Economic policy analysis tools for sustainable intensification
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Transcript of Economic policy analysis tools for sustainable intensification
Economic policy analysis tools for sustainable intensification
David J. Spielman and Patrick Ward
Africa RISING–CSISA Joint Monitoring and Evaluation Meeting, Addis Ababa, Ethiopia, 11-13 November 2013
CSISA’s policy research agendaImproved policies & institutions for inclusive growth
Aims and objectives– Address the policy environment needed to remove constraints
to the adoption of new technologies– Enhance the productivity and income benefits of improved
agricultural sector growth– Explore strategies and solutions to catalyse durable change at
scale
Expected outcomes• Improved policies and incentives that…
– encourage private investment and public-private partnerships in pro-poor technology development and delivery
– address changing labor, gender, assets, and migration dynamics related to pro-poor technology development and delivery
CSISA’s interesting questions
• What are farmers willing to pay for new technologies?– Custom-hired resource-conserving machinery services– Abiotic stress-resistant traits in inbred vs. hybrid backgrounds
• How heterogeneous in this demand for technology?– Does demand differ across geography, wealth, income, social status, etc.– Does heterogeneity create market opportunities for private investment?
• How might public and private investment leverage demand heterogeneity to increase adoption? – What types of encouragements (subsidy vouchers, discount coupons)
encourage adoption?– How do social network effects encourage adoption?– What are the tradeoffs inherent in different encouragement schemes?
CSISA’s policy analysis toolkit
• Tools to elicit willingness to pay and risk preferences– Choice experiments– Experimental games
• Tools to evaluate impact of a new technology– Natural experiments (difference-in-difference)– Propensity score matching (PSM), Regression discontinuity designs
(RDD), Instrumental variables (IV)– Controlled experiments (RCTs)
• Tools to evaluate market opportunity– Industry analysis, new empirical industrial organization– Structure, conduct, performance analysis
Ex: Preferences for drought tolerance in rice
• What are farmers willing to pay for drought-tolerant rice in inbred v hybrid background? – Inbreds: low-cost “renewable” public sector technology– Hybrids: high cost “non-renewable” private sector technology
• Participants presented with a series of “choice tasks” meant to reflect real-world seed purchasing decisions
• Three varying alternatives (A, B, or C): comprised of different combinations of relevant attributes
• Status quo (D): option to use seed cultivated in previous kharif season
Source: Ward, Ortega, Spielman and Singh (2013)
Illustrated choice tasks
Source: Ward, Ortega, Spielman and Singh (2013)
Estimated willingness to pay
Source: Ward, Ortega, Spielman and Singh (2013)
Yield: 1.3/0.9/0.4
Yield: 1.3/0.8/0.4
Yield 1/3/0.7/0.4
Yield: 1/3/0.6/0.4
Duration: <120 days
Duration: 120-135 days
Low seeding rate (4-6 kg/acre)
Seed must be purchased every year
-100 -50 0 50 100 150 200
Indian Rupees (INR)
Attrib
ute
t/acre under normal, severe, extreme drought
Demand for DT inbred vs DT hybrid rice
Source: Ward, Ortega, Spielman and Singh (2013)
Ex: Willingness to pay for LLL
• What are farmers willing to pay for custom-hired LLL services? – Binding auction for LLL service at for up to 3 plots of land– If participant bid ≥ a randomly drawn price, he may receive the service– Auction repeated in 2011 and 2012
Source: Lybbert, Magnan, Spielman, Bhargava, and Gulati (2013)
Heterogeneous willingness to pay across multiple dimensions
200
400
600
800
Rs.
/hour
0 10 20 30 40 50 60 70 80
Percent of area
Deoria
Gorakhpur
Maharajganj
District
200
400
600
800
Rs.
/hour
0 10 20 30 40 50 60 70 80
Percent of area
BPL
Non-BPL
BPL
200
400
600
800
Rs.
/hour
0 10 20 30 40 50 60 70 80
Percent of area
<1 acres
1-2.5 acres
>2.5 acres
Landholdings
200
400
600
800
Rs.
/hour
0 10 20 30 40 50 60 70 80
Percent of area
First (<= .3 acres)
Second (.3-1 acre)
Third (1 or more acres)
Plot size
Source: Lybbert, Magnan, Spielman, Bhargava, and Gulati (2013)
Change in willingness to pay, 2011-2012
Source: Lybbert, Magnan, Spielman, Bhargava, and Gulati (2013)
Cost-effectiveness of targeting strategies(Subsidy cost per acre and farmer)
100 120 140 160 180 200 220 240 260 280 300100
150
200
250
300
350
Uniform
Perfect
District
Landholdings
BPL
First-hour discount
Subsidy cost per farmer leveling (Rs./farmer)
Subs
idy
cost
per
acr
e le
vele
d
(Rs.
/acr
e)
Net gain for provider
Net loss for provider
Source: Lybbert, Magnan, Spielman, Bhargava, and Gulati (2013)
Random sample from village v Auction
(self-selection)
Auction winners
Auction losers
Lottery(random selection)
Lottery losersLottery winners
From auction to lottery: social network effects
Outcome: Water savings ≈ 21%
Source: Magnan, Spielman, Lybbert, and Gulati (2013)
New evidence, actionable information
• We can design novel targeting strategies to promote new technologies– A private sector strategy: Firms promote technologies to
profitable market segments only– A public sector strategy: State promotes technologies to all
market segments– A synthesis strategy: Firms and state collaborate to target
beyond profitable segments only
• Each targeting strategy involves tradeoffs– Equity vs. efficiency– Productivity vs. sustainability
Thank you