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‘Rule-of-Thumb’ Instructions to Improve Fertilizer Management: Experimental Evidence from Bangladesh

Islam, Mahnaz and Beg, Sabrin (2020): ‘Rule-of-Thumb’ Instructions to Improve Fertilizer Management: Experimental Evidence from Bangladesh. Forthcoming in: Economic Development and Cultural Change

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Abstract

Heavy government subsidies have led to inefficient application and overuse of fertilizer in Bangladesh. This results in higher than optimal costs to farmers and environmental and public costs. In a randomized controlled trial, we provide farmers with a simple tool (leaf color chart) and basic `rule-of-thumb' instructions to guide the timing and quantity of urea (nitrogen) application. Treatment farmers reduce urea use by 8\% without compromising yield, suggesting significant scope for improving urea management. The results are mainly driven by farmers delaying urea application as returns to urea are low early on in the season and urea applied is likely to be wasted. Cost-effectiveness estimates suggest that each dollar spent on this intervention produces a return of \$2.8 dollars due to reduction of urea use over three seasons, as well as significant environmental benefits. We also find suggestive evidence that optimizing the timing of urea application affects farmers' yields, plausibly as the intervention allows farmers to reallocate urea application to times when returns to urea are highest.

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