Alain de Janvry

Improving security of tenure over agricultural land has recently been the focus of a number of large land certification programs. While the main justification for these efforts was to increase productive investments and facilitate land rental transactions, we show that if access rights were tied to actual land use in the previous regime, these programs can also lead to increased outmigration from agrarian communities. We analyze the Mexican ejido land certification program which, from 1993 to 2006, awarded ownership certificates to 3.6 million farmers on about half the country’s agricultural land. Using the program rollout over time and space as an identification strategy, we show that households obtaining land certificates were 30% more likely to have a migrant member. The effect was larger for households with ex-ante weaker property rights and with larger off-farm opportunities. At the community level, certificates led to a 4% reduction in population. We show evidence of certificates leading to sorting, with larger farmers staying and land-poor farmers leaving in high productivity areas. We use satellite imagery to determine that, on average, cultivated land was not reduced because of the program, consistent with increases in agricultural labor productivity. Furthermore, in high productivity areas, the certification program led to an increase in cultivated land compared to low productivity areas.

What is the impact on voting behavior of strengthening property rights over agricultural
land? To answer this question, we use the 14 year nationwide rollout of Mexico’s land
certification program (Procede) and match affected communities (ejidos) before and after
the change in property rights with voting outcomes in corresponding electoral sections
across six federal election cycles. We find that, in accordance with the investor class
theory, granting complete property rights induced a conservative shift toward the promarket party equal to 6.8 percent of its average share of votes over the period. This shift was strongest where vested interests created larger expected benefits from marketoriented policies as opposed to public-transfer policies. We also find that beneficiaries failed to reciprocate through votes for the benefactor party. We conclude that, in the
Mexican experience, engaging in a land reform that strengthened individual property
rights over agricultural land was politically advantageous for the right-wing party.

Using data from a randomized experiment in rural China, this paper studies the influence of social networks on the decision to adopt a new weather insurance product and the mechanisms through which social networks operate. We provided financial education to a random subset of farmers and found a large social network effect on take-up: for untreated farmers, having an additional friend receiving financial education raised take-up by almost half as much as obtaining financial education directly, a spillover effect equivalent to offering a 15% reduction in the average insurance premium. By varying the information available to individuals about their peers’ take-up decisions and using randomized default options, we show that the positive social network effect is not driven by the diffusion of information on purchase decisions, but instead by the diffusion of knowledge about insurance. We also find that social network effects are larger in villages where households are more strongly connected, and when people who are the first to receive financial education are more central in the social network.

Improving security of tenure over agricultural land has recently been the focus of a number
of large land certification programs. While the main justification for these efforts was to increase
productive investments and facilitate land rental transactions, we show that if access rights were
tied to actual land use in the previous regime, these programs can also lead to increased outmi­
gration from agrarian communities. We analyze the Mexican ejido land certification program
which, from 1993 to 2006, awarded ownership certificates to 3.6 million farmers on about half the
country’s agricultural land. Using the program rollout over time and space as an identification
strategy, we show that households that obtained land certificates were 28% more likely to have a
migrant member. The effect was larger for households with ex-ante weaker property rights and
with larger off-farm opportunities. At the community level, certificates led to a 5% reduction in
population, and the effects were larger in lower land quality environments. We show evidence
of certificates leading to sorting, with larger farmers staying and land-poor farmers leaving in
high productivity areas. We use satellite imagery to determine that, on average, cultivated land
was not reduced because of the program, consistent with increases in agricultural labor produc­
tivity. Furthermore, in high productivity areas, the certification program led to an increase in
cultivated land compared to low productivity ones. We confirm the validity of the results with
checks on exogeneity of the rollout process relative to migration trends and on attrition in the
panel dataset we use.

Using data from a two-year randomized experiment in rural China, this paper studies the influence of social networks on the decision to adopt a new weather insurance product and the mechanisms through which social networks operate. In the first year, I provided financial education to
a random subset of farmers and found a large social network effect on insurance take-up: for untreated farmers, having an additional friend receiving financial education raises take-up by almost half as much as obtaining financial education directly, a spillover effect equivalent to offering a 12% reduction in the average insurance premium. By varying the information available to subjects about their peers’ take-up decisions and using randomized default options, I show that the positive social network effect is not driven by scale effects, imitation, or informal risk-sharing, but instead by the diffusion of insurance knowledge. One year later, social networks continue to affect insurance demand: observing an above-median share of friends receiving payouts increases insurance take-up at a rate equivalent to about 50% of the impact of receiving payouts directly. I also find that social network effects are larger in villages where households are more strongly connected, and when the people who receive financial education first are more central in the social network.

We analyze the impact on voting behavior of strengthening property rights over rural
land. We use the 14 year nationwide rollout of a land certification program in Mexico
(Procede) and match affected communities (ejidos) before and after the change in
property rights with voting outcomes in corresponding electoral sections across six
federal election cycles. We find that, in accordance with the investor class theory,
granting complete property rights induced a conservative shift toward the pro-market
party. This shift was strongest where vested interests created larger expected benefits
from market-oriented policies as opposed to public-transfer policies. We also find that
beneficiaries failed to reciprocate through votes to the benefactor party. We conclude that
engaging in a land reform that grants complete property rights is only politically
advantageous for a right-wing party, thus providing a rationale as to why so many land
reforms done by autocratic governments remain incomplete.

