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Ex-post study on Expected Utility of Weather Information: Quasi Experiment on Sri Lankan Paddy Farming

Authors:

N. M. K. C. Premarathne ,

Rajarata University of Sri Lanka, Puliyankulama, Anuradhapura,, LK
About N. M. K. C.
Department of Agricultural Systems, Faculty of Agriculture
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A. Senaratne,

Institute of Policy Studies of Sri Lanka, Colombo 07, LK
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L. H. P. Gunaratne

University of Peradeniya, Peradeniya, LK
About L. H. P.
Department of Agricultural Economics and Business Management, Faculty of Agriculture
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Abstract

Weather information creates certainty and confidence in farmers' minds, which reflect as expected utility. The expected utility helps them to use other inputs to obtain crop yields as the final value. Sri Lankan paddy farmers use both traditional and scientific weather information to capture the uncertainty of rainfall which mainly affects the cultivation decisions. No studies have been conducted in Sri Lanka to find out the impact of the expected utility, derived due to weather information by paddy farmers. To fill this gap, an ex-post valuation study was carried out as a quasi-experiment. A sample of 900 paddy farmers was selected as the control group (450) and the treated group (450) by multi-stage random sampling from six districts representing major cultivation patterns in Sri Lanka. The treated group was provided location-specific weather information as rainfall forecasts. The control group was assumed to be using traditional knowledge or general weather information. The baseline survey was conducted in 2016, while the end survey was conducted in 2018 using the same pre-tested structured questionnaire. The CRRA utility function was estimated to find the expected utility. Difference in Difference (DID) regression was used to quantify the effect of the treatment as the provision of location-specific rainfall forecasts by considering the differences in paddy yield per hectare per farmer as the dependent variable. The results revealed that the treated group derived the highest expected utility. The DID regression results revealed that the interaction was significant (p<0.05), and the coefficient of interaction was 960.54. Therefore, low-risk aversion can be achieved by provisioning location-specific weather information. Such effort is important to increase the full utilization of factors of Sri Lankan paddy production.
How to Cite: Premarathne, N.M.K.C., Senaratne, A. and Gunaratne, L.H.P., 2022. Ex-post study on Expected Utility of Weather Information: Quasi Experiment on Sri Lankan Paddy Farming. Tropical Agricultural Research, 33(4), pp.350–363. DOI: http://doi.org/10.4038/tar.v33i4.8587
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Published on 01 Oct 2022.
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