Incentives for Adoption of Site -Specific Technologies Under Uncertainty: Economic and *Environmental Implications

Abstract

The second part of the thesis develops a technology adoption model under uncertainty and risk aversion to examine the incentives for adoption of SSCM and its farm-level impacts. The theoretical model shows that ignoring the input availability uncertainty and risk preferences of farmers results in misleading estimates of impacts of SSCM on input use and yield, and overestimation of the impacts on quasi-rent differentials. Application of the model to adoption of SSCM in a watershed indicates that ignoring risk preference of farmers and uncertainties about SSCM equipment leads to over estimation of quasi-rent differentials of SSCM between 58%--76%. It also leads to an over estimation of the environmental benefits of SSCM by up to 90%. The results have policy implications for improving the benefits of SSCM and controlling pollution through encouraging the adoption of SSCM.