the government has been encouraging the cultivation of HYV rice, mostly via the
BAAC (Bank of Agriculture and Agricultural Credit), the dummy is expected to be
positively correlated with BAAC presence.
25
Water Presence Scarcity of water is an important resource constraint in this
region. Walker (2002) in a detailed study of the Mae Uam catchment area of the
Mae Chaem district of Chiang Mai, finds that even cultivation of dry-season
varieties of soybean, which requires relatively less water, has reached its hydrological limit. Dry season varieties of soybean (typically grown in the region) and
upland rice are crops that require little water.
26 On the other hand paddy rice
requires a lot of water to grow. Availability of water is used as a proxy for
productivity of land. In this analysis, presence of water is measured by the response
to the question “Did this village have sufficient water to grow short run (long run)
crops?” The dummy variable is equal to 1 if there is sufficient water and is zero
otherwise. Irrigation is usually provided by rain and, to a lesser extent, by small
man-made weirs and canals.
27
Acidic Soil The other variable used to measure the productivity of land is acidity
of soil. Acidity of soil is an undesirable quality. The variable is expected to have a
negative effect on agricultural area and intensity of cultivation. In this dataset it is
recorded as 1 if soil within a village suffers from high acidity, and 0 otherwise.
Perceptions of Land Ownership Secure land titles are defined as titles that allow
land to be used as collateral or sold. I expect that farmers who have secure land titles
will be more willing to invest in land and grow cash crops. I use a dummy variable,
which is equal to 1 if the village headman responds that “secure land titles were
held by most farmers in the village”.
Credit Use Credit use is expected to increase the intensity of cultivation. The
BAAC is the lender of first resort in most of these villages since it provides
relatively low interest credit. Credit obtained from the BAAC is assumed to
be mainly for agriculture, unlike credit provided by private money lenders (because
of the conditions that BAAC imposes). Clearly, credit use is endogenous.
28 The
variable used to indicate use of credit in this study is “Do villagers use credit from
the BAAC”. This variable equals 1 if people in the village use credit from the Bank
of Agriculture and Agricultural Credit, and 0 otherwise.
25 Thus the variable is used as an instrument in the BAAC credit use equations.
26 Although upland rice requires rainfall, it does not require standing water like paddy rice does.
27 Palm et al. (2004).
28 One reviewer suggests the use of a BAAC credit dummy which is ¼1 for the year that a village
starts using BAAC credit and then, irrespective of response, is coded ¼1, for all years thereafter.
The object here is to measure the use of credit and not so much the availability of credit. The
endogeneity of credit use is not discussed more in this paper but is discussed in detail in
Puri (2006).
8 Using Mixed Methods to Assess Trade-Offs Between Agricultural Decisions. . .
143
BAAC (Bank of Agriculture and Agricultural Credit), the dummy is expected to be
positively correlated with BAAC presence.
25
Water Presence Scarcity of water is an important resource constraint in this
region. Walker (2002) in a detailed study of the Mae Uam catchment area of the
Mae Chaem district of Chiang Mai, finds that even cultivation of dry-season
varieties of soybean, which requires relatively less water, has reached its hydrological limit. Dry season varieties of soybean (typically grown in the region) and
upland rice are crops that require little water.
26 On the other hand paddy rice
requires a lot of water to grow. Availability of water is used as a proxy for
productivity of land. In this analysis, presence of water is measured by the response
to the question “Did this village have sufficient water to grow short run (long run)
crops?” The dummy variable is equal to 1 if there is sufficient water and is zero
otherwise. Irrigation is usually provided by rain and, to a lesser extent, by small
man-made weirs and canals.
27
Acidic Soil The other variable used to measure the productivity of land is acidity
of soil. Acidity of soil is an undesirable quality. The variable is expected to have a
negative effect on agricultural area and intensity of cultivation. In this dataset it is
recorded as 1 if soil within a village suffers from high acidity, and 0 otherwise.
Perceptions of Land Ownership Secure land titles are defined as titles that allow
land to be used as collateral or sold. I expect that farmers who have secure land titles
will be more willing to invest in land and grow cash crops. I use a dummy variable,
which is equal to 1 if the village headman responds that “secure land titles were
held by most farmers in the village”.
Credit Use Credit use is expected to increase the intensity of cultivation. The
BAAC is the lender of first resort in most of these villages since it provides
relatively low interest credit. Credit obtained from the BAAC is assumed to
be mainly for agriculture, unlike credit provided by private money lenders (because
of the conditions that BAAC imposes). Clearly, credit use is endogenous.
28 The
variable used to indicate use of credit in this study is “Do villagers use credit from
the BAAC”. This variable equals 1 if people in the village use credit from the Bank
of Agriculture and Agricultural Credit, and 0 otherwise.
25 Thus the variable is used as an instrument in the BAAC credit use equations.
26 Although upland rice requires rainfall, it does not require standing water like paddy rice does.
27 Palm et al. (2004).
28 One reviewer suggests the use of a BAAC credit dummy which is ¼1 for the year that a village
starts using BAAC credit and then, irrespective of response, is coded ¼1, for all years thereafter.
The object here is to measure the use of credit and not so much the availability of credit. The
endogeneity of credit use is not discussed more in this paper but is discussed in detail in
Puri (2006).
8 Using Mixed Methods to Assess Trade-Offs Between Agricultural Decisions. . .
143