An evaluation framework and empirical evidence on the effect of pay-for-results programs on the development of markets for welfare-enhancing agricultural technologies

Abstract

BackgroundDonors and international development organizations increasingly recognize that private sector investment and creativity are needed to enhance global food security. Pay-for-results schemes are receiving greater attention as a means to catalyze private sector investment in sustainable, inclusive markets for goods and technologies that achieve food security and agriculture development goals. In pay-for-results schemes, the development organization promises prizes to private sector actors for achieving pre-specified goals.MethodWe describe an evaluation framework to help development organizations learn from both successful and failed pay-for-results projects to achieve agriculture and food security outcomes. Applying the evaluation framework, we describe the findings from four pay-for-results projects sponsored by AgResults, a multilateral initiative funded by development organizations from four countries (Australia, Canada, the UK, and the US) and the Bill & Melinda Gates Foundation.ResultsThe lessons highlighted from these examples illustrate the importance of structuring the prize to encourage the creation of competitive agricultural markets; aligning the prize structure with the development goal of improving smallholder farmers’ food security; and constructing a theory of change that reflects a thorough understanding of the baseline market, enabling environment, and underlying assumptions about competitors’ response to the prize.ConclusionsOur work has several policy implications:Under certain conditions, pay-for-results mechanisms can help develop competitive, smallholder-inclusive agricultural markets and reduce food insecurity.Prize competitions offering multiyear, proportional prizes are more conducive than grand prizes to fostering the development of competitive agricultural markets.The enabling environment plays a significant role in pay-for-results mechanisms’ success or failure.Private sector-led actions alone may not be sufficient to adequately address the targeted development challenge.