We report on an experiment in which new commercial savings products, informed by the
behavioral finance literature, were offered to the microfinance borrowers of Guatemala’s largest
public-sector bank. We find that giving these borrowers the opportunity to plan, and be reminded
of, saving at the time of loan repayment resulted in a doubling of savings deposits relative to the
control, and that proposing a default contribution of 10% of the loan payment caused deposits to
double again. The savings treatments also generate faster pay-down of debt and weakly better
overall repayment performance, suggesting that simultaneous savings and borrowing can be
complementary activities. A theoretical model shows that the simultaneous provision of debt and
commitment savings products helps a greater fraction of the population to eventually escape a
debt-financed equilibrium. Mainstreaming the most successful product tested here would allow the
bank to mobilize savings sufficient to leverage 50% of its short-term loan portfolio.

We study insurance against common shocks in cooperatives and other productive
groups of individuals. In those groups, and due to strategic interactions among
group members, insurance decisions may be preferably taken at the group level
rather than the individual level. We highlight two kinds of potential problems with
individual insurance : the first one is a free-riding problem because due to strategic
interactions, insurance decisions exert a positive externality on other group members
; the second one is a coordination problem that occurs because it may be unprotable
for an individual to take insurance if the others in the group do not. Both types of
problems can be resolved if insurance is oered at the group level.

The Fair Trade (FT) initiative has been hugely popular with coffee consumers around the world, and
yet the creation of durable producer rents is challenging in a competitive market environment. We
model the FT premium actually received by producers and suggest that rents are in fact dissipated,
but that this occurs in ways that are quite obscure to consumers. First, over-certification dilutes the
effective premium even during years in which the nominal FT premium is high. Then, the use of a
quality-invariant FT floor price in the very heterogeneous market for coffee creates a second,
completely unrelated mechanism through which producer benefit is eroded. We use unique data
from a large association of coffee cooperatives in Central America to measure nominal FT
premiums received by member cooperatives, comparing coffee of the exact same quality sold with
and without the FT label. We confirm that nominal premiums are dissipated by over-certification
and unrewarded quality differentials. In effect, FT membership is priced like a put option: producers
are willing to lose a small amount through participation during years in which the market price is
high in order to retain future access to the FT floor price. We conclude by discussing ways in which
the FT mechanism could be adjusted to take advantage of ethical consumers’ willingness to pay in
order to achieve the desired transfers of rents to smallholder producers.

Even though several studies have assessed the degree of progressivity in targeting
communities under the participatory Social Investment Fund (SIF) approach to
the provision of local public goods, there is yet little evidence on how increasing
decentralization affects the quality of this targeting. We identify the impact of
increasing decentralization on community targeting using the unique situation of
Zambia’s SIFs where the degree of decentralization changed in time and space
across districts over the 15 years of program implementation. We find that greater
decentralization of SIFs’ functions to districts that had been deemed to have the
necessary level of managerial capacity led to more progressive targeting across
wards, mildly so at the national level and strongly so within districts. We also
observe how local electoral politics gained importance with greater
decentralization, with more votes received by the candidate from the majority
party in the district council attracting more projects to a ward, and more projects
in a ward rewarded by more votes for the councilor from the incumbent party.
Decentralization thus made concerns with community poverty more salient in
targeting and local politics more important in public goods allocation.

Food prices have more than doubled between mid-2006 and mid-2008, creating major
distress among the poor across the world, but also gainers among farm producers. While
transmission was largely averted in India, increasingly open food markets indicate the
need to anticipate the welfare implications of a repetition of such events in the future.
This paper simulates the welfare effects of the rise in the international price of cereals
and edible oils on a comprehensive typology of Indian households. Results show that
large farmers(with farm size of one hectare and more) would have gained as a group, and
that the average gain is large for those who gain, but that 59% of them in fact lose. The
main category of poor households negatively affected by the rise in prices is rural
(representing 77% of all losing poor households), both farmers and non-farmers. This is
contrary to conventional wisdom that looks at the urban poor as the main category to be
sheltered from rising prices through safety net measures, and expects most farmers to
gain. These rural households account for 79% of the aggregate welfare loss among the
poor. This makes a forceful case for the need to look beyond the urban poor when food
pricesrise.

China’s record in reducing rural poverty has been nothing short of spectacular and should be a source of
lessons for other countries. Rural poverty reduction is generally sought in the role of agriculture in
contributing to farm incomes. However, non-farm employment in rural areas can also be a major
contributor. Using detailed household survey data from Hubei province, we simulate the counterfactual of
what rural households’ incomes, poverty, and inequality would be in the absence of access to non-farm
sources of income. Results show that, without non-farm employment, rural poverty would be much higher
and deeper, and that income inequality would be higher as well. We find that education, proximity to
town, neighborhood effects, and village effects are crucial in helping particular households gain access to
these opportunities. We also find that those who stay as pure farmers have non-observable characteristics
that make them much more productive in agriculture, implying positive selection on these characteristics.
Moreover, participation in non-farm activities has a positive spillover effect on household farm
production.

Constructing structural models of educational choice allows to explore design features
for educational programs and to predict how the program would perform in alternative
contexts, for instance when accompanied by new complementary programs. We use the
experience of Progresa, Mexico’s ambitious conditional cash transfer program for
education in poor rural communities, to construct such a model. The impact of transfers
on decisions to enroll in secondary school and to repeat a grade in case of failure is
accurately measured due to randomized treatment in a subset of communities. While
impact measurements of Progresa on educational attainment are available from reduced
form estimates, the structural model allows to decompose the channels of influence in
decision making and to measure their relative importance on observed outcomes. We
measure the gains from a design where future transfers can be credibly committed in
spite of political cycles, and from complementary supply-side programs providing
improved off-school support to students and access to better information about job
opportunities outside the community offered by education.

