Green Revolution Technology Adoption Risk Gap
Expert TheoryReview
High-yielding agricultural technology packages developed during the Green Revolution (chemical fertilizers, hybrid seeds) remain underutilized in developing regions despite high expected average returns, primarily due to catastrophic downside yield risks during dry spells.
Picture this
It is like offering high-performance sports car engine parts to mountain drivers; even if the engine can go twice as fast, drivers stick to standard engines because taking sharp mountain turns at high speed without a guardrail carries a high risk of driving off a cliff.
What the evidence says
High expected return technologies (hybrid seeds and fertilizers) suffer from low adoption because input costs (Rs. 5,000–9,000/ha) represent non-recoverable losses when severe rainfall shortages occur.
- Who was studied
- Synthesis of empirical adoption literature (e.g., Duflo, Kremer and Robinson 2008; Suri 2009) applied to rural Indian smallholders.
- How
- Analytical synthesis evaluating how uninsured production risk acts as a persistent institutional barrier to high-yielding technology uptake.
What to do
Bundle high-yielding seed varieties and fertilizer subsidies directly with index weather insurance to accelerate technology adoption among risk-averse smallholders.
From the source
"The 'Green Revolution' introduced high-yield crop varieties, chemical fertilizer and other cultivation practices that tremendously increased global agricultural productivity... Our results suggest that limited insurance against idiosyncratic production risk may be one explanation why firms in developing countries are unwilling to shift towards investments that generate higher returns, but with greater risk."
How Does Risk Management Influence Production Decisions? Evidence from a Field Experiment