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Economic policy analysis tools for
sustainable intensification

David J. Spielman and Patrick Ward

Africa RISING–CSISA Jo...
CSISA’s policy research agenda
Improved policies & institutions for inclusive growth
Aims and objectives
– Address the pol...
CSISA’s interesting questions
• What are farmers willing to pay for new technologies?
– Custom-hired resource-conserving m...
CSISA’s policy analysis toolkit
• Tools to elicit willingness to pay and risk preferences
– Choice experiments
– Experimen...
Ex: Preferences for drought tolerance in rice
• What are farmers willing to pay for drought-tolerant
rice in inbred v hybr...
Illustrated choice tasks

Source: Ward, Ortega, Spielman and Singh (2013)
Estimated willingness to pay
Seed must be purchased every year

Attribute

Low seeding rate (4-6 kg/acre)
Duration: 120-13...
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 ...
Heterogeneous willingness to pay across
multiple dimensions

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)
350

Subsidy cost per acre leveled
(Rs./acre...
From auction to lottery: social network effects
Auction losers
Random sample from
village v

Auction

Auction winners

(se...
New evidence, actionable information
• We can design novel targeting strategies to promote
new technologies
– A private se...
Thank you
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Economic policy analysis tools for sustainable intensification

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Presented by David J. Spielman and Patrick Ward, IFPRI at the Africa RISING–CSISA Joint Monitoring and Evaluation Meeting, Addis Ababa, Ethiopia, 11-13 November 2013

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Transcript of "Economic policy analysis tools for sustainable intensification"

  1. 1. 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
  2. 2. CSISA’s policy research agenda Improved 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
  3. 3. 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?
  4. 4. 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
  5. 5. 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)
  6. 6. Illustrated choice tasks Source: Ward, Ortega, Spielman and Singh (2013)
  7. 7. Estimated willingness to pay Seed must be purchased every year Attribute Low seeding rate (4-6 kg/acre) Duration: 120-135 days Duration: <120 days Yield: 1/3/0.6/0.4 t/acre under normal, severe, extreme drought Yield 1/3/0.7/0.4 Yield: 1.3/0.8/0.4 Yield: 1.3/0.9/0.4 -100 -50 0 50 100 150 200 Indian Rupees (INR) Source: Ward, Ortega, Spielman and Singh (2013)
  8. 8. Demand for DT inbred vs DT hybrid rice Source: Ward, Ortega, Spielman and Singh (2013)
  9. 9. 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)
  10. 10. Heterogeneous willingness to pay across multiple dimensions Source: Lybbert, Magnan, Spielman, Bhargava, and Gulati (2013)
  11. 11. Change in willingness to pay, 2011-2012 Source: Lybbert, Magnan, Spielman, Bhargava, and Gulati (2013)
  12. 12. Cost-effectiveness of targeting strategies (Subsidy cost per acre and farmer) 350 Subsidy cost per acre leveled (Rs./acre) District BPL 300 Uniform Landholdings 250 Perfect 200 Net gain for provider Net loss for provider First-hour discount 150 100 100 150 200 250 300 Subsidy cost per farmer leveling (Rs./farmer) 350 Source: Lybbert, Magnan, Spielman, Bhargava, and Gulati (2013)
  13. 13. From auction to lottery: social network effects Auction losers Random sample from village v Auction Auction winners (self-selection) Lottery (random selection) Lottery winners Lottery losers Outcome: Water savings ≈ 21% Source: Magnan, Spielman, Lybbert, and Gulati (2013)
  14. 14. 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
  15. 15. Thank you
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