Disaggregated Pesticide Investment Sensitivity
RCTClinical Trial
When agricultural risk management enables cash crop expansion, individual input investments respond heterogeneously because protective inputs like pesticides directly safeguard high-value crop investments against secondary biological risks.
Picture this
Think of buying expensive electronics; once a buyer insures against flood damage, they become much more willing to purchase protective cases because safeguarding the expensive investment against secondary physical damage becomes worth the extra cost.
What the evidence says
Pesticide was the sole disaggregated input with a statistically significant positive response to insurance provision (marginal effect on adoption probability = 0.054, p < 0.05; log expenditure marginal effect = 0.932, p < 0.05), while other inputs showed positive but statistically insignificant coefficients.
- Who was studied
- N = 1,479 farming household heads in semi-arid Andhra Pradesh, India.
- How
- Disaggregated Tobit and Probit econometric regressions estimating treatment effects across 5 distinct cash crop input categories (hybrid seeds, improved seeds, fertilizer, manure, pesticide).
What to do
Bundle weather index insurance with targeted access to chemical pesticides, as risk-hedged producers specifically expand crop-protection inputs to secure high-value cash crop yields.
From the source
"The treatment effect for each input is positive in all ten cases, however it is generally not statistically significant, except in the case of pesticide."
How Does Risk Management Influence Production Decisions? Evidence from a Field Experiment