Pecuniary versus Non-pecuniary Interventions to Influence Farmers’ Behavior: Evidence from Field Experiment in Vietnam

Encouraging farmers to adopt pro-environmental production is vital to the promotion of sustainable agriculture. Previous observational studies emphasize the importance of economic incentives and information access to the farmer's decision; however, due to endogeneity issues, little strong causal evidence is available. This study makes an original contribution by experimentally examining the impacts of subsidy and information treatments on farmers' adoption of organic fertilizer. To do so, we analyze data from a randomized controlled trial (RCT) conducted on 1287 small-scale tea farmers in Vietnam. We find significant impacts of our information treatment and a 50% price subsidy. Interestingly, the effect of the former is approximately one-third that of the latter. Subgroup treatment analysis reveals that the information treatment performs well for members of certification groups. Thus, to induce farmers to adopt pro-environmental production behaviors, information provision can partially substitute for subsidies to reduce the burden on the public budget.This work is supported by JSPS KAKENHI Grant Numbers 18J13432 and 17K03692.SUPPLEMENTAL MATERIALS: pp.1-