Addressing Agricultural Nonpoint Source Pollution Incidentally via Collaboration with Larger Farms: Evidence from China

Agricultural nonpoint source pollution (ANSP) from farmers’ use of chemical fertilizers is one of the outstanding problems in resource management across the world. Alongside the three traditional policy responses of encouraging voluntary adoption of best management practices (BMP’s), weakly enforced command and control, or economic incentives over what can be observed, we consider a fourth approach of incidental ANSP pollution control. Here small farms may voluntarily adopt BMP’s and reduce excessive fertilizer as an incidental by-product of changing production to increase profit or reduce risk. We examine specifically the option for smaller scale crop farms in Sichuan Province China to collaborate with large or new agricultural operations (LNAO’s). Collaboration can take the form of 1) technical assistance for payment or as part of 2) production orders, or 3) temporarily providing land, labour or capital in exchange for payment or share of profit. Evaluating the effects of small farms’ voluntary collaboration on their fertilizer use is hampered by their self-selection to enter such arrangements, and by their potential hesitancy to honestly reveal their (high) levels of fertilizer use. In this paper, we use 364 proximity surveys of 3528 small crop farmers located in villages primarily in Sichuan Province, China, regarding their production methods, output, and collaboration. The surveys are conducted by undergraduate/masters students from the same villages, to increase trust and encourage honest reporting of fertilizer use. We use propensity score matching (PSM) to compare the fertilizer use of farmers who do collaborate, against 1) observably matched farmers who do not, then 2) against more narrowly matched non-collaborators who express a desire to collaborate, or 3) against matched non-collaborators whose villages do not contain LNAO’s with whom to collaborate, or finally 4) against matched non-collaborators who satisfy both conditions. We find robust evidence that small farmers use substantially less nitrogen or total chemical fertilizer if they collaborate with LNAO’s via production orders. In our most credible specification, such collaboration causes small farmers to reduce their total chemical fertilizer use by 27.7%, or by 30.4 kg/Mu from a sample mean of 109.9 kg/Mu. In contrast, we find only mixed evidence of effect if farmers collaborate via technical assistance, and no significant effect if they collaborate via supplying inputs for payment or profit share.