Peer effects in the diffusion of water‐saving agricultural technologies

We investigate the role of peer effects in the diffusion of an important water‐saving irrigation technology: low energy precise application (LEPA). Using detailed irrigation behavior data for growers in the High Plains Aquifer region of Kansas covering 1990–2014, we find clear evidence of peer influence in adoption of LEPA, net of environmental factors. Specifically, an additional neighboring LEPA installation within 1 km increases the probability of adoption by about 0.3 percentage points, on average, and this effect diminishes with distance. Our empirical estimates indicate that in the absence of peer effects, LEPA adoption would have been about 10% lower (1,000–1,600 fewer installations) per year. In addition, we find that growers install LEPA in response to higher energy prices.     

The complex dynamics of smallholder technology adoption: the case of SRI in Madagascar

This article explores the dynamics of smallholder technology adoption, with particular reference to a high‐yielding, low external input rice production method in Madagascar. We present a simple model of technology adoption by farm households in an environment of incomplete financial and land markets. We then use a probit model and symmetrically censored least squares estimation of a dynamic tobit model to analyze the decisions to adopt, expand, and disadopt the method. We find that seasonal liquidity constraints discourage adoption by poorer farmers. Learning effects—both from extension agents and from other farmers—exert significant influence over adoption decisions.     

Bias from Farmer Self‐Selection in Genetically Modified Crop Productivity Estimates: Evidence from Indian Data

In the continuing debate over the impact of genetically modified (GM) crops on farmers of developing countries, it is important to accurately measure magnitudes such as farm‐level yield gains from GM crop adoption. Yet most farm‐level studies in the literature do not control for farmer self‐selection, a potentially important source of bias in such estimates. We use farm‐level panel data from Indian cotton farmers to investigate the yield effect of GM insect‐resistant cotton. We explicitly take into account the fact that the choice of crop variety is an endogenous variable which might lead to bias from self‐selection. A production function is estimated using a fixed‐effects model to control for selection bias. Our results show that efficient farmers adopt Bacillus thuringiensis (Bt) cotton at a higher rate than their less efficient peers. This suggests that cross‐sectional estimates of the yield effect of Bt cotton, which do not control for self‐selection effects, are likely to be biased upwards. However, after controlling for selection bias, we still find that there is a significant positive yield effect from adoption of Bt cotton that more than offsets the additional cost of Bt seed.     

Achieving environmental flows where buyback is constrained

Theory suggests that the development of common property increases national welfare, and consistent with this thinking Australia's Murray–Darling Basin (MDB) Plan uses a common property approach to recover environmental water rights in the national interest. Two water recovery instruments are used: purchasing water rights (buyback) from farmers, and saving water by subsidising irrigator adoption of technically efficient technology. A moratorium on buyback has focused environmental recovery on subsidised technically efficient technology adoption. Economists argue that national welfare is maximised via buyback and highlight the limitations of efficiency savings to recover sufficient environmental water. A risk is that water recovery targets may be reduced in future, limiting welfare gains from water reform. This article evaluates possible welfare trade‐offs surrounding environmental water recovery outcomes where arbitrary limits on buyback are imposed. Results suggest that, on average, strategies which attempt to obtain >1500 gigalitres (GL) of water from on‐farm efficiency investments will only provide sufficient resources to meet environmental objectives in very wet states of nature. We conclude that reliance on technically efficient irrigation infrastructure is less economically efficient relative to water buyback. Importantly, the transformation of MDB irrigation will significantly constrain irrigators' future capacity to adapt to climate change.     

