Farmer Management of Production Risk on Degraded Lands: The Role of Wheat Genetic Diversity in Tigray Region, Ethiopia

This article investigates the effects of wheat genetic diversity and land degradation on risk and agricultural productivity in less favoured production environments of a developing agricultural economy. Drawing production data from household and plot surveys conducted in the highlands of Ethiopia, we estimate a stochastic production function to evaluate the effects of variety richness, land degradation, and their interaction on the mean and the variance of wheat yield. Ethiopia is a centre of diversity for durum wheat and farmers manage complex variety mixtures on multiple plots. Econometric evidence shows that variety richness increases productivity and reduces yield variability, while land degradation augments exposure to risk. Simulations with estimated parameters illustrate how farmers mitigate the adverse effects of land degradation on wheat productivity and risk exposure by planting more diverse durum wheat varieties on multiple plots.