Determinants of Risk-Dependent Agricultural Field Behaviours in Bhutan

Abstract

This article investigates the power of individual risk preference in combination with socio-economic and demographic characteristics to predict ten agricultural field behaviours in a developing country. A sample of 163 farmers from western-central Bhutan was interviewed regarding their farm management practices. Their risk preference was then experimentally elicited using a modified Multiple Price List. The results show farm size as being a primary determinant of income diversification, nitrogenous fertiliser application, and pesticide use. Farm diversification is most dependent on the household head's level of education and the quantity of farm labour available. Finally, both income diversification and farm diversification are shown to have an inverse relationship with loss risk aversion. On the basis of the findings of this article, agricultural policy and programmes can increase their efficacy and efficiency by targeting agrarian Bhutanese households based on their characteristics.