Stochastic Dominance Analysis of Soil and Water Conservation in Subsistence Crop Production in the Eastern Ethiopian Highlands: The Case of the Hunde-Lafto Area

Abstract

The aim of this paper is to analyze whether investment in soil and water conservation results in a higher yield and income and/or mitigate variability in yield and income to subsistence farm households in the Hunde-Lafto area. Net returns from crop production with and without soil and water conservation (SWC) are compared based on stochastic dominance (SD) criteria. A non-parametric first order SD and normalized second order are used for data analysis. Analysis is based on the Soil Conservation Research Program (SCRP) database for the Hunde-Lafto research unit. The results of the analysis suggest that adopting a conservation strategy results in higher grain yield and net return than in not adopting. The normalized second order SD analysis results do not support the hypothesis that conservation strategy is unambiguously better than a noconservation strategy in reducing variability in yield and net return to farmers. However, conservation strategy has shown second order dominance at lower levels of yield and income that often correspond to unfavorable rainfall conditions. This makes it a preferred strategy to cope with the most prevalent risk factor of moisture shortage. Therefore, appropriate policies to help and encourage farmers to adopt SWC structures will contribute to improving the welfare of subsistence farm households in the study area and in other similar settings in the country. Designing and implementing SWC techniques that may result in unambiguous second order SD dominance will further improve the desirability and adoption of conservation measures.