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Impact of Sustainable Land and Watershed Management (SLWM) Practices in the Blue Nile
- 1. Impact of Sustainable Land and Watershed Management (SLWM) Practices in the Blue Nile Emily Schmidt and Fanaye Tadesse IFPRI ESSP-II December 13, 2013 Hilton Hotel, Addis Ababa 1
- 2. Agriculture in the Blue Nile Basin • Land degradation in some areas is estimated to decrease agricultural productivity by 0.5 to 1.1% per year. (Holden et al. 2009) • Moisture stress between rainfall events (dry spells) is responsible for most crop yield reductions (Adejuwon, 2005) • Many programs implemented past and present to improve soil and water conservation in the highlands of Ethiopia (SLMP, GIZ, World Bank, MERET, SUN, Soil Research Conservation Program)
- 3. Agriculture in the Blue Nile Basin (2) • 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). – Depends on agricultural potential: low-agricultural potential areas benefit more from minimum tillage and conventional farming compared to high-agricultural potential areas (Kassie et al., 2010).
- 4. Study focus: Blue Nile (Abbay) Basin • Evaluate SLWM investment impact on value of production per hectare • Understand time horizon of impact (how long does it take to experience a benefit?) • Assess benefit-cost of such investments
- 5. 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
- 6. Agricultural Production of Survey Sample 9 woredas: 5 Amhara, 4 Oromiya – Teff as leading crop (4 woredas in Amhara) • Fogera • Gozamin • Toko Kutaye • Misrak Este – Maize • Mene Sibu (Oromiya) • Diga (Oromiya) • Alefa (Amhara) – Wheat / other • Dega Damot (Amhara) • Jeldu (Oromiya) • Substantial diversity across woredas in terms of production patterns, landholding, agricultural activity
- 7. Households Using SLM on Private Land Woreda Alefa Fogera Misrak Estie Gozamin Dega Damot Mene Sibu Diga Jeldu Toko Kutaye Percent of households 50% 54% 54% 21% 82% 7% 32% 2% 79% Year of first Community Program 1990 1983 1977 1988 1986 1992 2000 na 1989 Most common activity on private land (percent) soil bund (64.2) stone terrace (65.8) stone terrace (36.1) soil bund (40.9) soil bund (42.8) soil bund (89.8) irrigation canal (2.9) stone terrace (24.0) soil bund (33.7)
- 8. Perceived Most Successful SLWM activities (% of households) 40 35 30 25 20 15 10 5 0 stone soil bund terrace check dam trees drainage planted ditch grass strips
- 9. Percent of total plots under SLWM on private land (1944-2009 ) 20 18 16 14 12 10 8 6 4 2 0
- 10. Evaluating the impact of SLWM infrastructure on value of production • Need to identify a suitable comparison group: What would plots be like had they not adopted SLWM on their land? • Use propensity score matching technique to compare similar groups: • Match agricultural plots based on observable characteristics, for example: Biophysical characteristics • Plot slope • Soil fertility • Plot size • Experienced past flood / erosion Household characteristics • Age, sex • Education • Official in the village
- 11. Nearest Neighbor Matching: Plot level Outcome variable: Value of Agricultural Production 1992-2009 # Observations 10108 (1985-2002 E.C.) 1992-2002 (.026) 10108 (1985-1995 E.C.) 2003-2009 (1996-2002 E.C.) ATT: Nearest neighbor matching 0.104 *** 0.239 *** (.036) 10108 0.0132 (.030) • Plots that received SLWM investment at any time in the analysis period have 10.4% greater value of production in 2010 than plots without investment. •Plots that received SLWM investment before 2002 have 23.9% greater value of production in 2010 than plots without investment. • If this is the case, what is the marginal benefit of an extra year of SLWM?
