304
26.3 Evidence Base
Few studies address the wide variety of barriers (financial, economic and behavioural) that stand in the way of CSA investments. The effectiveness of finance for
CSA adoption can be judged by considering the net welfare effects at farm- household
level (income, health and food) and the environmental effects at village/landscape
level. This includes the simultaneous improvement of income/wealth and sustainability by reducing trade-offs and managing volatility. Many available impact studies
(Norman et al. 2015) focus, however, on higher scale levels (village, region, district)
and on single indicators (either socio-economic or sustainability outcomes).
Suitable finance depends on the type of CSA practices undertaken (see
Table 26.1). Some require upfront investments in inputs (e.g., adapted seed varieties
or integrated nutrient management), whereas others require longer-term investments (e.g., laser levelling, solar pumps, land-water conservation). Credit amounts
involved and their impact on household risk and cash flow can differ widely, with
consequences for the required financial products. Sometimes a CSA practice can be
easily accommodated in the household production system, without the need for
external finance (Asfaw et al. 2014; Di Falco et al. 2012; Yirga and Hassan 2006).
The impacts of different CSA practices can vary widely as well. Whereas CSA
practices targeting improved water and nutrient management and diversified seed
systems focus on input efficiency (pathway 1), weather-smart services may be particularly helpful in reducing risks (pathway 3), and market reforms deliver more
potential for managing the vulnerability and composition of revenue streams (pathway 2). This also translates into different credit scores used by financial institutions,
which tend to vary depending on the likelihood of reaching improved efficiency
and/or higher resilience (Basak 2017).
We will briefly discuss some key finding from these field studies that address the
three impact pathways. This also permits us to highlight major differences in the
approaches to assessing impact.
26.3.1 Input Intensification and Investment Pathways
Many adoption studies point to rural finance as a key enabler of technology change
(Feder et al. 1985; Feder and Umali 1993). The positive impact of credit use on CSA
adoption has been confirmed in studies of highland crops in Ethiopia (Pender and
Gebremedhin 2008), fisheries systems in Nigeria (Arimi 2014) and soil conservation in Malawi (Marenya et al. 2014).
To assess impact, these studies generally rely on cross-section regression for
likelihood of adoption with a single binary dummy for access to credit services. Few
studies rely on balanced samples or use sound counterfactual procedures for robust
impact analysis. In fact, individual characteristics are highly correlated with access
to credit, and therefore sample selection correction methods (Heckman procedure)
R. Ruben et al.
26.3 Evidence Base
Few studies address the wide variety of barriers (financial, economic and behavioural) that stand in the way of CSA investments. The effectiveness of finance for
CSA adoption can be judged by considering the net welfare effects at farm- household
level (income, health and food) and the environmental effects at village/landscape
level. This includes the simultaneous improvement of income/wealth and sustainability by reducing trade-offs and managing volatility. Many available impact studies
(Norman et al. 2015) focus, however, on higher scale levels (village, region, district)
and on single indicators (either socio-economic or sustainability outcomes).
Suitable finance depends on the type of CSA practices undertaken (see
Table 26.1). Some require upfront investments in inputs (e.g., adapted seed varieties
or integrated nutrient management), whereas others require longer-term investments (e.g., laser levelling, solar pumps, land-water conservation). Credit amounts
involved and their impact on household risk and cash flow can differ widely, with
consequences for the required financial products. Sometimes a CSA practice can be
easily accommodated in the household production system, without the need for
external finance (Asfaw et al. 2014; Di Falco et al. 2012; Yirga and Hassan 2006).
The impacts of different CSA practices can vary widely as well. Whereas CSA
practices targeting improved water and nutrient management and diversified seed
systems focus on input efficiency (pathway 1), weather-smart services may be particularly helpful in reducing risks (pathway 3), and market reforms deliver more
potential for managing the vulnerability and composition of revenue streams (pathway 2). This also translates into different credit scores used by financial institutions,
which tend to vary depending on the likelihood of reaching improved efficiency
and/or higher resilience (Basak 2017).
We will briefly discuss some key finding from these field studies that address the
three impact pathways. This also permits us to highlight major differences in the
approaches to assessing impact.
26.3.1 Input Intensification and Investment Pathways
Many adoption studies point to rural finance as a key enabler of technology change
(Feder et al. 1985; Feder and Umali 1993). The positive impact of credit use on CSA
adoption has been confirmed in studies of highland crops in Ethiopia (Pender and
Gebremedhin 2008), fisheries systems in Nigeria (Arimi 2014) and soil conservation in Malawi (Marenya et al. 2014).
To assess impact, these studies generally rely on cross-section regression for
likelihood of adoption with a single binary dummy for access to credit services. Few
studies rely on balanced samples or use sound counterfactual procedures for robust
impact analysis. In fact, individual characteristics are highly correlated with access
to credit, and therefore sample selection correction methods (Heckman procedure)
R. Ruben et al.