Production Risks a nd Food Security under A lternative T echnology C hoices in Malawi: A pplication o f a Multinomial Endogenous Switching R egression

Abstract

Employing nationally representative data, we investigatetheimpactofSustainable Intensification Practices (SIPs) on farm households’ food security, downside risk and the cost of risk in Malawi.The analysis relies on aflexible moment-based specification of astochastic production function in a multinomial endogenous switching regression framework to correct for the selection bias stemming both from observed and unobserved heterogeneity. A quantile moment approach is used to estimate the cost of risk.After controlling for the effects of unobserved heterogeneity and several observable variables on maize production and downside risk functions,estimation results show that the adoption of SIPs increases food security and reduces downside risk exposure and the cost of risk. We estimate greater food security and larger reduction in downside risk from simultaneous adoption of both crop diversification(maize–legume intercropping androtations) and minimum tillage, suggesting that there are complementary benefits from these practices. We find most of the cost of risk comes from exposure to downside risk. Our findings imply that in dealing with production risks development agents should encourage