environmental investments on private land: planting trees in
TRANSCRIPT
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Environmental Investments on
Private Land: Planting Trees in
Chipata, Zambia
Paulina Oliva, (UCSB)
in collaboration with:
Kelsey Jack (Tufts)
Elizabeth Walker (Harvard)
Samuel Bell (Cornell)
with support from IGC, CDKN, Musika
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Economic context:
Environmental Investments
Long-Run Private Benefits
– Agricultural technologies with short-run costs and long-run private benefits
• Examples: tree crops, agroforestry, conservation farming, “climate-smart” agriculture
Public Benefits
– Provide benefits to individuals other than adopters
• Examples: carbon sequestration, soil erosion, watersheds
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Policy context:
Private Initiatives and REDD+
Contract Farming Firms Farmer network infrastructure
Long-term horizons
REDD+ and the Department of Forestry in
Zambia Anticipate benefits for livelihoods and biodiversity
Agroforestry ranked first among land use practices for REDD+
(Kokwe 2012)
Department of Forestry has REDD+ funding for tree-planting
program
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Encouraging Adoption
Growing popularity of incentive-based approaches – Payments for Ecosystem Services (PES) is a
prominent example
Context often characterized by uncertainty and limited liability
– Often observe high participation (take-up) followed by low compliance (effort)
– Adding PES to farmer’s revenue source alternatives is particularly valuable
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Research Questions
• How effective are incentive-based approaches in the presence of uncertainty and limited liability?
– Subsidies vs. Conditional Payments (Rewards)
• What is the value of PES for the farmer?
– Long-run private benefits
– As one more revenue source alternative
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Our Study
Use of economic incentives to encourage adoption of
Faidherbia albida (msangu tree) in Chipata, Zambia
Research Collaboration
• Dunavant Cotton, Ltd
• Share Value Africa, Non-Profit Org.
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Musangu (Faidherbia albida)
• Indigenous to Zambia
• Fixes nitrogen + sequesters carbon
• Loses leaves during rainy season
• Labor costs incurred primarily in first year
• Fertilizer benefits take 5-10 years
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Experimental Design
• 1317 farmers, organized into 125 groups of ~10 for
training
• Farmers offered contracts that provided 50 tree
seedlings
1. Group-level variation in input costs
2. Individual-level variation in size of reward
3. Individual-level variation in timing of reward announcement
(before/after take-up)
• All contracts were conditional on 35/50 survival rate
Variation in input cost
A=0 A=4,000 A=8,000 A=12,000
Reward before take-up Continuous variation in reward, R
Reward after take-up R = 0 – 150,000
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Study setting
0 275137.5 Kilometers 0 105 Kilometers
Number of trees planted
0
1 - 19
20-34
35-49
50 or more
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Data Collection
Take-up decisions: 1317
Baseline survey: 1292
… one year later …
Endline survey: 1237
Tree Monitoring: 1042
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Study population
• Dunavant cotton outgrower farmers
• Mean landholding is 7 acres
• 97% of land is under cultivation
• 12% female headed households
• Report 1 month of food shortages
• No formal land title
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Conceptual Framework: Take Up
Farmer’s participation decision
• This decision takes place at the beginning of the year
• A farmer participates if
Net Benefits* > A
*Account for
– private benefits (may vary across farmers)
– expected effort costs (may be uncertain at take up)
– reward
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Conceptual Framework: Survival
Farmer decides how many trees to care for
• This decision takes place throughout the year
• Cost of effort is no longer uncertain (i.e. shocks have
occurred)
N =0 If effort cost turns out to be very high (compared
to private benefits and reward)
0 < N < 35 If reward is not enough to compensate for the
cost of caring for 35 trees, but some trees are
still desirable due to private net benefits
N = 35 If reward is enough to encourage more trees
than private benefits would justify
N > 35 If private benefits are very high compared to
costs (reward is irrelevant)
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Conceptual Framework: Takeaways
1. If what explains heterogeneity in survival across farmers
is differences in private costs then
• Large selection effects:
– farmers that are more likely to participate at high input cost are
also more likely to have better survival rates
• Reliable outcomes:
– farmers that participate are likely to plant a positive number of
trees.
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Conceptual Framework: Takeaways
2. If what explains heterogeneity in survival across farmers is unexpected shocks to effort cost
• No selection effects:
– Either high or low participation rates in each treatment
– No big differences in performance across differences in input costs
– No big differences in performance across timing of R treatments
• Unreliable outcomes:
– Many participating farmers plant 0 trees
– Farmers performance is similarly highly responsive to R in both groups (known and unknown R before take up)
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Conceptual Framework: Implications
• If heterogeneity in private benefits matters,
– high input costs may help screen for highly productive farmers
• If unexpected shocks to effort costs matter,
– subsidies to input costs may encourage participation w/o compromising performance
– PES could be very valuable for farmer: it may help reduce uncertainty by adding to his revenue source options
– performance of PES may be improved through contingent contracts
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Outcome I: Take up
How do input cost subsidies affect take up?
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Outcome I: Take up .4
.6.8
1P
rogra
m p
art
icip
atio
n (
Est’d
coe
ffic
ien
t)
0 25000 50000 75000 100000 125000 150000Conditional reward (ZMK)
a=0 a=4000
a=8000 a=12000
Input costs
How does reward affect take up?
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Outcome II: Tree survival
– program participants
How do input subsidies affect tree survival?
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Outcome II: Tree survival
– program participants
How do performance incentives affect tree
survival?
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Outcome II: Tree survival
– program participants
Does performance differ by timing of reward?
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Summary of Preliminary Results
• Economic incentives are effective at encouraging adoption
• Not much evidence for selection
• Heterogeneity in performance is likely driven by unexpected shocks
to effort costs
• Subsidies to inputs may encourage participation w/o affecting
performance
• Potentially large value of PES from adding to farmer’s revenue
sources, at the expense of program performance
• Contingent contracts could improve performance
Share reporting
Health shocks are household's biggest challenge 0.51
Lost livestock due to illness or health 0.44
Lowest anticipated crop price above observed 0.97
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Policy Impact
• Dunavant is planning on scaling up the
program to 100K farmers
• Department of forestry has started a
campaign to plant 12 million trees and is
using our research to inform the design
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Ongoing and Future Work
• Long-run outcomes: Pending funding, monitor survival of trees beyond one year
• Estimate economic model behind conceptual framework
– Measures of private benefits
– Measures of effort costs
– Measures of uncertainty
– What is the value of adding one more alternative to revenue sources? (Option Value)
• Simulate performance of alternative contracts
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Carbon Sequestration
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Outcome II: Tree survival
– program participants
Does the response to the reward differ by input
cost?