The persistence of rural poverty, concentration in rural areas of the most extreme forms of
poverty, and rising inequality in the distribution of rural incomes remain vexing aspects of rural
development in Latin America, in spite of expensive programs intended at reducing poverty and inequality.
Mexico is no exception to this observation. This widespread failure calls upon exploring alternative
approaches to rural development that may have greater chances of success. Taking an approach that
distinguishes between marginal and favorable areas, and that seeks to integrate rural and urban activities in
a territorial dimension centered around regional economic projects and the economic incorporation of the
poor is one such option that deserves further consideration. It has been introduced in Mexico through the
Microregions Strategy. While it is too early to evaluate this program, we derive lessons from international
experiences that provide guidelines to assess the Mexican strategy.

We do this by first characterizing the recent evolution of rural poverty and inequality in Latin
America. We then proceed to explore a set of qualitative changes in rural poverty that need to be taken into
account in a new approach. This is complemented by analyzing a set of new opportunities for rural poverty
reduction that should also be factored into a new approach. On the basis of international experiences with
territorial development, we derive a set of principles for success of the approach. We use these principles
to discuss the methodology followed in Mexico for the Microregions Strategy.

Farmers incur proportional and fixed transactions costs in selling their crops on markets.
Using data for Peruvian potato farmers, we propose a method to measure these transactions costs.
When opportunities exist to sell a crop on alternative markets, the observed choice of market can be
used to infer a monetary measure of transactions costs in market participation. The market choice
model is first estimated at the reduced form level with a conditional logit, as a function of variables
that explain transactions costs. We then use these market choice equations to control for selection in
predicting the idiosyncratic prices that would be received on all markets and the idiosyncratic
proportional transactions costs that would be incurred to reach all markets. The net between the two
gives us a measure of effective farm-level prices. This allows us to estimate a semi-structural
conditional logit of the market choice model. In this model, the choice of market is a function of
predicted effective farm-level prices, and of market information that accounts for fixed transactions
costs. We can use the estimated coefficients to derive the price equivalence of the fixed cost due to
information. We find that the information on market price that farmers receive from their neighbors
reduces fixed transactions costs by the equivalent of doubling the price received, and is equal to four
times the average transportation cost.

Agriculture has multiple functions to fulfill for the development of the Sub-Saharan Africa countries: a source of growth, an instrument for poverty reduction, and a contribution to the provision of environmental services. Yet, it is still used far below potential, with gains in land and labor productivity lagging below those of other regions. Successful use of agriculture for development will require greater attention by governments and donors, supported by scholarship and learning. The economics profession has an important role to play in helping re-conceptualize in a new paradigm the role of agriculture for development, design and evaluate new approaches, contribute to capacity building, and participate to policy advice and the mobilization of political
support.

We use administrative data from the lottery-based open enrollment system in Beijing middle schools to obtain unbiased estimates of school fixed effects on student performance. To do this, we classify children in selection channels, with each channel representing a unique succession of lotteries through
which a child was assigned to a school, given his parents’ choice of schools and the schools’ enrollment quotas. Within each channel, students had an equal probability of being assigned to a given school. Results show that school fixed effects are strong determinants of student performance. These fixed effects are shown to be highly correlated with teacher qualifications measured in particular by their official ranks. Furthermore, teacher qualifications have about the same predictive power for student test scores as do school fixed effects, implying that observable aspects ofschool quality almost fully account for the role ofschool quality differences.

We study the eects of the Mexican conditional cash transfer program Progresa (now re-named Oportunidades) on school enrollment and performance in passing grades. We develop a theoretical framework of the dynamics of the educational process including endogeneity and uncertainty of school performance. It provides predictions for the eect on performance of a cash transfer conditional on school attendance. Using a randomized experiment implemented under Progresa, we identify the eect of the program on enrollment and performance in the first year of the program, before performance-induced dynamic selection took place. We find that the program had a positive impact on school enrollment at all grade levels whereas for performance it had a positive impact at the primary school level but a negative impact at the secondary level. According to our theoretical framework, this can be due to the disincentives created by termination of program benets after the third year of secondary school.

Governments need the capacity to manage price instability and its social consequences; but in countries where people suffer most, they are least able to respond, because of limited fiscal and institutional resources. This article argues that policies used by middle- and high-income countries are unsuitable for poorer, agricultural countries; it recommends instead that these nations promote broader access to land and raise land productivity. The authors explain why instruments used by richer countries, such as those that control prices and cheapen food, fail in poorer countries. They describe the features of smallholder farmers in poorer countries, drawing upon evidence from India, Peru, and Guatemala to demonstrate how subsistence farming can be part of policy responses to the distress of a food crisis in both the short and medium term. They call upon donors to improve their understanding of and support for smallscale, subsistence-oriented farming.

This paper analyzes how electoral incentives affected the performance of a major decentralized conditional cash transfer program intended on reducing school dropout rates among children of poor households in Brazil. We show that while this federal program successfully reduced school dropout by 8 percentage points, the program’s impact was 36 percent larger in municipalities governed by mayors who faced reelection possibilities
compared to those with lame-duck mayors. First term mayors with good program performance were much more likely to get re-elected. These mayors adopted program implementation practices that were not only more transparent but also associated with better program outcomes.

Conditional cash transfer (CCT) programs have proved to be effective in inducing chronic poor households to invest in the human capital of their children while helping reduce poverty. They have also protected child human capital from the shocks that affect these households. In this paper, we argue that many non-poor households exposed to uninsured shocks have to use children as risk coping instruments, with the risk of creating long term irreversibilities in child human capital development. We review recent experiences to explore how CCT programs could be designed to serve as safety nets for the vulnerable non-poor when hit by a shock. This would require a number of modifications to the way rules of operation of CCT programs are currently designed. As developing countries enter into a period of increasing economic turbulence, providing extended safety nets to the children of the transitory-poor is becoming a key feature of social protection.

