Development in the Midst of Drought: Evaluating an Agricultural Extension and Credit Program in Nicaragua.

This paper measures the impact of year one of the Millennium Challenge Corporation’s Rural Business Development program for small rice farming households on the Pacific Coast of Nicaragua. The program was rolled out in the 2009-2010 agricultural year, which was the driest year on record in the region, likely due to an El Niño event. Estimated impacts show that the program at best had no effect, and at worst led to a 10 percent reduction in yields. These impacts are estimated using an econometric model which uses selection on observables as its identifying assumption, and robustness checks suggest that this is a reasonable approach in this case. Inference accounts for spatial correlation across households of the unobserved determinants of agricultural outcomes. The program appears to have been almost exclusively focused on increasing yields through better and greater application of chemical fertilizers, and minimization of losses in the post-harvest stages of production. If the pessimistic estimates of program effects are true, then the program could have been improved by incorporating risk management strategies into extension advice. On the other hand, farmers may be well insured against climatic risk, in which case they may have selected into the program knowing that they would be trading greater risk for higher expected returns. Survey data offers some evidence that the latter is indeed the case.development, impact evaluation, agricultural extension, rural credit, spatial, International Development,

Development in the Midst of Drought: Evaluating an Agricultural Extension and Credit Program in Nicaragua.

This essay is an evaluation of year one of the Rural Business Development (RBD) program for small rice farmers in León, Nicaragua. The RBD program is administered by the Millennium Challenge Corporation, and is designed to deliver agricultural extension advice and affordable credit in the form of inputs to farm households. This essay estimates the average impact of the program on rice yields and revenues utilizing inverse propensity score weighting combined with linear regression. In conducting statistical inference, it also accounts for the fact that agricultural outcomes are likely correlated over space in a small area such as the one studied here. The results suggest that the program had no impact on average, likely due to the presence of a severe drought during the 2008 – 2009 rice growing season, but that poorer households may have done better than their wealthier counterparts. This does not account for program costs, which when factored in would likely make the overall net benefit of the program negative. There may very well be long term benefits to exploiting extension advice and better access to credit created by the RBD program, and the it appears to have shielded poorer farmers somewhat from the impact of the drought. But the results highlight the danger of introducing programs aimed at raising productivity and incomes in areas subject to system unanticipated shocks. Incorporating risk management techniques or insurance against systemic risk into extension programs may improve welfare and encourage broader participation in agricultural productivity programs going forward.development, extension, credit, spatial, impact evaluation, International Development,

Development in the Midst of Drought: Evaluating an Agricultural Extension and Credit Program in Nicaragua.

This essay is an evaluation of year one of the Rural Business Development (RBD) program for small rice farmers in León, Nicaragua. The RBD program is administered by the Millennium Challenge Corporation, and is designed to deliver agricultural extension advice and affordable credit in the form of inputs to farm households. This essay estimates the average impact of the program on rice yields and revenues utilizing inverse propensity score weighting combined with linear regression. In conducting statistical inference, it also accounts for the fact that agricultural outcomes are likely correlated over space in a small area such as the one studied here. The results suggest that the program had no impact on average, likely due to the presence of a severe drought during the 2008 – 2009 rice growing season, but that poorer households may have done better than their wealthier counterparts. This does not account for program costs, which when factored in would likely make the overall net benefit of the program negative. There may very well be long term benefits to exploiting extension advice and better access to credit created by the RBD program, and the it appears to have shielded poorer farmers somewhat from the impact of the drought. But the results highlight the danger of introducing programs aimed at raising productivity and incomes in areas subject to system unanticipated shocks. Incorporating risk management techniques or insurance against systemic risk into extension programs may improve welfare and encourage broader participation in agricultural productivity programs going forward.Development, program evaluation, agricultural extension., International Development,

Perceptions and Participation: Mistaken Beliefs, Encouragement Designs, and Demand for Index Insurance.

Replaced with revised version of paper 07/20/10.International Development, Research Methods/ Statistical Methods,

Investigating Demand for Weather Index Insurance: Experimental Evidence from Ethiopia

There is much interest in weather index insurance as a poverty‐mitigating tool, but concerns persist about potential demand for the product among the poorest of the poor. This paper relates the experiences in rural areas of Tigray region, Ethiopia through both commercial sign‐up data and a series of experimental games conducted to test demand for weather index insurance. Demand was observed to be considerable in both.Risk and Uncertainty,

Development in the Midst of Drought: Evaluating an Agricultural Extension and Credit Program in Nicaragua.

