Combining Sustainable Agricultural Practices Pays Off: Evidence on Welfare Effects from Northern Ghana
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Sustainable Agricultural Practices (SAPs) are believed to play a vital role in addressing adverse effects of climate change and improving households’ welfare. While literature provides robust evidence on their welfare impacts in isolation, there is limited evidence on how combinations of SAPs contribute to households’ welfare. Due to complementarity and substitution effects and cost involved in adopting SAPs, combinations may have impacts that are higher or lower than individual effects. To shed light on this question, we investigate the adoption and impacts of SAPs on net crop income per acre and consumption expenditure per capita using a cross-sectional survey of 421 household and 1229 plots from northern Ghana. We employed a maximum simulated likelihood estimation of a Multinomial Endogenous Treatment Effect Model to account for observable and unobservable heterogeneity that influences SAPs adoption decisions and the outcome variables. As a departure from existing studies, our paper incorporated the effects of individual risk preferences, quantified using an experimental game with real payoffs, on the adoption and impacts of SAPs. Our results reveal that adoption decisions are affected by household and plot level characteristics including risk preferences of households. We find that adoption of SAPs significantly increase net crop income and consumption expenditure except when soil & water conservation is adopted in isolation.