published in:American journal of agricultural economics 1998-05, Vol.80 (2), p.409-418
Main Authors: Winter-Nelson, Alex, Amegbeto, Koffi
Format: Article
Language:English
Subjects:
Administered prices
Agricultural economics
Agriculture
Cereals
Conservation
Corn
Cost control
Crop economics
Crops
Developing countries
Farmers
Farms
Horticulture
Investment
Investment value
Kenya
LDCs
Liberalization
Market prices
O130
Price levels
Price policy
Prices
Profits
Q150
Q180
Q240
Remittances
Risk aversion
Simulation
Soil conservation
Terraces
Uncertainty
Water conservation
World prices
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Summary:Policy reforms to liberalize agricultural markets in developing countries are likely to influence both the level and the variability of prices. While considerable attention has been given to the impact of changes in price level on soil and water conservation, there has been relatively little analysis of the role of price variability in conservation decisions. We present a model of investment under uncertainty to analyze the effect of both level and variability of prices on the decision to invest in conservation. The model is applied to adoption of fanya juu terraces in eastern Kenya.
ISSN:0002-9092
1467-8276
DOI:10.2307/1244512