Quentin Stoeffler, Michael Carter, Catherine Guirkinger, Wouter Gelade
This paper examines whether agricultural insurance can boost investment by small scale farmers in West Africa. It is based on a randomized evaluation designed to analyze the impacts of index insurance for cotton farmers in Burkina Faso. No impact of insurance was found on cotton, but, consistent with microeconomic theory, significant spillover impacts on investment in other agricultural activities were measured. Furthermore, the effects of insurance payouts on farmers hit by a shock confirm the potential of index insurance as a risk-management tool. However, this research uncovers important flaws in the implementation of the project that limited its impact on cotton. Overall, this study suggests a promising role for index insurance in stimulating investment, but also draws attention to key challenges to the efficient delivery of insurance to small farmers. Finally, the study’s hybrid, mixed methods RCT offers lessons for the evaluation of complex interventions where trust, understanding, and timing are all important.
{"title":"The Spillover Impact of Index Insurance on Agricultural Investment by Cotton Farmers in Burkina Faso","authors":"Quentin Stoeffler, Michael Carter, Catherine Guirkinger, Wouter Gelade","doi":"10.1093/wber/lhab011","DOIUrl":"https://doi.org/10.1093/wber/lhab011","url":null,"abstract":"This paper examines whether agricultural insurance can boost investment by small scale farmers in West Africa. It is based on a randomized evaluation designed to analyze the impacts of index insurance for cotton farmers in Burkina Faso. No impact of insurance was found on cotton, but, consistent with microeconomic theory, significant spillover impacts on investment in other agricultural activities were measured. Furthermore, the effects of insurance payouts on farmers hit by a shock confirm the potential of index insurance as a risk-management tool. However, this research uncovers important flaws in the implementation of the project that limited its impact on cotton. Overall, this study suggests a promising role for index insurance in stimulating investment, but also draws attention to key challenges to the efficient delivery of insurance to small farmers. Finally, the study’s hybrid, mixed methods RCT offers lessons for the evaluation of complex interventions where trust, understanding, and timing are all important.","PeriodicalId":501583,"journal":{"name":"The World Bank Economic Review","volume":"7 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-04-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138543825","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
David Blakeslee, Ritam Chaurey, Ram Fishman, Samreen Malik
Zoning laws that restrict rural land to agricultural production pose an important institutional barrier to industrial development. We study the effects of the Industrial Areas (IA) program in Karnataka, India, which rezoned agricultural land for industrial use, but without the economic incentives common with other place-based policies. We find that the program caused a large increase in firm creation and employment in villages overlapping the IAs. Moreover, the surrounding areas experienced spillover effects, with workers shifting from agricultural to non-agricultural employment, and entrepreneurs establishing numerous small-scale service sector and agricultural firms.
{"title":"Land Rezoning and Structural Transformation in Rural India: Evidence from the Industrial Areas Program","authors":"David Blakeslee, Ritam Chaurey, Ram Fishman, Samreen Malik","doi":"10.1093/wber/lhab004","DOIUrl":"https://doi.org/10.1093/wber/lhab004","url":null,"abstract":"Zoning laws that restrict rural land to agricultural production pose an important institutional barrier to industrial development. We study the effects of the Industrial Areas (IA) program in Karnataka, India, which rezoned agricultural land for industrial use, but without the economic incentives common with other place-based policies. We find that the program caused a large increase in firm creation and employment in villages overlapping the IAs. Moreover, the surrounding areas experienced spillover effects, with workers shifting from agricultural to non-agricultural employment, and entrepreneurs establishing numerous small-scale service sector and agricultural firms.","PeriodicalId":501583,"journal":{"name":"The World Bank Economic Review","volume":"36 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-01-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138543817","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Low levels of investment into modern technologies, and limited use of measures that have low monetary cost but the potential for high yields, are often regarded as obstacles to further agricultural development. This paper investigates farmers’ demand for one such measure, namely agricultural advisory services. These have modest (most frequently zero) monetary user cost but, according to some recent research, have the potential to result in large increases of yields. Yet demand for these extension services is often low. We propose that costly attention may be part of the explanation for this. In our model, advisory services are available free of charge, but positive effects on production are only realized if farmers devote attention to listening to and implementing the provided advice. Modeling farmers as rational decision makers facing scarce attention, we identify the circumstances under which farmers may optimally abstain from demanding advisory services. The model complements the insights of other theories commonly used to explain suboptimal farm decisions and outcomes, and generates testable predictions, which are consistent with empirical evidence based on a large farm-level panel dataset from Sub-Saharan Africa.
{"title":"The Demand for Advice: Theory and Empirical Evidence from Farmers in Sub-Saharan Africa","authors":"Dominik Naeher, Matthias Schündeln","doi":"10.1093/wber/lhab001","DOIUrl":"https://doi.org/10.1093/wber/lhab001","url":null,"abstract":"Low levels of investment into modern technologies, and limited use of measures that have low monetary cost but the potential for high yields, are often regarded as obstacles to further agricultural development. This paper investigates farmers’ demand for one such measure, namely agricultural advisory services. These have modest (most frequently zero) monetary user cost but, according to some recent research, have the potential to result in large increases of yields. Yet demand for these extension services is often low. We propose that costly attention may be part of the explanation for this. In our model, advisory services are available free of charge, but positive effects on production are only realized if farmers devote attention to listening to and implementing the provided advice. Modeling farmers as rational decision makers facing scarce attention, we identify the circumstances under which farmers may optimally abstain from demanding advisory services. The model complements the insights of other theories commonly used to explain suboptimal farm decisions and outcomes, and generates testable predictions, which are consistent with empirical evidence based on a large farm-level panel dataset from Sub-Saharan Africa.","PeriodicalId":501583,"journal":{"name":"The World Bank Economic Review","volume":"20 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-01-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138543819","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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