A counterfactual experiment on the effectiveness of plastic ponds for smallholder farmers: A case of Nepalese vegetable farming

Plastic pond has attracted huge attention as water harvesting technology, since it is reported to be cost-effective and adoptable in various geographical settings such as sloping land. Therefore, it is expected to contribute to poverty reduction for smallholder farmers. Despite its importance, there has been no research on the issue, and thus this paper identifies the impact of plastic-pond technology on agriculture. We focus on vegetable farming for which adoption of plastic ponds gains some popularity and implemented questionnaire surveys of 1,001 farmers in Nepal. With the data, endogenous switching regression is applied by taking vegetable income and adoption of plastic ponds as dependent variables in regime and selection equations, respectively, because it enables to take into account endogeneity in technology adoption and to measure the impact via counterfactual experiments. The selection equation shows that adoption of plastic ponds is enhanced by credit access, investment, improved seeds, education and agricultural training. The regime equations find that vegetable incomes for nonadopters are affected by several factors such as age, education, livestock, land value, credit access, investment and improved seeds, while the only two determinants of livestock value and credit access are important for vegetable incomes of adopters. This implies that plastic ponds fundamentally change the structure of vegetable farming. The counterfactual experiment demonstrates that vegetable income of nonadopters would increase by 33% if nonadopters adopt plastic ponds, which is significant to improve food security and welfare of farmers. Overall, the plastic pond shall be a promising technology in not only Nepal and but also many other developing nations.