Abstract
Abstract This paper investigates the effects of crop biodiversity on farm income and production risk using a large panel dataset of rural households in Kenya. We consider three different metrics of in situ (on-farm) crop diversification (richness, evenness and concentration). We apply a partial moments-based model to test the effects of each strategy on welfare defined as expected crop income, variability (variance) and downside risk (skewness). Our comprehensive econometric approach differentiates climatic shocks, weather and climate change. The results suggest that the benefits from greater diversification in terms of enhanced land productivity and lower production costs could surpass the foregone benefit from greater efficiency associated with more concentrated production systems. Crop richness and evenness each reduce exposure to crop income risk, especially for more vulnerable farmers who produce below the expected revenue threshold. Farmers who rely on greater crop specialization, on the contrary, are more exposed to crop income risk.
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