This paper shows that insecurity of property rights over agricultural land can have large efficiency and equity costs because of the way it affects matching in the tenancy market. A principal-agent framework is used to model the landlord’s decision to rent when he takes into account the risk of losing the land to the tenant and when contract enforcement is decreasing in social distance with the tenant. These effects are quantified for the case of local land rental markets in the Dominican Republic. Results show that insecure property rights lead to matching in the tenancy market along socio-economic lines, severely limiting the size of the rental market and the choice of tenants for landlords, both with efficiency costs. Social segmentation reduces access to land for the rural poor, with high equity costs. Simulations suggest that improving tenure security would increase rental transactions by 21% and the area rented to the poor by 63%. Increased property rights security is hence beneficial not only to asset owners, but also to those with whom they might interact in the market.

We utilize a unique pair of experiments to isolate the ways in which reductions in asymmetric information alter credit market outcomes. A Guatemalan microfinance lender gradually started using a credit bureau across its branches without letting borrowers know about it. One year later, we ran a large randomized credit information course that described the existence and workings of the bureau to the clients of this lender. This pairing of natural and randomized experiments allows us to separately identify how new information enters on the supply and the demand sides of the market. Our results indicate that the credit bureau generated large efficiency gains for the lender, and that these gains were augmented when borrowers understood the rules of the game. The credit bureau rewarded good borrowers but penalized weaker ones, increasing economic differentiation.

The role of agriculture as an instrument for industrialization had been rigorously conceptualized in the 1960s and 1970s under the classical paradigm of development economics. After many implementation failures under import substitution industrialization policies and protracted neglect of agriculture under the policies of the Washington Consensus that followed the debt crisis, agriculture has gradually returned in the development agenda, especially with the food crisis. We argue in this article that a new paradigm has started to emerge as to how to use agriculture for development, pursuing a broadened development agenda. We explore the specifications of this paradigm and discuss conditions for successful implementation.

Empirical evidence has shown that off-farm non-agricultural (OFNA) employment offers a major pathway from poverty for rural populations. However, the pattern of participation in these activities is heterogeneous across categories of individuals and poorly understood. We explore the role of spillovers from peers on an individual’s participation in formal and informal OFNA employment using village census data for rural Mexico. We test and reject the possibility that peers’ decisions could be proxying for unobserved individual, village-level, or individual-type effects. We find that peers’ participation in OFNA employment has a large impact on an individual’s ability to engage in this type of employment, both formal and informal, even after controlling for
individual attributes and village characteristics. Peer effects are structured by similarities in gender, ethnicity, educational level, and land endowment. We find that marginal peer effects tend to be stronger for categories of individuals that are already more engaged in OFNA employment, such as men, non-indigenous people, the more educated, and the landless, contributing to reinforcing inequalities in accessing these jobs. However, the role of peer effects relative to that of education in obtaining formal OFNA employment is more important for members of groups that are less engaged in these jobs, such as women, indigenous people, the less educated, and smallholders.

We conducted a randomized experiment at the time of the 2004 flu vaccine shortage, providing information about the sharply reduced number of clinics and their schedule, and an appeal on cooperative restraint to a campus population. This strategy was intended to reduce demand for vaccination among non-priority individuals and to free available supplies for the priority population. It failed to achieve its purpose. Information induced a net increase in vaccines distributed and, perversely, the net increase originated entirely in non-priority individuals. The surprising finding is that calls on cooperative restraint induced an uncalled for positive response among priority individuals, while they induced an increase in cheating among non-priority individuals. Age as a qualifying factor was in particular widely abused, with the number of “65 years old” more than twice the predicted value, while about half of the predicted 61-64 years old were missing.

The world of agriculture is in a state of crisis. And nowhere is this more important than for Africa where economies depend heavily on agriculture and hunger is on the rise. Agriculture is in the headlines, but for the wrong reasons: failures instead of successes. It is receiving rare political attention and financial commitments by governments and donors. This creates unique opportunities in using agriculture for development. But will opportunities be seized? Governments and donors have increasingly turned their backs on agriculture over the last 20 years, contributing to the current food crisis. Will African governments and donors respond by successfully using agriculture for development, or, after a brief concern with agriculture motivated by food riots and human distress, are we to witness a return to business as usual? This paper attempts to answer that question, identifying causes that have led to the crisis, opportunities for new departures, and forces that could be mobilized in order to avoid the business-as-usual scenario and promote instead the agriculture-for-development outcome.

Food prices rose sharply on the international market between January 2005 and mid-2008, precipitating what has become known asthe “global food crisis”. Yet, how much of a crisis was it at the household level, and for whom was it a crisis? This paper analyzes the welfare effects of changes in prices over categories of households in Guatemala. We find three surprising results. The first is that there was no statistically significant transmission of international into domestic prices over the three and a half years that the crisis lasted. Most real staple food prices rose, but changes were modest and certainly far removed from full transmission as frequently assumed. Welfare effects were as a consequence small. The second surprising result
is that, given high food dependency for farmer households, including large farmers, most of these households lost from the rise in prices, especially of course the marginal, small, and medium farmers. Only if international prices had fully transmitted would half of the large farmers have gained, with the vast majority in the other categories still losing. Allowing for price responses in both production and consumption mitigates negative effects, but still leaves a vast majority of the farmer population losing. Finally, the third surprising result is that farmer households represent as many astwo-thirds of all poor householdslosing from rising food prices. Increasing the productivity of production for home consumption in smallholder farming can thus be an important instrument in combating the short run welfare losses of rising food prices among poor households.