The impact of safety nets on technology adoption: a difference‐in‐differences analysis

This article contributes to a growing body of empirical literature relating credit constraints and incomplete insurance to investment decisions. We use panel data from rural Ethiopia to investigate whether participation in a safety net program enhances fertilizer adoption. Using a difference‐in‐differences estimator and inverse propensity score weighting, we find that participation in Ethiopia's food‐for‐work (FFW) program increased fertilizer adoption in the short run, but not in the long run. Results also indicate that the intensity of fertilizer usage increased with livestock holdings for FFW‐participant households, providing some evidence that the intervention helped asset‐rich farm households more than asset‐poor households. We find no significant effects of free distribution on fertilizer adoption or intensification. Our results are consistent with the hypothesis that safety nets can be viewed as mechanisms that allow households to take on more risk to pursue higher profits. The results highlight the importance of safety net programs, their effectiveness in ensuring farmers that they will be protected against uninsured shocks, and how that assurance can translate into productivity‐enhancing behavior.     

EU Food Safety Standards,Pesticide Use and Farm‐level Productivity: The Case of High‐value Crops in Kenya

This article provides an empirical analysis of the impact of European Union (EU) private food safety standards on pesticide use and farm‐level productivity among small‐scale vegetable producers in Kenya. We apply an extended three‐stage damage control production framework, accounting for multiple endogeneity problems, to farm‐level data collected from a random cross‐sectional sample of 539 small‐scale producers. Estimation results show that farmers producing vegetables for the domestic market use significantly lower quantities of pesticides than do export farmers. However, contrary to findings elsewhere, the econometric evidence here shows that both domestic and export‐oriented vegetable farmers in Kenya use pesticides at levels below the economic optimum. The results also show that the adoption of standards by export farmers does not have any significant impact on total pesticide use. However, adopter categories are distinguishable in terms of types of pesticide used, i.e. adopters use safer pesticides based on World Health Organization (WHO) classification. The third‐stage structural revenue model results demonstrate that adoption of standards has a positive and significant impact on revenue raised in vegetable production. Nevertheless, farmers producing for the export market are indistinguishable from those producing for the domestic farmers in terms of the total revenue earned from producing vegetables during the rainy season, on a ‘per acre’ basis. Although standards can potentially prevent resource‐poor smallholders from maintaining their position in the lucrative export markets, they can also result in positive changes in the production systems of those small‐scale farmers who adopt it, as shown by these results.     

Cost‐reflective pricing: empirical insights into irrigators’ preferences for water tariffs

Using prices to improve the efficiency with which water resources are allocated is now widely accepted in principle if somewhat difficult to achieve in practice. Whilst there are some technical difficulties associated with full‐cost recovery in irrigation, the lack of political will to tackle reform remains a significant impediment. This article reports the results of an empirical investigation into farmers’ preferences for changes to water prices and tariff structures. We conclude that some of the preferences of farmers are conducive to price reform. We also find evidence that public subsidy of infrastructure in irrigation is not always aligned with the preferences of farmers.     

Interaction between crop insurance and technology adoption decisions: The case of wheat farmers in Chile

This paper examines relationships between crop insurance and input technology decisions among Chilean wheat farmers. Using nationwide farm‐level data, a bivariate probit model is estimated. We investigate the extent to which the adoption of production input technologies is associated with farmers’ participation in the insurance program. We find that relationships between insurance and technology decisions are significant only for family farmers. In particular, there is a negative relationship between participation in the insurance program and the adoption of modern irrigation. Interpretations based on the role of input technologies on insurance adoption and adverse selection behaviours are discussed.     

Revisiting the Impact of Order Effects on Sensitivity to Scope: A Contingent Valuation of a Common‐Pool Resource

While many studies have employed stated preferences methods to estimate the value of non‐market ecosystem goods and services, contingent valuation (CV) still generates a significant amount of criticism. Besides ethical concerns, two of the key criticisms relate to insensitivity to scope and order effects. We examine the expectation that the presence of order effects in stepwise disclosure procedures affects the degree of scope sensitivity. We use data from a CV exercise asking farmers in Southern Spain to value two different levels of guarantee of water supply for irrigation in a context of water scarcity. We find that despite order effects being present, they do not affect the existence or the degree of sensitivity to scope. We conclude that, in the light of the mixed evidence found in the literature and the results of our study, it does not seem justified to ascribe order effects and their connection with sensitivity to scope to study design alone (e.g. step‐wise versus advanced disclosure, top‐down versus bottom‐up). The nature of the environmental good under valuation also matters. Our study of irrigation water as a common‐pool resource suggests that, when clear private benefits also exist, these appear to override any ‘good cause dumping effect’ that might arise from the public good component.     

