Urea Subsidies and the Decision to Allocate Land to a New Fertilizing Technology: Ex-ante Analysis in Ecuador
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This ex-ante study examines how urea subsidies affect the adoption of a more efficient but labor-intensive existing alternative, Urea Deep Placement (UDP), in some of the major growing regions of Ecuador (Daule and Santa Lucia cantons, Guayas province). A government subsidy covers around 30% of urea fertilizer cost since 2007. Such a public intervention may be favoring to the traditional broadcasting fertilization method, which demands urea more intensively, crowding out improved innovations (i.e. UDP) and becoming an adverse selection mechanism.