Agricultural growth has long been recognized as an important instrument for poverty reduction. Yet, measurements of this relationship are still scarce and not always reliable. This paper presents additional evidence at both the sectoral and household levels based on recent data. Results show that rural poverty reduction has been associated with growth in yields and in agricultural labor productivity, but that this relation varies sharply across regional contexts. GDP growth originating in agriculture induces income growth among the 40% poorest which is on the order of three times larger than growth originating in the rest of the economy. The power of agriculture comes not only from its direct poverty reduction effect but also from its potentially strong growth linkage effects on the rest of the economy. Decomposing the aggregate decline in poverty into a rural contribution, an urban contribution, and a population shift component shows that rural areas contributed more than half the observed aggregate decline in poverty. Finally, using the example of Vietnam, we show that rapid growth in agriculture has opened pathways out of poverty for farming households. While the effectiveness of agricultural growth in reducing poverty is well established, the effectiveness of public investment in inducing agricultural growth is still incomplete and conditional on context.

One major concern with public school open enrollment programs is the potential for parents’ school selection errors to adversely affect their children’s academic achievement. In thisstudy of the Beijing middle school open enrollment program, we estimate the degree to which children’s school outcomes were negatively affected by the poor choices their parents made during the school selection process. We do this by examining parents’ responses to a survey on school choices combined with actual school applications, school admission records, and High School Entrance Examination test scores for 4,717 students entering middle schools in Beijing via randomized lotteries. We find that the children of parents who made judgment errors in school selection were admitted to lower quality schools and achieved lower testscores on the High School Entrance Examination. Parents who had less education, whose children performed at lower levels in primary school, and who were less attentive to teachers’ opinions about schools were more prone to make these errors. Providing assistance to parents, especially those less prepared to make informed choices about school selection, is consequently important for supporting more efficient and equitable open enrollment programs.

Credit agents in microfinance institutions (MFIs) must be given incentives to acquire information on potential borrowers and select them in accordance with the MFI's objectives. We show that while giving incentives has no cost in for-profit MFIs, it is costly in pro-poor MFIs: When repayment and wealth are positively correlated, a pro-poor MFI cannot obtain the selection of poor clients in the proportion it wishes with incentives based solely on repayment. It then becomes necessary to audit the share of very poor borrowers selected by an agent in order to provide the latter with adequate incentives. When audit costs are large, pro-poor MFIs may have to forego selection on wealth -- and use other targeting devices such as working in impoverished geographical locations. Driven by donor concerns with 'mission drift' away from the poor, audits on the wealth status of clients have been introduced at the level of MFIs. We show that introducing pro-poor incentives requires extending such audits to the level of credit agents.

The fundamental role that agriculture plays in development has long been recognized. In the seminal work on the subject, agriculture was seen as a source of contributions that helped induce industrial growth and a structural transformation of the economy. However, globalization, integrated value chains, rapid technological and institutional innovations, and environmental constraints have rapidly changed the context for agriculture’s role. We argue that a new
paradigm is needed that recognizes agriculture’s multiple functions for development in that emerging context: triggering economic growth, reducing poverty, narrowing income disparities, providing food security, and delivering environmental services. Yet, governments and donors have neglected these functions of agriculture with the result that agriculture growth has been reduced, 75% of world poverty is rural, sectoral disparities have exploded, food insecurity has returned, and environmental degradation is widespread. Mobilizing these functions requires shifting the political economy to overcome anti-agriculture policy biases, strengthening governance for agriculture, and tailoring priorities to country conditions.

While agriculture is rarely a sensational topic, it has been in the headlines across the world over the last two years, if for the wrong reasons. “The End of Cheap Food”, “The Silent Tsunami”, “Grains Gone Wild”, “Across the Globe, Empty Bellies Bring Rising Anger” have been front page titles in The Economist and The New York Times. This surge of interest in agriculture and what it can do for development has been motivated by a conjunction of negative outcomes: sharply rising food prices with
associated food riots and rising hunger; an approaching deadline for the Millennium Development Goals (MDG) that will not be unmet in most countries, while 75% of world poverty is rural and agriculture has to play a major role if the MDG of halving poverty is to be met; rising rural-urban income disparities creating political tensions in rapidly growing countries such as China and India; threats to the future of the family farm and excessively rapid rural exodus toward urban slums; new demands on agriculture to contribute to energy supply and to deliver environmental services; the destabilization of weather patterns and rising temperatures creating threats to the resilience of farming systems on which the rural poor depend; rising water scarcity and pollution of potable water sources with agro-chemicals associated with the intensification of cropping patterns; loss of biodiversity associated with deforestation and horizontal expansion of extensive farming systems; and pandemics such as the avian flu linking agriculture to human health. Agriculture clearly needs to do a better job for development as the developmental failures of agriculture have reached crisis proportion. Reassessing why agriculture has not been more effectively used for development is thus happening by popular demand.

Yet, can we expect that this reassessment will result in significant changes on the way agriculture is used for development? Or are we to return to “business as usual”, with a continued neglect of agriculture and the associated failed opportunities to use it to
stimulate growth in poor countries, reduce rural poverty, and improve sustainability in resource use, as occurred over the last 25 years following the debt crisis and the policies of the Washington Consensus. The World Development Report 2008 was a call to make better use of agriculture for development. Urgency of the call has been enhanced by the food crisis. Will governments and international development agencies hear the call and stop turning their backs on agriculture? What would it take for agriculture to be effectively used for development and to address the many crisis that have brought it to 2 the headlines? It is the objective of this presentation to raise these questions and discuss answers.

