Welfare effect of improved wheat adoption in Tigrai, Ethiopia: A panel data evidence

Abstract

Technological change in agriculture in land-scarce developing countries is required for land use intensification to feed the growing population. The purpose of this study is to analyze factors affecting adoption decision of improved wheat variety and its effect on households’ welfare in a semi-arid economy of Tigrai, northern Ethiopia. First, a correlated random effect double hurdle model with a control function approach is used to analyze determinants of improved wheat adoption decision and extent of adoption. Second, fixed effect instrumental variable method is used to assess the impact of area under improved wheat cultivation on households’ welfare. Double hurdle model results indicate that access to improved wheat, landholding, male adult and access to information have strong and positive effect on adoption decision and extent of adoption of improved wheat. The impact analysis shows that extent of improved wheat adoption has strong and positive effect on households’ income, consumption, and food security. Moreover, the gender and wealth disaggregation analysis show that extent of improved wheat adoption has a positive and significant effect on welfare of male and female-headed, land poor and land rich households. Thus, adoption of improved wheat is a pro-poor strategy and increasing access to the technology appears a promising pathway for rural development in a land scarce and semi-arid economy like Ethiopia.