Irrigation technology adoption and its implication for water conservation in the Texas High Plains: a real options approach

Water shortage has been a significant issue for several decades in the Texas High Plains. Agriculture has been identified as the main activity contributing to this shortage. To address this issue, many efforts have been focused on the possible adoption of sophisticated irrigation systems with high levels of water application efficiency. In this study, the entry and exit thresholds for the low‐energy precision application (LEPA) system are analyzed simultaneously in cotton farming in the Texas High Plains using a real options approach. The results show that the LEPA system is profitable only when cotton price is set above $1.59/kg. The exit (entry) threshold is consistently low (high) over a range of values for parameter changes including investment cost, exit cost, variable cost, risk‐adjusted discount rate, and volatility rate, so it is unlikely that farmers with irrigation systems in place would leave them easily. This implies that to attain the goal of saving water, Lubbock County needs to focus on convincing current farmers to replace old irrigation systems with new ones.     

The Effect of Mandatory Agro‐Environmental Policy on Farm Fertiliser and Pesticide Expenditure

EU farmers are subject to mandatory cross‐compliance measures, requiring them to meet environmental conditions to be eligible for public support. These obligations reinforce incentives for farmers to change their behaviour towards the environment. We apply quasi‐experimental methods to measure the causal relationship between cross‐compliance and some specific farm environmental performance. We find that cross‐compliance reduced farm fertiliser and pesticide expenditure. This result also holds for farmers who participated in other voluntary agro‐environmental schemes. However, the results do not support our expectations that farmers who relied on larger shares of public payments had a stronger motivation to improve their environmental performance.     

Adoption of climate‐smart practices and its impact on farm performance and risk exposure among smallholder farmers in Ghana

Increased climate variability during the last four decades has made the agricultural environment in many developing countries more uncertain, resulting in increasing exposure to risk when producing crops. In this study, we use recent farm‐level data from Ghana to examine the drivers of individual and joint adoption of crop choice and soil and water conservation practices, and how adoption of these practices impacts on farm performance (crop revenue) and exposure to risks (skewness of crop yield). We employ a multinomial endogenous switching regression model to account for selectivity bias due to both observable and unobservable factors. The empirical results reveal that farmers’ adoption of crop choice and soil and water conservation leads to higher crop revenues and reduced riskiness in crop production, with the largest impact on crop revenues coming from joint adoption. The findings also show that education of the household head, access to extension and weather information influence the likelihood of adopting these practices. Thus, enhancing extension services and access to climate information and irrigation can reduce gaps in adoption of soil and water conservation and crop choice, considered as climate‐smart practices that will eventually improve crop revenues and reduce farmers’ exposure to climate‐related production risks.     

Drinking water and off‐farm labour supply: between‐gender and within‐gender bias

In this paper, we use the China Health and Nutrition Survey (CHNS) panel data to analyse the impact of drinking water on off‐farm labour supply. A two‐stage least squares (2SLS) multivariate Tobit regression model with random effects was applied. We find that impacts of drinking water conditions on off‐farm labour supply may be greater for women than men but depends on the specific family role or family structure. A strong within‐gender effect exists in households. For example, daughters are not sensitive to water access nor water quality, but householder's spouses are sensitive to water access, and daughters‐in‐law are sensitive to water quality. Our findings suggest that infrastructure development in improved access to safe water has contributed positively to reductions in traditional gender biases, evening the playing field between daughters, daughters‐in‐law, mothers and mothers‐in‐law. We also find that water the infrastructure program may actually encourage off‐farm labour mobility, reducing the supply of agricultural labour and the share of household labour on the farm. Thus, a broader approach to water policy should also include public investment in achieving greater labour efficiency and productivity.     

