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 on the adoption of perennial energy crops by French farmers in the prospect theory framework. Our results demonstrate that farmers’ degree of loss aversion and probability weighting matter in the adoption 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 is highly dependent on land type only. We find that the more loss averse the farmer, and the more weighted the extreme events, the lower the probability of adoption on high-potential land. We also show that farm characteristics are relevant factors: a higher share of low-profitability land drives adoption up whereas cattle breeding tends to hamper adoption