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Abstract

The aim of this article is to assess the optimal choices of a smallholder quinoa farmer in the Puno Peru, in terms of their decision if and when to undertake certain investments that are expected to increase quinoa yield and crop resistance to harsh weather conditions, i.e. frost. We focus on two options, namely quinoa variety management and Waru Waru. The former alternative considers the option of the farmer to switch from his business-as-usual quinoa variety to one that has different yield and frost resistance characteristics. The latter alternative refers to the implementation of an ancestral cultivation practice that is estimated to offer benefits in terms of yield increase and resistance to harsh climate conditions. We rely on Real Options Analysis to assess these opportunities for the farmer. The article also discusses how quinoa price dynamics, yield sensitivity to frost, and governmental support impact the decisions of the smallholder farmer.

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