Why don't producers adopt best management practices? An analysis of the beef cattle industry

Cattle producers were surveyed to determine their adoption rates and reasons for non‐adoption of 16 best management practices. Potential reasons for non‐adoption included unfamiliarity, non‐applicability, high cost, still considering adoption, and preference not to adopt. The two most commonly cited reasons for non‐adoption were unfamiliarity and non‐applicability of the practice. Results highlight the importance of educational efforts in encouraging adoption, as well as farm type and financial situation of the farmer.     

Cotton farmers’ willingness to pay for pest management services in northern Benin

This study was carried out to assess cotton farmers’ willingness to pay (WTP) for pest management services in northern Benin. Targeted staggered control (TSC) has been introduced to reduce pesticide use in cotton cropping and generate an estimated benefit of FCFA48,800 (€74.40) per cotton hectare accruing from increased productivity and reduced pesticide cost. However, TSC application requires extra time for pest identification and scouting, and its adoption remains low due to the lack of funding to boost farmers’ awareness and cover training costs. An interval regression model was used to analyze responses to a double‐bounded contingent valuation survey with data collected from 300 cotton farmers. The results showed that 87.3% of cotton farmers were willing to pay for TSC services. Annual WTP per cotton hectare was estimated at FCFA16,962 (€25.80), revealing an existing demand for TSC adoption. Respondents' WTP was driven by farm and socio‐economic characteristics. Financial mechanisms managed by farmers could thus potentially foster technology adoption, and in turn, generate economic and environmental benefits.     

Forty years of irrigation development and reform in China

This study reviews 40 years of irrigation development in China including the transformation of the institutional and incentive structures in irrigation management. After rural reforms in the 1970s, irrigation investments slowed until the late 1990s. In North China, farmers became major investors in groundwater irrigation, leading to property rights’ transfer of tube wells from collective to private ownership. Despite positive effects in cropping patterns, farmer income and development of groundwater markets, privatisation has accelerated groundwater table deterioration. Since the middle of 1990s, Water User Associations have replaced village collective management of surface irrigation. This approach was adopted by most provinces by early 2001 with mixed results; only institutions with water‐saving incentives realised efficient irrigation. The Government is reforming water price policies to provide water‐saving incentives to farmers while not hurting their income. While China has focused on water rights and markets, and despite regulations and pilot projects, full implementation of water rights has been slow. Research reveals greater policy scope for expanding irrigation technologies that generate real water saving to rural areas. Given pressure associated with water scarcity and concern for food security, further effective reforms in irrigation and policy incentives are expected. The Government has also initiated some pilot projects to resolve increasing water scarcity problems through adjusting agricultural production activities.     

农业用水非农化对农户粮食生产用水行为的影响基于山东省728份农户调查数据

目的 农户作为微观经营主体,其节水技术的采用将提高粮食生产用水效率,达到节约水资源与保证粮食生产的双重目的。通过分析农户粮食生产用水行为,探讨水资源短缺约束对农户粮食生产技术采用的诱致效应。方法 文章基于2019年对山东省728份农户的调查问卷数据,以农户行为理论为基础,综合运用统计分析、Logit模型等方法,对农业用水非农化约束下农户的粮食生产用水行为进行分析。结果 在农业用水非农化态势下,作为理性经济人的农户倾向于采用节水技术,以保证粮食生产。农户年龄、家庭农业劳动力人数、灌溉水源与灌溉方式对其节水技术的采用影响显著为负,农业年收入、小麦及玉米种植面积对农户节水技术的采纳行为影响显著为正。结论 规模化经营是大型节水设施应用的基本条件,应当加快农地流转,推进粮食生产规模化经营,提高粮食灌溉的规模化和标准化水平;同时加快建立科学合理的农业水价改革制度,促进农民节约农业用水,以此实现水资源利用效率提高与粮食生产能力稳定的双重目标。     