This paper measures the impact of year one of the Millennium Challenge Corporation’s Rural Business Development program for small rice farming households on the Pacific Coast of Nicaragua. The program was rolled out in the 2009-2010 agricultural year, which was the driest year on record in the region, likely due to an El Niño event. Estimated impacts show that the program at best had no effect, and at worst led to a 10 percent reduction in yields. These impacts are estimated using an econometric model which uses selection on observables as its identifying assumption, and robustness checks suggest that this is a reasonable approach in this case. Inference accounts for spatial correlation across households of the unobserved determinants of agricultural outcomes. The program appears to have been almost exclusively focused on increasing yields through better and greater application of chemical fertilizers, and minimization of losses in the post-harvest stages of production. If the pessimistic estimates of program effects are true, then the program could have been improved by incorporating risk management strategies into extension advice. On the other hand, farmers may be well insured against climatic risk, in which case they may have selected into the program knowing that they would be trading greater risk for higher expected returns. Survey data offers some evidence that the latter is indeed the case

Development in the Midst of Drought: Evaluating an Agricultural Extension and Credit Program in Nicaragua.

This essay is an evaluation of year one of the Rural Business Development (RBD) program for small rice farmers in León, Nicaragua. The RBD program is administered by the Millennium Challenge Corporation, and is designed to deliver agricultural extension advice and affordable credit in the form of inputs to farm households. This essay estimates the average impact of the program on rice yields and revenues utilizing inverse propensity score weighting combined with linear regression. In conducting statistical inference, it also accounts for the fact that agricultural outcomes are likely correlated over space in a small area such as the one studied here. The results suggest that the program had no impact on average, likely due to the presence of a severe drought during the 2008 – 2009 rice growing season, but that poorer households may have done better than their wealthier counterparts. This does not account for program costs, which when factored in would likely make the overall net benefit of the program negative. There may very well be long term benefits to exploiting extension advice and better access to credit created by the RBD program, and the it appears to have shielded poorer farmers somewhat from the impact of the drought. But the results highlight the danger of introducing programs aimed at raising productivity and incomes in areas subject to system unanticipated shocks. Incorporating risk management techniques or insurance against systemic risk into extension programs may improve welfare and encourage broader participation in agricultural productivity programs going forward

Development in the Midst of Drought: Evaluating an Agricultural Extension and Credit Program in Nicaragua.

Abstract: This essay is an evaluation of year one of the Rural Business Development (RBD) program for small rice farmers in León, Nicaragua. The RBD program is administered by the Millennium Challenge Corporation, and is designed to deliver agricultural extension advice and affordable credit in the form of inputs to farm households. This essay estimates the average impact of the program on rice yields and revenues utilizing inverse propensity score weighting combined with linear regression. In conducting statistical inference, it also accounts for the fact that agricultural outcomes are likely correlated over space in a small area such as the one studied here. The results suggest that the program had no impact on average, likely due to the presence of a severe drought during the 2008 – 2009 rice growing season, but that poorer households may have done better than their wealthier counterparts. This does not account for program costs, which when factored in would surely make the overall net benefit of the program negative. There may very well be long term benefits to exploiting extension advice and better access to credit created by the RBD program, and the it appears to have shielded poorer farmers somewhat from the impact of the drought. But the results highlight the danger of introducing programs aimed at raising productivity and incomes in areas subject to system unanticipated shocks. Incorporating risk management techniques or insurance against systemic risk into extension programs may improve welfare and encourage broader participation in agricultural productivity programs going forward

The Impact of Farm Animal Housing Restrictions on Egg Prices, Consumer Welfare, and Production in California

New animal welfare policies on the horizon in many states have prompted debates about the cost of achieving happier hens and hogs. A recent policy change in California offers a unique opportunity to measure the economic repercussions of minimum space requirements for egg-laying hens. Using forecasting methods and structural break tests as applied to 16 years of monthly data on egg production and input prices, we find that by July 2016 both egg production and the number of egg-laying hens were about 35% lower than they would have been in the absence of the new regulations. Out-of-state eggs were able to compensate for falling California production until around the time of implementation of the new rules, at which point imports of eggs into California fell. For consumers, we estimate price impacts using panel structural break tests and difference-in-differences models as applied to five years of scanner data from the retail market for shell eggs in three California markets and three control markets. We find that the average price paid per dozen eggs was about 22% higher from December 2014 through September 2016 than it would have been in the absence of the hen housing restrictions. The price impact fell over time, from an initial impact of about 33% per dozen to about 9% over the last six months of the observed time horizon. These price increases correspond to welfare losses of at least $117 million for the three California markets over the observed time horizon. Our results suggest that because of the policy change, California consumers can expect to experience annual welfare losses of at least$25 million in future years from higher retail egg prices alone