The impact of uncertainty on farmers’ adoption of straw returning technology in Northwest China

Abstract

Straw returning technology has the potential to not only enhance the crop’s nitrogen yield but also protect the ecological environment and enhance crop yield. This paper explores the impact of uncertainty on rural households’ adoption of straw returning technology using an experimental method based on 703 wheat planting households in the Loess Plateau, China. The results show that 1) most farmers are inclined to risk aversion, and farmers generally have the characteristics of ambiguity aversion. 2) Risk preference and ambiguity preference obviously and negatively impact the possibility of adopting straw returning technology, and when the farmer’s risk preference and ambiguity preference increase by 0.1 units, the probability of adopting straw returning technology will decrease by 19.4% and 17.1%, respectively. 3) When we take the risk preference and ambiguity preference together into account, risk preference has sufficiently large effects on farmers’ decision on adopting straw returning technology relative to ambiguity preference. Overall, this research provides a micro-foundation and policy recommendations for farmers’ straw returning technology promotion in rural China and sheds light upon how the government can formulate relevant policies to promote green environmental development.