Farmers’ risk preferences and pesticide use decisions: evidence from field experiments in China

China faces health and environmental problems associated with the use of agricultural chemicals, including pesticides. While previous studies have found that risk aversion affects pesticide use in China, they have focused primarily on commercial cotton farmers. In this study, we consider the case of smaller, semisubsistence and subsistence farmers in a poor and landlocked province of China (Yunnan). We use a field experiment to measure risk aversion and collect detailed data on farm production and input use to specifically ask whether risk aversion affects pesticide use, and whether this effect differs for subsistence farmers producing exclusively for home consumption versus semisubsistence farmers who produce both for home and the market. We find that risk aversion significantly increases pesticide use, particularly for subsistence farmers and for market plots by semisubsistence farmers. Further, this effect of risk aversion significantly decreases with farm size for subsistence farmers, but not for semisubsistence farmers, implying that pesticide use may be used to ensure sufficient food supply for home consumption. Finally, we find barriers to the use of pesticides for subsistence farmers, both in terms of financial constraints and economies of scale. This finding implies that risk‐mitigation strategies, such as crop insurance, may not target food security concerns of subsistence farmers. Given these different motivations for pesticide use, policymakers may wish to consider effective tools to support rural food security for farmers in the poorer regions of China in order to decrease pesticide use.     

Factors Affecting Farmers’ Participation in Agri‐environmental Measures: A Northern Italian Perspective

Agri‐environmental measures play an important role in Italian rural areas, as shown by the financial commitment to the Rural Development programmes. However, in contrast with other European Union (EU) countries, policy‐makers still have limited experience on how farmers approach environmental incentive schemes. This paper casts new light on this issue from a northern Italian perspective. The rationale of the farmers’ decision‐making process is explored using two multinomial models. The first explains the probability of non‐participation or participation in one of three specific agri‐environmental measures. The model outcomes show that labour‐intensive farming types and high dependency of household income on farming activity constrain farmers’ participation, whereas previous experience, easy‐to‐implement environmentally friendly farm practices and adequate compensation of extra costs encourage participation. The second model explores the effect of farmers’ attitudes and beliefs on their predispositions towards participation in any of the schemes. The results highlight that, besides income factors, the farm's future in the business, and the relationship with neighbouring farmers and their opinions on environmentally friendly practices all have significant effects on adoption of agri‐environmental measures. The paper concludes by suggesting that farmers’ attitudes and beliefs, as well as the local behavioural influences, have to be taken into account when designing and communicating agri‐environmental measures.     

Spot water markets and risk in water supply

Water availability patterns in semiarid regions are typically extremely variable. Even in basins with a highly developed infrastructure, users are subject to unreliable water supplies, incurring substantial economic losses during periods of scarcity. More flexible instruments, such as voluntary exchanges of water among users, can help users to reduce risk exposure. This article looks at the effects of spot water markets on the economic risk caused by water availability variations. Our theoretical and empirical risk analyses are based on the random profits of water users. Profit probability density functions are formally and graphically characterized for both water sellers and buyers under several possible market outcomes. We conclude from this analysis that, where water supply is stochastic, water markets unambiguously reduce both parties' risk exposure. The empirical study is conducted on an irrigation district in the Guadalquivir Valley (Southern Spain), where there is a high probability of periods of extreme water scarcity. Water demand functions for the district representative irrigators and a spatial equilibrium model are used to simulate market exchanges and equilibrium. This programming model is combined with statistical simulation techniques. We show that the profit probability distribution of a representative irrigator is modified if water exchanges are authorized, leading to risk reductions. Results also indicate that if the market were extended to several districts and users that are subject to varying hydrological risk exposure, extremely low‐profit events would be less likely to occur. In sum, we show that exchanging water in annual spot markets can reduce farmers' economic vulnerability caused by water supply variability across irrigation seasons. These results support the water policy reform carried out in Spain in 1999 to allow for voluntary water exchanges among right holders.