Adoption of perennial crops and behavioral risk preferences. An empirical investigation among French farmers.

We mix survey and experimental data to investigate the impact of individual risk preferences onthe adoption of perennial energy crops by French farmers in the prospect theory framework. Ourresults demonstrate that farmers’ degree of loss aversion and probability weighting matter in theadoption decision. The effect of loss aversion is highly dependent on farmers’ reference level,which may be related to land type or farm history, while the effect of probability weighting ishighly dependent on land type only. We find that the more loss averse the farmer, and the moreweighted the extreme events, the lower the probability of adoption on high-potential land. Wealso show that farm characteristics are relevant factors: a higher share of low-profitability landdrives adoption up whereas cattle breeding tends to hamper adoption