Can a Prize Competition Ensure Lasting Uptake of Rice Technology Practices that Reduce GHG Emissions in Vietnam?

Alt Fulltext Image
Hits: 209

October 30, 2019

By Tulika Narayan and Judy Geyer, Abt Associates

As the External Evaluator for AgResults, Abt Associates uses a mix of quantitative and qualitative methods to determine if the AgResults Pay-for-Results prize competitions achieve their objectives. Tulika Narayan serves as the Research Director.

The problem. Agriculture accounts for 23 percent of total greenhouse gas emissions (GHG) in Vietnam, of which rice cultivation contributes 54 percent. The warm, waterlogged soil of rice paddies provides ideal conditions for methanogenesis — or release of methane into the atmosphere. Recognizing this, the government of Vietnam has been working towards the goal of reducing GHG emissions from rice cultivation. However, progress has been slow because rice production practices that reduce emissions are often too complex or not profitable enough for farmers to adopt.

The AgResults solution. The AgResults Vietnam Greenhouse Gas Emissions Reduction Challenge Project in Thai Binh Province aims to (1) improve technologies that reduce GHG emissions from rice (while maintaining or improving yield) and (2) promote farmers’ adoption of those technologies. AgResults’ five donors – USAID, DFID, Global Affairs Canada, DFAT, and the Bill and Melinda Gates Foundation – are using this and other Challenge Projects to test whether Pay-for-Results (PfR) incentives can help solve various challenging agricultural problems affecting smallholder farmers around the world. As the External Evaluator, Abt Associates conducts independent evaluations to gauge the short- and long-term results of AgResults’ prize competitions.

The Vietnam project offers prizes to “competitors” (private companies such as seed companies, fertilizer suppliers, and rice traders). To win a prize, a competitor must both develop an improved technology package that reduces GHG while improving yields and succeed in getting farmers to adopt that package to scale. Prior to its Vietnam low emissions rice project, Abt evaluation of completed AgResults projects have demonstrated that PfR can be successful, particularly when farmers directly benefit from a new product or technology, independent of prize incentives.

Results from Phase 1. In the project’s first phase, which ended in 2018, 11 private sector entities competed to develop packages of low emissions rice production technologies. Of those, six competitors won prizes for developing technologies that demonstrably reduced emissions and increased yields. Four competitors who won prizes in Phase 1 decided to compete in Phase 2, which is currently underway. Phase 2 prizes will be awarded to competitors based on the number of smallholder rice farmers who adopt the technology packages, the total reduction in GHG emissions, and the increase in rice yields.

Abt’s evaluation of Phase 1 noted that the technologies used in Phase 1 — short duration variety rice, alternate wetting and drying (AWD), slow release fertilizer, reduced use of fertilizer, increased spacing of plants, and crop residue management — are not completely new. Instead, they combine existing approaches to reduce GHG emissions in new packages. All four technology packages that advanced to Phase 2 share common features with some variations. These technology packages are also largely similar in their GHG reduction and yield increasing potential. This suggests that technologies are themselves not distinct enough to explain differences in farmer adoption rates. Rather, any adoption differences stem from the strategies that competitors use to incentivize farmers, the long-term value they demonstrate to farmers in adopting the package, and the cost of resources they invest in the effort.

Will the results sustain? Abt’s interim findings suggest that competitors are giving substantial subsidies for seeds and fertilizers to motivate farmers to adopt the technology packages. This investment makes sense because the competitors have a chance to win large prizes – $500,000 at the end of each of the four crop cycles for a potential total of $2,000,000 to be shared among four competitors, provided they reach GHG emission reduction targets. In addition, the four companies have a fair chance of winning one of the end-of-project grand prizes of $750,000, $400,000 and $200,000 for the top three competitors. In addition to these subsidies for farmers who implement the technologies, some competitors have also promised to pay back a share of these prizes to the cooperative leaders and farmers. Almost all have hired cooperative leaders and village leaders to ensure that the farmers adopt the technologies.

Although competitors’ use of subsidies, conditional payments, and contract work for farming leaders bodes well for achieving strong results by the end of the project, use of the technology packages cannot be sustained after the incentives end unless the competitors and/or farmers realize clear benefits of adoption. Before Phase 2 began, Abt conjectured that farmers and competitors could benefit from adopting these technologies if they obtained premium prices by tapping into existing high-value or specialty markets, which require production systems consistent with the technologies promoted by AgResults. Interviews with competitors suggest that they are targeting safe rice markets and export markets to access premiums.

