Crop biodiversity, productivity and production risk: Panel data micro‐evidence from Ethiopia

This paper uses data from the Central Highlands of Ethiopia to assess the productivity and production risk impacts of crop diversification. Using count index as a measure of crop biodiversity, results show that increasing crop biodiversity contributes positively to farm level productivity. In addition, the findings suggest that the level of production risk significantly responds to the level of diversity, with the effect highly conditional on the skewness. The major contribution of the paper is that, unlike previous similar studies that tended to focus on intra‐crop diversity, it incorporates the mutual interdependencies across crops within a farm by focusing on inter‐crop diversity. Hence the study adds to the growing empirical literature, particularly in Africa, that tests empirical relationships between productivity, risk and crop diversity. An important policy implication for a diversity rich country such as Ethiopia is that agro‐biodiversity can be used to improve agricultural productivity while promoting in situ conservation.