Formal village organizations (VO) can be classified into market-oriented (MO) and communityoriented (CO) organizations, with the former aimed at raising members’ incomes and the latter at the provision of local public goods. This paper investigates the role of community conservatism in opposing economic differentiation and, thereby, constraining the emergence, configuration, and activities of MOs in West Africa. To do this, we develop a model where we show that, if these conservative forces are important, MOs need to be larger than would otherwise be optimal in order to gain acceptability and emerge. This, in turn, has an impact on their governance structure, as the needed extra members demand a more participatory decision-making process in order to secure the delivery of club goods, constraining the exercise of leadership. With very high resistance to economic differentiation, no MO can emerge. Using a dataset of 646 VOs in Burkina Faso, we identify a sharp contrast in initial size and governance structure between the first MO to emerge in a village and subsequent MOs. This is consistent with the results of the model assuming that first MOs encounter strong opposition to their emergence, while the social environment is more tolerant forsubsequent MOs..

Quantitative and qualitative analyses are used to assess the existence of village organizations (VOs), their performance, and members’ participation in benefits in Senegal and Burkina Faso. VOs are classified into Market-oriented (MOs) and Community-oriented (COs). Results show that organizations are present in a majority of villages and include a high share of rural households. Diffusion of MOs is limited by isolation and social conservatism. Performance is constrained by low professional management capacity and lack of access to resources. With elaborate administrative rules in place, participation in benefits shows no occurrence of leader or elite capture in MOs.

Access to land, and the conditions under which it happens, play a fundamental role in economic development. This is because how the modes of access to land and the rules and conditions of access are set, as policy instruments, has the potential of increasing agricultural output and aggregate income growth, helping reduce poverty and inequality, improving environmental sustainability, and providing the basis for effective governance and securing peace. This potential role is, however, difficult to capture, and there are many cases of failure. History is indeed replete with serious conflicts over access to land and with instances of wasteful uses of the land, both privately and socially. Governments and development agencies have for this reason had to deal with the “land question” as an important item on their agendas (de Janvry et al., 2002). We explain in this note: (1) why access to land, and the conditions under which it is accessed and used, are important for economic development, (2) how different types of property rights can affect access and use, (3) what are different modes of access, and in particular the role of land markets, and (4) what are some of the policy implications to enhance how access to and use of the land can contribute to economic development. We stress in this note that access to land may be a difficult policy question, but that access will only translate into development if the harder question of influencing how it is used is effectively resolved.

This paper discusses the gain in efficiency from including deforestation risk as a targeting criterion in payments for environmental services (PES) programs. We contrast two payment schemes that we simulate using data from Mexican common property forests: a flat payment scheme with a cap on allowable hectares per enrollee, similar to the program implemented in many countries, and a  payment that takes deforestation risk and heterogeneity in land productivity into account. We simulate the latter strategy both with and without a budget constraint. Using observed past deforestation, we find that while risk-targeted payments are far more efficient, capped flat payments are more egalitarian. We also consider the characteristics of communities receiving payments from both programs. We find that the risk-weighted scheme results in more payments to poor communities, and that these payments are more efficient than those made to non-poor ejidos. Finally, we show that the risk of deforestation can be predicted quite precisely with indicators that are easily observable and that cannot be manipulated by the community.

75% ofthe world poor are rural people. Half a billion of them are located in countries both vulnerable to rising food prices and with weak capacity to provide socialsafety nets. For them, agriculture must be the main instrument to respond to the food crisis and escape poverty.

This chapter outlines the evolution of Mexico’s payments for hydrological services program from its inception through the first two years of the program’s implementation. Background information on forests, deforestation, and potential environmental services provide context for a political economy analysis of the path the program traveled through Mexico’s legislative and administrative structures. We also analyze the characteristics of the recipients during the first two years, including results from a survey of participants and community case studies. A final section extracts lessons from the Mexican experience, including possible alternative program designs to address some of the problems encountered in its implementation

We explore in this paper the design of optimal share contracts when there is a double moral hazard, one on inputs exclusively provided by the agent (such as effort) and the other in reporting the level of output to be shared with the principal, and when there is a social efficiency cost to under-reporting. The optimal contract is second best in that it allows for residual moral hazard in both effort and output reporting. The model predicts that contract terms will vary with the value to the tenant of unreported output as well as with any capacity of the principal to directly supervise the agent. The model is written for a landlord-tenant share contract but applies as well for tax collection and franchising.

This article uses data from Uganda’s largest incumbent microfinance institution to analyse the impact of entry by competing lenders on client behaviour. We observe that rising competition does not lead to an increase in client dropout rate, but induces a decline in repayment performance and savings deposited with the incumbent, suggesting rising multiple loan-taking by clients. This joint effect on dropout and repayment is consistent with some negative information about clients and is being shared across lenders. However, the observed decline in repayment rates in a context of rising multiple loan-taking shows that information sharing about clients is far from complete.

Conditional cash transfer programs are now used extensively to encourage poor parents to increase investments in their children’s human capital. These programs can be large and expensive, motivating a quest for greater efficiency through increased impact of the programs’ imposed conditions on human capital formation. This requires designing the programs’ targeting and calibration rules specifically to achieve this result. Using data from the Progresa randomized experiment in Mexico, this article shows that large efficiency gains can be achieved by taking into account how much the probability of a child’s enrollment is affected by a conditional transfer. Rules for targeting and calibration can be made easy to implement by selecting indicators that are simple, observable, and verifiable and that cannot be manipulated by beneficiaries. The Mexico case shows that these efficiency gains can be achieved without increasing inequality among poor households.

