Cost-benefit analysis of alternative innovations to the contentious PPPs

The diffusion and adoption of new technologies or innovations among farmers depend on the characteristics of the innovation itself as well as the characteristics of the farmer among others. One important characteristic of an innovation that drives its adoption is the associated cost of adoption. Most farmers will likely favor innovations that require lower investment costs and reduce their future operating costs both in the short and the long run. It is therefore important that innovators are able to determine accurately the private cost accompanying the adoption of an innovation. It is important to note that while the adoption of some innovations comes with investment costs others do not require any investment. Thus, some innovations require just a change of approach and practice in order to achieve the same or better results. These two scenarios present themselves under the NOVATERRA project where researchers are developing new innovations to reduce pesticide application in grapes and olives production.

The aim of this study is therefore two folds. Firstly, to establish the baseline costs and benefits associated with the production of a hectare vineyard and olive groves in the Mediterranean zones and secondly, to estimate the private costs and benefits of adopting an alternative innovation to the contentious plant protection products. In executing the second part of the study, the key focus will be to distinguish between innovations that come with investment costs and innovations without investment costs. In both scenarios, it is expected that the adoption of the new innovation will lead to some redistribution of costs and benefits that will impact the adoption process. The results will benefit both innovators and adopters by helping innovators to present accurate information to their targets while giving prior knowledge on the costs and benefits to the potential adopters.

By Noah Larvoe and Zein Kallas

Center for Agro-Food Economics and Development, CREDA

Universitat Politècnica de Catalunya – UPC