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This paper introduces a method which aims to estimate farmer's risk aversion coefficients, where risk is defined as income variability. Parametrization techniques are used in household models which are solved with quadratic programming. The method is applied to smallholders in Zimbabwe's semi-arid areas. Risk aversion coefficients estimated for different household types are positive and related to certain economic parameters.

The method proves to be useful where the impact of an innovation, which has a certain degree of risk associated with it, is analyzed. In this paper a technical and an institutional innovation are tested. Results show that at given costs and prices, both, improved small grain varieties as well as trade liberalization, stimulating private trade, have a positive but limited impact on household's income and food security. This implies the need for a comprehensive approach to contend the problem of food insecurity in rural areas.