Income shocks on poor households are known to induce parents to take their children out of school and send them to work when other risk-coping instruments are insufficient. State dependence in school attendance further implies that these responses to short-run shocks have long-term consequences on children’s human capital development. Conditional cash transfer (CCT) programs, where the condition is on school attendance, have been shown to be effective in increasing educational achievements and reducing child work. We ask the question here of whether or not children who benefit from conditional transfers are protected from the impacts of shocks on school enrollment and work. We develop a model of a household’s decision regarding child school and work under conditions of a school re-entry cost, conditional transfers, and exposure to shocks. We take model predictions to the data using a panel from Mexico’s Progresa experience with randomized treatment. Results show that there is strong state dependence in school enrollment. We find that the conditional transfers helped protect enrollment, but did not refrain parents from increasing child work in response to shocks. These results reveal that CCT programs can provide an additional benefit to recipients in acting as safety nets for the schooling of the poor.

Explaining land use change in Mexico requires understanding the behavior of the local institutions involved. We develop two theories to explain deforestation in communities with and without forestry projects, where the former involves a process of side payments to non-members of the community and the latter of partial cooperation among community members. Data collected in 2002 combined with satellite imagery are used to test these theories. For the forestry villages, we establish a positive relationship between the distribution of profits as dividends instead of public goods and forest loss. For communities not engaged in forestry projects, deforestation is largely related to the ability of the community to induce the formation of a coalition of members that cooperates in not encroaching. This happens more easily in smaller communities with experienced leaders. A disturbing result of the analysis is that deforestation is higher when a community engages in forestry projects, even after properly accounting for self-selection into this activity. This suggests that forestry projects as they now exist in Mexico are not sustainable and contribute to the deforestation problem.

This article analyzes effects of insect-resistant Bt cotton on pesticide use and agricultural productivity in Argentina. Based on farm survey data, it is shown that the technology reduces application rates of toxic chemicals by 50 per cent, while significantly increasing yields. Using a damage control framework, the effectiveness of Bt versus chemical pesticides is estimated, and technological impacts are predicted for different farm types. Gross benefits could be highest for smallholder farmers, who are not currently using the technology. The durability of the advantages is analyzed by using biological models to simulate resistance development in pest populations. Rapid resistance buildup and associated pest outbreaks appear to be unlikely if minimum non-Bt refuge areas are maintained. Thus, promoting a more widespread diffusion of Bt cotton could amplify the efficiency, equity, and environmental gains. Conclusive statements about the technology’s sustainability, however, require longer-term monitoring of possible secondary effects and farmers’ behavior in maintaining refuges.

To help inform the current debate on the role of land as an instrument for poverty reduction, we analyze the conditions under which access to land reduces poverty in Mexican rural communities. Semi-parametric regression results show that access to even a small plot of land can raise household welfare significantly. For smallholders, an additional hectare of land increases welfare on average by 1.3 times the earnings of an agricultural worker. In addition, the marginal welfare value of land depends importantly on a household’s control over complementary assets such as education and on the context where assets are used such as road access.

We analyze the expansion of non-agricultural rural employment in manufacture and services in Mexican municipalities during the 1990s and explore the role of geographical features in explaining the local and regional supply of non-agricultural rural employment opportunities. We identify the presence of positive externalities from non-agricultural rural employment expansion in nearby areas. In addition, we find that proximity to urban centers with large services or manufacturing sectors is important in explaining rural employment growth outcomes. Alternatively, for municipalities faraway from urban centers, a larger proportion of the growth in non-agricultural employment (in particular in manufacture) comes from the interaction between a high-value agriculture and availability of roads.

The CGIAR Technical Advisory Committee (TAC) is being transformed into a Science Council. This paper is about the role of the CGIAR Science Council in enhancing and guarding the relevance and quality of science in the CGIAR. In carrying out this role, the Science Council must act in a strategic advisory role, basing its advice on: planning and strategy development in the context of CGIAR goals; internal self-assessments and independent external monitoring and evaluation; and on impact assessments. The paper elaborates these three main functions of the Science Council to facilitate the transformation of TAC into a full Science Council.

At its International Centres Week in October 2000 (ICW2000), the Consultative Group on International Agricultural Research (CGIAR) adopted a new Vision and Strategy. This papert is about Plank 4 of the CGIAR’s Vision and Strategy that calls for the adoption, in collaboration with national and regional partners, of a regional approach to research planning, priority setting and implementation. Given the poverty and impact focus of international public goods research, both NARS (national agricultural research systems) and the CGIAR have advantages in pursuing a regional approach as a component of their respective activities. For the NARS in the region, this means seeking at the regional level advantages that they could not derive solely from a national-level approach, thus complementing and supplementing the national approach. For the CGIAR, this means seeking complementary gains that it could not achieve exclusively through a global or ecoregional approach. These mutual advantages open the door for partnerships in regional research between NARS and their regional organizations, and the CGIAR. The paper highlights the advantages as well as risks and limitations of a regional approach to research. Since ICW2000, all regional and sub-regional organizations and CGIAR Centres have taken action to facilitate regional consultation processes that could eventually lead to establishing a regional approach to research for the CGIAR and NARS. The paper notes some emerging lessons, and takes a forward look.

ARE Update is a bimonthly magazine published by the University of California Giannini Foundation of Agricultural Economics for the purpose of providing wide dissemination of research results and expert opinion from faculty and graduate students in agricultural and resource economics at UC Davis and UC Berkeley. Update targets a lay audience of policy makers, Cooperative Extension advisors, agribusiness managers, and other professionals interested in agricultural, resource, environmental, and development economics.

