Causal Impact of the Adoption of Soil Conservation Measures on Farm Profit, Revenue and Variable Cost in Darjeeling District, India

Working Paper no. 121-17

This study attempts to evaluate the effects of on-farm soil conservation practices on farm profit and its components, revenue, and variable cost. Since farmers self-select themselves as adopters of a particular type of conservation measure, there could be a problem of selection bias in evaluating their soil conservation practices. We address the selection bias by using propensity score matching. The comparison includes not merely adoption status but also adoption intensity, to see if the adoption of multiple conservation measures results in higher estimates of impact than the adoption of fewer conservation measures. We use the logit and conditional logit model to determine propensity scores. We use primary survey data from the Darjeeling district of the Eastern Himalayan region for the year 2013. Our results
from the binary adoption case suggest that there is no difference in the profits for the winter and monsoon seasons taken separately. Although revenues from adoption are higher, these appear to be associated with higher variable costs, thus resulting in no difference in profits. Furthermore, while the joint adoption of contour, afforestation, and bamboo plantation, or even just two of these measures, can lead to a significant gain in revenues, they also increase costs. The causal impact of the simultaneous adoption of soil conservation measures on per acre total revenue varies between INR 4560 and 5302 in the winter season and between INR 3469 and 5115 in the monsoon season. The causal impact of these soil conservation measures on
the per acre variable cost ranges from INR 3209 to 5345 during the winter season and from INR 2969 to 3657 in the monsoon season.