Agriculture in the Blue Nile Basin• Land degradation in Ethiopia continues to challenge sustainable agricultural development opportunities• Rainfall is poorly distributed in both spatial and temporal terms. – Moisture stress between rainfall events (dry spells) is responsible for most crop yield reductions (Adejuwon, 2005). – Soil erosion rates are highest when vegetation cover ranges from 0 to 30% (before the rainy season starts).
Agriculture in the Blue Nile Basin (2)• Land degradation in some arease is estimated to decrease productivity by 0.5 to 1.1% (annual mean). (Holden et al. 2009)• Analysis of soil and water conservation on land productivity in Ethiopia suggest mixed results – Plots with stone terraces experience higher crop yields (Pender and Gebremedhin, 2006) – Experimental trials of bunds and terraces suggest costs outweigh benefits (Shiferaw and Holden, 2001).
Study focus: Blue Nile (Abbay) Basin• Evaluate SLWM adoption impact on value of production per hectare• Understand time horizon of impact (how long does it take to experience a benefit)• Assess cost-benefit of such investments
Preview of findings• Farmers that implement and sustain SLWM experience higher value of production in the medium term• Significant benefits are not experienced until after 7 years of maintenance• The longer one sustains SLWM, the higher the marginal effect of sustaining an extra year of activity.• It is not clear that the benefits of investment in SLWM at the private farm-plot level outweigh the labor costs of maintenance
Sample Selection• 2 regions, 9 woredas (districts): Random sampling of 200 HHs per woreda• Stratification: Random sample within woredas that have recently started or planned SLM program – 3 sites (kebeles) per woreda (SLMP woredas) • Past or Ongoing program • Planned program (for 2011) • No formal past program
Percent of total plots under SLWM on private land (1944-2009 )201816141210 8 6 4 2 0
Perception of SLM activities Most Successful Sustainable Land Management activities (%) 40 35 30 25 20 15 10 5 0 stone soil bund check dam trees drainage grass strips terrace planted ditch
MethodologyImpact Analysis : matching based on observables – Nearest Neighbor Matching: measure ATT of adopting SLM on value of production and livestock holdings – Adopters: 1/3 of private land within the last 15 years (24% of sample) ATT = E (∆│X,D = 1) = E(A1 – A0│X,D = 1) = E(A1│X,D = 1) – E(A0│X,D = 1) – Analyze for two time periods – 1992 – 2002 (1985 – 1994 EC) – 2003 – 2009 (1995 – 2002 EC)
Covariates for Nearest neighbor matching and continuous effects estimation• Land Characteristics • Land size • Experienced past flood or erosion • Experienced past drought • Slope (flat, steep, mixed) • Fertilizer use (proxy for willingness to invest – unobservables) • Soil quality (fertile, semi, non) • Agro-ecological zone • Rainfall (30 year average) • Rainfall variation• Household Characteristics • Obtained credit • Received agricultural extension assistance • Person-months on non-farm activity • Distance from a city• Other HH characteristics (age, sex, education, etc.)• Other village characteristics
Nearest Neighbor Matching – split sample Outcome Variable ATT Observations 1992-2002 (1985 – 1995 E.C.) Value of Agricultural Production 0.152 ** 1373 (0.071) Livestock value (in Birr) -0.429 1318 (.100) 2003-2009 (1996 – 2002 E.C.) Value of Agricultural Production -0.015 1397 (0.062) Livestock Value (in Birr) -0.158 1327 (0.095) • Households that adopted SLWM on their private land in the first 10 years of analysis have 15.2% (2,329 birr avg.) greater value of production in 2010 than non-adopters. • If this is the case, what is the dose effect of SLWM, in other words, what is the marginal benefit of an extra year of SLWM?
Continuous treatment effect• Follow the work of Hirano and Imbens (2004)• Potential outcome Yi (t ) - plot level value of production per hectare given a certain treatment level• Get the average dose – response function defined as (t ) E[Yi (t )]• And the treatment effect function (marginal effect) (t ) (t 1) (t )
Next steps: Benefit-cost of private investmentInitial investment cost 5000 5000 2000 2000 0 0Shadow wage ratefactor 1 0.5 1 0.5 1 0.5Discount Rate: .05NPV of Benefits 11,478 11,478 11,478 11,478 11,478 11,478NPV of Costs 24,794 12,397 17,918 8,959 13,334 6,667NPV Benefits /NPV Costs 0.46 0.93 0.64 1.28 0.86 1.72First Year of NB > 0 NA NA NA 2008 NA 2006First Year of MB > MC 2002 2000 2002 2000 2002 2000 • Wage rate of non-farm labor is very sensitive • Initial investment cost determines profitability
Conclusions• Households that construct and sustain SLWM for at least 7 years experience higher value of production in the medium term – Unlike technologies such as fertilizer or improved seeds, benefits may accrue over longer time horizons.• A mixture of strategies may reap quicker benefits – Physical SWC measures may need to be integrated with soil fertility management and moisture management
Conclusions (2)• The longer one sustains SWC, the higher the marginal benefit of sustaining an extra year of activity. – Initially SWC structures slow ongoing degradation – Nutrient build-up may take more time to show significant impact on value of production.• Benefits may plateau at a certain treatment level. – As nutrient repletion and erosion control is successful, we would expect to see diminishing returns as the necessary biophysical components are replaced.