- 12. Increase in value of production given maintenance of SLWM 0.20 Marginal effect 0.15 0.10 0.05 0.00 Treatment range with statistically significant impact -0.05 -0.10 -0.15 1 3 5 7 9 11 13 15 17 Years SLWM maintained Number of years SLWM maintained 7 8 9 10 11 12 13 14 15 16 17 Marginal effect 0.02 0.04 0.05 0.06 0.08 0.09 0.10 0.12 0.13 0.15 0.16
- 13. Benefit-cost of investing in SLWM Infrastructure (1992–2009) 3% Discount Rate Initial investment (birr) NPV of Benefits Shadow wage rate factor NPV of Costs NPV Benefits / NPV Costs Year Total Net Benefit > 0 First Year of MB > MC 5% Discount Rate 2000 0 2000 0 10,621 10,621 11,478 11,478 1 14,535 0.5 1 0.5 7,267 11,229 5,614 0.73 1.46 NA 2006 2001 1999 0.95 1.89 1 0.5 1 0.5 17,918 8,959 13,334 6,667 0.64 1.28 0.86 1.72 NA 2004 NA 2007 NA 2005 2001 1999 2001 1999 2001 1999 • Wage rate of non-farm labor is very sensitive • Initial investment cost affects timing of benefit > cost
- 14. 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. • The longer one sustains SWC, the higher the marginal benefit of sustaining an extra year of activity. • A mixture of strategies may reap quicker benefits – Physical SWC measures may need to be integrated with soil fertility management and moisture management
- 15. Conclusions (2) • Biophysical benefits may plateau at a certain treatment level. – Expect to see diminishing returns of SWC as the necessary biophysical components are replaced. • Benefit-Cost scenarios suggest that benefits do not outweigh costs immediately – Rethink program planning timelines and initial investments – Provide a package of investments including soil and water conservation structures (i.e. fertilizer and improved seed) – Evaluate other market factors influencing farmer adoption (i.e. off-farm labor opportunities, land rental, etc.)
- 16. Thank you
Notes de l'éditeur
- In the case of the early adopters (those that adopted SLM 1992-2002), those that have adopted SLM on their private land are more likely to have a 15 percent higher value of agricultural production than who did not. However for the late adopters (those adopting later than 2002, there is no statistically significant impact. No impact is observed in the livestock value for both the early and late adoptersThis implies that time of adoption actually matters and calls for a further investigation on how long it actually takes to see an impact from SLM adoption. We also want to see what the marginal benefit of an extra year of SLM adoption is using the continuous treatment effect function.
- In terms of the treatment effect function, which is the marginal effect of sustaining SLM for one more year, we see that for each additional year SLM is maintained on a plot the value of production is increasing and is statically significant after the 7th year. For instance, for a plot that has maintained SLM for 7 years the marginal benefit of maintaining it for an additional year is a 4% increase in value of production. Moreover, for each additional year SLM is maintained, the marginal effect is increasing with every additional year.
- The PSM analysis suggests that SLWM benefits are obtained well into the future, which makes them especially sensitive to the choice of discount rate used in the cost benefit analysis. Therefore, we assess benefits and costs under two scenarios, assuming SLWM investment occurred in 1992 (first year of the early adopter group). We use a three and a five percent discount rate in order to construct the net present value of increased agricultural production, and costs of initial investment and maintenance over time.We assume a constant, real recurrent labor cost for yearly maintenance of structures at 516 birr per year (reported days and wage rate from the household survey). Given the off-season nature of SLWM work, we present estimates of labor costs using both the market wage for construction and maintenance of structures and a shadow wage rate of 50 percent of the market wage. The analysis assumes that in the absence of adoption of SLWM technology, the value of production in previous years is equal to the 2009 level (in real terms). Finally, we use two scenarios of initial investment costs. At a five percent discount rate, the first scenario assumes a 2,000 birr initial investment. In this scenario, benefits outweigh costs beginning in 2007 (benefit: cost ratio of 1.28), assuming a shadow wage rate factor of 50 percent (Table 8). Under the same discount rate, with zero initial investment costs (households still incur annual labor costs for maintenance), benefits exceed costs in 2005 (benefit: cost ratio of 1.72). Under the three percent discount rate scenario, benefits outweigh costs in 2006 and 2004 for the two scenarios (2,000 birr and zero birr initial investment) respectively, and net benefits are 1.46 and 1.89 times that of costs. Thus, assuming an initial investment in 1992, the earliest that benefits would exceed costs is 12 years later, assuming the initial investment is fully subsidized and household expenses are equivalent to annual maintenance labor costs.These estimates are consistent with other cost-benefit studies found in the literature. Shiferaw and Holden (2001) analyzed experimental trials of bunds and terraces in west and east Amhara and found insufficient economic incentives for investment in such structures. Hengsdijk et al. (2005) underlined the tradeoffs of investments in Tigray region whereby bunds slightly increased crop productivity during drier periods when yields were low, but decreased productivity during moist seasons because overall cropped area was reduced for the construction of bunds.