Pull mechanisms are results-based payments or incentives that seek to overcome the underlying market failures that have limited the provision or adoption of particular technologies that benefit poor households. They incentivize the private sector to work towards pre-defined results through rewards that are paid out only if the results are achieved. AgResults pilots implement pull mechanisms to encourage key private sector actors’ involvement in the market for the technology, either by developing the technology or provision of technology.
There are several underlying market failures that can result in missing markets for welfare enhancing technologies. Lack of awareness about the technology, poorly functioning market for credit, or perceived risks of adoption can limit technology adoption by poor households. In addition, weakly functioning land and labor markets can place limits on smallholders’ ability to adjust their land and labor mix to optimize returns from new agricultural technologies, ultimately impeding technology adoption. All or any of these constraints can lead to little or no demand for the technology. In the face of nonexistent or unexpressed demand, technology suppliers face high fixed costs to enter the market: awareness campaigns, provision of lines of credit, and bundled insurance products are resource intensive investments. Weak road and transportation infrastructure and/or weak institutions and policy environments to enforce contracts or quality verification can also limit the supply of technologies. When one or multiple such market failures are present, there is a missing market for the technology, or lack of investment in development of technology for the smallholders.
The AgResults pilot designs involve pull mechanisms to create incentives for the private sector to either develop or supply technologies that are beneficial for the poor households. The incentives are designed to offset the key constraints and risks that private sector faces in entering the market, and helps unleash private sector investment that unlocks other constraints to a fully functioning market for the technology. The external evaluations assess whether the pull mechanisms address the key underlying market failures and engage the private sector in the market while leading to impact on poor households (see evaluation questions).
The Evaluator employs an evaluation framework across all the AgResults pilots that draws on economic theory to predict the expected impact. This framework examines how each pilot’s pull mechanism incentivizes the private sector through results-based rewards to overcome market failure and impact poor households (read more on the pull mechanism theory of change). It also identifies behaviors of market actors that might impede or aid development impact on poor households. In comparison to push mechanisms, which provide upfront funding for activities with a specific path to the development goal, pull mechanisms reward achievement of pre-defined results without preference to any specific path to achieving these results. Effectively push mechanisms subsidize the cost of technology development or technology provision, while pull mechanisms increase the expected revenue from technology development or provision by reducing the risk of entering the market. Therefore, in some pilots, the evaluation will evaluate the pull mechanism in comparison with a particular push mechanism, rather than the overall aid environment in which AgResults is implemented.
The common evaluation framework allows for comparison across pilots and generalization of results and lessons learned. In all AgResults pilot evaluations, the Evaluator applies mixed methods using rigorous qualitative and quantitative analytic methods to test economic theory-driven hypotheses. The diagram below displays how we answerall evaluation questions in our charge.
To study the impact of AgResults on development of markets for the technology, the Evaluator is assessing the entire value chain for the technology applying a structure-conduct-performance paradigm, both at baseline before the pilot begins and at the end of the pilot. Specifically, we assess the underlying conditions of the market, structure of the market to assess the volume and cost of transactions, value chain actors’ strategies to engage in the market, and the market performance. To understand the gender impacts, we conduct gendered value chain analysis and examine intra-household roles, responsibilities and dynamics to capture specific impacts on women and men.
To examine smallholder and consumer impact, the Evaluator is conducting impact evaluations using both quantitative and qualitative surveys and the most rigorous methods that are feasible given the pilot context. Integrated in the Evaluator’s approach is an assessment of the AgResults pilot’s impact on gender and social inclusion, and examines impacts on the poor and most vulnerable using both qualitative and quantitative methods. To assess sustainability, the evaluations assess if the market for the technology exists two years after the pilot ends, and if it continues to engage with and have an impact on smallholders. At the end, the evaluation will conduct a cost-effectiveness analysis comparing across the pilots the cost of implementing pull mechanisms for every smallholder impacted. Finally, we will synthesize findings across pilots to draw lessons learnt in the design and implementation of pull mechanisms.
Diagram: Evaluation Framework by Evaluation Questions