However, the one component of the technology package that has the largest influence on reducing GHG emissions – AWD – is not linked to a premium market. Therefore, even if farmers continue to adopt some components of the technology packages, it is unclear if GHG-reducing components of the technology packages will continue to be adopted after the competition ends. This was always a difficult challenge for AgResults to tackle since GHG reducing component of the technology package is a pure public good. Unless it is monetized, there would not be an incentive for farmers to adopt it.

Recognizing this, the AgResults project incentivized yield-reduction potential of the technology packages – competitors earn more prizes if their technologies increase yield. Cooperative leaders and key stakeholders suggest that for farmers to deviate from long-practiced traditions, they would need to experience yield increases of 30 percent. However, so far, the expected yield increase from the AgResults technology packages appears to be less than this threshold. It is not clear whether a modest yield increase would justify the additional input, labor, and water management costs required to implement technology packages after the subsidies end.

Abt’s external evaluation will rigorously establish the extent to which rice farmers targeted by AgResults increased their rice yields and reduced GHG emissions. Since higher yield do not mean higher income, it will also evaluate the extent to which farmers increased net returns from growing rice after accounting for all the input and labor costs. However, this analysis will be based on farmer costs after accounting for the subsidies and incentives they receive from the competitors. To assess whether the technologies are profitable after the incentives end, and whether they continue to adopt the technologies, a sustainability analysis one year after the project ends is needed.

Sustainability analysis is important. With 7,970 farmers applying technology packages on 869 hectares in Thai Binh, Phase 2 of the Vietnam project has thus far achieved stronger results compared to other development programs. But there is a lot of room for further growth: The project has two more growing seasons to expand within Thai Binh, which has a total of 80,000 hectares under rice cultivation Abt’s interim findings suggest that for these practices to continue beyond the life of the project when the incentives end, significant changes to the underlying market for low-GHG rice would have to occur over the next two growing seasons. It is also conceivable that the government of Vietnam promotes these technologies as part of their extension services, although their promotion of AWD thus far has not led to large-scale adoption. Investment in verification protocols needed to access carbon markets for payments to reduce GHG emissions would be a far more effective strategy. It remains to be seen if AgResults is successful in creating a lasting impact in tackling a difficult development challenge – only a sustainability analysis can answer this question.

Type of Post: Blog

October 30, 2019

By Tulika Narayan and Judy Geyer, Abt Associates

As the External Evaluator for AgResults, Abt Associates uses a mix of quantitative and qualitative methods to determine if the AgResults Pay-for-Results prize competitions achieve their objectives. Tulika Narayan serves as the Research Director.

The problem. Agriculture accounts for 23 percent of total greenhouse gas emissions (GHG) in Vietnam, of which rice cultivation contributes 54 percent. The warm, waterlogged soil of rice paddies provides ideal conditions for methanogenesis — or release of methane into the atmosphere. Recognizing this, the government of Vietnam has been working towards the goal of reducing GHG emissions from rice cultivation. However, progress has been slow because rice production practices that reduce emissions are often too complex or not profitable enough for farmers to adopt.

The AgResults solution. The AgResults Vietnam Greenhouse Gas Emissions Reduction Challenge Project in Thai Binh Province aims to (1) improve technologies that reduce GHG emissions from rice (while maintaining or improving yield) and (2) promote farmers’ adoption of those technologies. AgResults’ five donors – USAID, DFID, Global Affairs Canada, DFAT, and the Bill and Melinda Gates Foundation – are using this and other Challenge Projects to test whether Pay-for-Results (PfR) incentives can help solve various challenging agricultural problems affecting smallholder farmers around the world. As the External Evaluator, Abt Associates conducts independent evaluations to gauge the short- and long-term results of AgResults’ prize competitions.

The Vietnam project offers prizes to “competitors” (private companies such as seed companies, fertilizer suppliers, and rice traders). To win a prize, a competitor must both develop an improved technology package that reduces GHG while improving yields and succeed in getting farmers to adopt that package to scale. Prior to its Vietnam low emissions rice project, Abt evaluation of completed AgResults projects have demonstrated that PfR can be successful, particularly when farmers directly benefit from a new product or technology, independent of prize incentives.

