Assessing economic and environmental impacts of NRM technologies: an empirical application using the economic surplus approach.

Abstract

AbstractThis chapter addresses methodological and empirical complexities in assessing the economic and environmental impacts of crop and resource management research through a case study of groundnut production technology (GNPT) in central India. The GNPT package is described. Data was collected from 355 farm households in Maharashtra for the 1994/95 crop season. To quantify the returns to investment on research and technology exchange, three aspects were examined: (1) benefits (both economic and environmental) accruing from the research and technology exchange programme; (2) adoption rates and the spread of different components of GNPT; and (3) research and technology exchange cost involving research partnerships among international and national research programmes as the extension sector. Economic surplus and distribution welfare gains were estimated by assuming a parallel shift in the supply function due to investment in the research and technology development. Internal rates of return, net present values and benefit-cost ratios were computed under three options: (1) full adoption of the GNPT package; (2) adoption of only management practices; (3) and adoption of only land management with other practices remaining the same. Because environmental effects were not measured in monetary terms, two sensitivity analyses were carried out under scenarios related to net positive and negative environmental effects. The case study illustrates the critical importance and use of qualitative information in understanding additional environmental and long-term effects due to adoption of natural resource management technologies. The results show that if environmental effects reduced fully-accounted unit costs by just 10% more than market effects, the net present value of the GNPT would increase by US$0.4 million and the internal rate of return would increase by 1%.