Decomposing the impacts of an agricultural value chain development project by ethnicity and gender in Nepal

Abstract

This paper estimates the impact of an inclusive agricultural value chain development project on agricultural productivity and decomposes the impact by gender and ethnicity of producers. The intervention sought to alleviate poverty among small-scale producers by increasing agricultural productivity and lowering transaction costs. It also specifically targeted minority and female producers to ensure inclusivity. We use primary survey data from over 2,500 households in rural Nepal. We estimate the impact on agricultural productivity by employing a treatment effect estimator, and decompose it by gender and ethnicity using the Kitagawa-Oaxaca-Blinder (KOB) decomposition method. We find that the project has a positive impact on agricultural productivity, but the impact is higher for non-minority and male-headed households than for minority and female-headed households, respectively. The ethnicity productivity gap is smaller in the treatment group than in comparison group. Even though male-headed households have consistently higher productivity, the gender gap in agricultural productivity is smaller in the treatment group compared to the comparison group. KOB decomposition shows that the ethnicity- and gender- specific differential impacts are mainly driven by differential endowment effects, primarily land and labor endowments. Results suggest that the project reduced the ethnicity- and gender-specific productivity gaps, although it did not eliminate them entirely. These findings highlight the need for targeted support to vulnerable producers including ethnic minority and female producers. Specifically targeted land tenure security programs can ensure that vulnerable producers can harness benefits in a manner which could help narrow productivity differences.