Results from Phase 1. In the project’s first phase, which ended in 2018, 11 private sector entities competed to develop packages of low emissions rice production technologies. Of those, six competitors won prizes for developing technologies that demonstrably reduced emissions and increased yields. Four competitors who won prizes in Phase 1 decided to compete in Phase 2, which is currently underway. Phase 2 prizes will be awarded to competitors based on the number of smallholder rice farmers who adopt the technology packages, the total reduction in GHG emissions, and the increase in rice yields.

Abt’s evaluation of Phase 1 noted that the technologies used in Phase 1 — short duration variety rice, alternate wetting and drying (AWD), slow release fertilizer, reduced use of fertilizer, increased spacing of plants, and crop residue management — are not completely new. Instead, they combine existing approaches to reduce GHG emissions in new packages. All four technology packages that advanced to Phase 2 share common features with some variations. These technology packages are also largely similar in their GHG reduction and yield increasing potential. This suggests that technologies are themselves not distinct enough to explain differences in farmer adoption rates. Rather, any adoption differences stem from the strategies that competitors use to incentivize farmers, the long-term value they demonstrate to farmers in adopting the package, and the cost of resources they invest in the effort.

Will the results sustain? Abt’s interim findings suggest that competitors are giving substantial subsidies for seeds and fertilizers to motivate farmers to adopt the technology packages. This investment makes sense because the competitors have a chance to win large prizes – $500,000 at the end of each of the four crop cycles for a potential total of $2,000,000 to be shared among four competitors, provided they reach GHG emission reduction targets. In addition, the four companies have a fair chance of winning one of the end-of-project grand prizes of $750,000, $400,000 and $200,000 for the top three competitors. In addition to these subsidies for farmers who implement the technologies, some competitors have also promised to pay back a share of these prizes to the cooperative leaders and farmers. Almost all have hired cooperative leaders and village leaders to ensure that the farmers adopt the technologies.

Although competitors’ use of subsidies, conditional payments, and contract work for farming leaders bodes well for achieving strong results by the end of the project, use of the technology packages cannot be sustained after the incentives end unless the competitors and/or farmers realize clear benefits of adoption. Before Phase 2 began, Abt conjectured that farmers and competitors could benefit from adopting these technologies if they obtained premium prices by tapping into existing high-value or specialty markets, which require production systems consistent with the technologies promoted by AgResults. Interviews with competitors suggest that they are targeting safe rice markets and export markets to access premiums.

However, the one component of the technology package that has the largest influence on reducing GHG emissions – AWD – is not linked to a premium market. Therefore, even if farmers continue to adopt some components of the technology packages, it is unclear if GHG-reducing components of the technology packages will continue to be adopted after the competition ends. This was always a difficult challenge for AgResults to tackle since GHG reducing component of the technology package is a pure public good. Unless it is monetized, there would not be an incentive for farmers to adopt it.

Recognizing this, the AgResults project incentivized yield-reduction potential of the technology packages – competitors earn more prizes if their technologies increase yield. Cooperative leaders and key stakeholders suggest that for farmers to deviate from long-practiced traditions, they would need to experience yield increases of 30 percent. However, so far, the expected yield increase from the AgResults technology packages appears to be less than this threshold. It is not clear whether a modest yield increase would justify the additional input, labor, and water management costs required to implement technology packages after the subsidies end.

Abt’s external evaluation will rigorously establish the extent to which rice farmers targeted by AgResults increased their rice yields and reduced GHG emissions. Since higher yield do not mean higher income, it will also evaluate the extent to which farmers increased net returns from growing rice after accounting for all the input and labor costs. However, this analysis will be based on farmer costs after accounting for the subsidies and incentives they receive from the competitors. To assess whether the technologies are profitable after the incentives end, and whether they continue to adopt the technologies, a sustainability analysis one year after the project ends is needed.

Sustainability analysis is important. With 7,970 farmers applying technology packages on 869 hectares in Thai Binh, Phase 2 of the Vietnam project has thus far achieved stronger results compared to other development programs. But there is a lot of room for further growth: The project has two more growing seasons to expand within Thai Binh, which has a total of 80,000 hectares under rice cultivation Abt’s interim findings suggest that for these practices to continue beyond the life of the project when the incentives end, significant changes to the underlying market for low-GHG rice would have to occur over the next two growing seasons. It is also conceivable that the government of Vietnam promotes these technologies as part of their extension services, although their promotion of AWD thus far has not led to large-scale adoption. Investment in verification protocols needed to access carbon markets for payments to reduce GHG emissions would be a far more effective strategy. It remains to be seen if AgResults is successful in creating a lasting impact in tackling a difficult development challenge – only a sustainability analysis can answer this question.