This chapter first offers examples of risky decisions in agriculture and discusses their implications. The need to take account of risk in agriculture is then highlighted, and the concepts of risk and uncertainty are explained. The chapter also considers the individuals who need to think about risk in agriculture and then presents a general approach to risk management in agriculture as well as an overview of formal decision analysis.

What considerations lead policymakers to invest in agricultural extension as a key public responsibility, and what factors and agency incentives explain differences in extension system performance? To help answer these questions, this article provides a framework outlining farmers' demand for information, the public goods character of extension services, and the organizational and political attributes affecting the performance of extension systems. This conceptual framework is used to analyze several extension modalities and their likely and actual effectiveness. The analysis highlights the efficiency gains that can come from locally decentralized delivery systems with incentive structures based on largely private provision, although in most poorer countries extension services will remain publicly funded.

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Notices 1 Effective January 2007, the Discussion Paper series within each division and the Director General's Office of IFPRI were merged into one IFPRI-wide Discussion Paper series. The new series begins with number 00689, reflecting the prior publication of 688 discussion papers within the dispersed series. The earlier series are available on IFPRI's website at http://www.ifpri.org/publications/results/taxonomy%3A468. 2 IFPRI Discussion Papers contain preliminary material and research results. They have been peer reviewed, but have not been subject to a formal external review via IFPRI's Publications Review Committee. They are circulated in order to stimulate discussion and critical comment; any opinions expressed are those of the author(s) and do not necessarily reflect the policies or opinions of IFPRI.

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