This article analyzes adoption and impacts of Bt cotton in Argentina against the background of monopoly pricing. Based on survey data, it is shown that the technology significantly reduces insecticide applications and increases yields; however, these advantages are curbed by the high price charged for genetically modified (GM) seeds. Studies show that farmers’ average willingness to pay is less than half the actual technology price. A lower price would not only increase benefits for growers, but could also multiply company profits.

Using survey-data from Peru, this paper evaluates the impact of a pilot farmerfield-school (FFS) program on farmers’ knowledge of integrated pest management (IPM) practices related to potato cultivation. We use both regression analysis controlling for participation and a propensity score matching
approach to create a comparison group similar to the FFS participants in observable characteristics. Results are robust across the two approaches as well
as with different matching methods. We find that farmers who participate in the program have significantly more knowledge about IPM practices than those in the non-participant comparison group. We also find suggestive evidence that improved knowledge about IPM practices has the potential to significantly improve productivity in potato production.

This article analyzes adoption and impacts of Bt cotton in Argentina against the background of monopoly pricing. Based on survey data, it is shown that the technology significantly reduces insecticide applications and increases yields; however, these advantages are curbed by the high price charged for genetically modified seeds. Using the contingent valuation method, it is shown that farmers' average willingness to pay is less than half the actual technology price. A lower price would not only increase benefits for growers, but could also multiply company profits, thus, resulting in a Pareto improvement. Implications of the sub-optimal pricing strategy are discussed.

Bt cotton was among the first transgenic crops to be used in commercial agriculture. A gene from the soil bacterium Bacillus thuringiensis (Bt) has been transferred to the cotton genome. This gene codes for production of a protein that is toxic to the cotton bollworm, a severe insect pest in most cotton-growing regions of the world. In the United States and China, Bt cotton was commercialized in the mid-1990s, and today, the technology covers around 30-40% of the cotton area in both countries. Recent studies demonstrate that US and Chinese Bt adopters realize significant pesticide and cost savings (Carpenter et al., 2002; Pray, Huang, Hu, & Rozelle, 2002). Benefits of Bt cotton have also been reported for South Africa (Shankar & Thirtle, 2003) and Mexico (Traxler, Godoy-Avila, Falck-Zepeda, & Espinoza-Arellan, 2001). Nonetheless, there is still uncertainty related to the technologyís impacts and sustainability under different agroecological and socioeconomic conditions. This article analyzes the implications of Bt cotton in Argentina, where the technology was commercialized by Monsanto in 1998. Unlike other Bt-growing countries, where cotton is a heavily subsidized crop, Argentina is producing under free-trade conditions, with comparatively low input intensities and production costs. This might influence the technologyís agronomic outcome. Apart from a comparative analysis of pesticide use and yields with and without Bt, productivity effects are modeled econometrically using a damage control specification. This analysis is based on a comprehensive survey of Argentine cotton farmers in 2001 done jointly with Argentinaís National Institute for Farming and Livestock Technology (INTA). Although short-run gains of the technology are increasingly recognized (Qaim & Zilberman, 2003), long-run effects associated with pest resistance remain in doubt. We address this issue by using biological models to simulate possible resistance development in bollworm populations. Although resistance buildup has not been observed in the field so far, biochemical studies indicate a high risk of rapid insect adaptation to the Bt toxin (Gould, 1998). Resistance development is one of the main concerns of environmentalists with respect to Bt crops. It would not only challenge the technologyís sustainability, but would also imply loss of Bt as an ecologically friendly microbial insecticide that is widely used in organic agriculture.

Improved water harvesting and soil erosion control using the remarkably simple practice of contour stone bunding is shown to increase grain yields by 41% in low rainfall regions of Burkina Faso. Empirical results show that yield increases in food crops help foodbuying farm households import substitute in food consumption, reduce livestock production, and increase seasonal migration which is more compatible with seasonal agriculture than with the yearlong livestock activity. Self-sufficient households, by contrast, can take advantage of higher yields to free resources from food production and allocate these to expand their livestock economy, thus benefiting more from the region’s comparative advantage. We also show that greater effectiveness in cooperation in the management of common property resources helps increase income derived from livestock for all categories of households. However, not all forms of cooperation are effective. When cooperation is only formal, individual activities such as crops, non-agricultural employment, and seasonal migration are pursued as opposed to livestock activities that rely on effective community management of common property resources.

Regionalization of agricultural research across countries has received considerable attention in recent years, with the establishment of regional and sub-regional organizations in most regions. Recently, the CGIAR System has called for a regional approach to research involving bottom-up priority-setting and implementation, and integrating this with global priority-setting. This paper explores the possibility of developing an approach for research priority-setting that would satisfy national, regional and global expectations of regionalization and allow the regional and sub-regional organizations to assume a bigger role. The paper also considers how the CGIAR Centres may support this priority-setting process and how they may use it to define their regional activities. A review of existing regional research initiatives show the many models in use, with different extents of collaboration, and with different challenges and promises. Regional priorities can strengthen the relevance of agricultural research in a region or sub-region. A description of a relatively generic approach to establishing regional priorities is presented. Different research organizations that are present in a region can use the research priorities to enable their work, and it is possible for CGIAR Centres to participate in the regional agenda while respecting the global nature of the CGIAR System. The integration of regional priorities into the CGIAR global research agenda is an area where there is little experience in the CGIAR System. The challenge for the CGIAR is to determine how to maintain a global focus in its agenda while promoting a coordinated regional approach to research planning and implementation. Priority-setting in the CGIAR will become even more of an ongoing process while the bottom-up regional approach to research planning, priority-setting and implementation is established in all regions.