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Rainfed rice, risk, and technologyadoption: microeconomic evidencefrom eastern IndiaH.N. Singh, S. Pandey, and R.A. VillanoRisk and risk aversion are often believed to be important factors that constrainthe adoption of technology by poor farmers. The nature and magnitudeof risk and how farmers manage risk, however, have been poorly studied inthe context of rainfed rice. This chapter provides an analysis of variability inrice production and farmers’ coping strategies using farm-level panel datafrom two villages of eastern Uttar Pradesh, India.The results indicate that crop diversification is an important farmer strategyfor dealing with risk. Through crop and income diversification, farmershave been able to reduce the effect of risk in rice production on the variabilityof total household income. The economic cost of risk in rice production wasfound to be quite low, implying that yield-increasing rather than yield-stabilizingrice technologies are likely to be more appropriate in these environments.The adoption of modern varieties was conditional on irrigation, farmers’ education,farmers’ age, and their wealth status as represented by farm size.Implications of these results for technology design and policy reforms arediscussed.Uncertainties involved in rainfed rice farming are manifold and farmers face considerablechallenges in dealing with these. Of all the elements of risk, the most importantfor agriculture is rainfall. Risk under rainfed conditions generally tends to be high asvariability in rainfall can lead to wide swings in yield and output. Poor farmers, whenfaced with high levels of risk, may respond by adopting practices that reduce riskeven if they entail a reduction in income on average. To the extent that risk and riskaversion constrain technology adoption, the study of risk and farmers’ mechanismsfor coping with risk is important for technology design and policy reforms.Farmers cope with risk by developing various strategies over time. These strategiescan be classified into ex ante and ex post depending on whether they help reducerisk during the production process or reduce the impact of risk after a productionshortfall has occurred. Because of the absence of efficient market-based mechanismsfor diffusing risk, farmers modify their production practices to provide self-insuranceRainfed rice, risk, and technology adoption: . . . 323