Endogenous Switching Probit Model Research Articles

Transitionning and the trinity nexus: Scenarios from a small country

The energy issue in both developed and developing countries remains vital. However, in developing countries, energy pressure is much greater. Despite this, few studies have examined credit, entrepreneurship, and energy transition in developing countries. We addressed this research gap by using the data collected from six regions in Burkina Faso. Employing the multivariate probit and the endogenous switching probit model, three scenarios are explored. We find that entrepreneurship promotes energy transition while access to credit is not useful to the energy transition. However, the joint effect of access to credit and entrepreneurship is 4 times higher for solar PV use and 3 times for biogas adoption. Access to credit promotes the energy transition when credit is devolved to the entrepreneur supporting the trinity rather than the trilemma.

Impact and Mechanism of Digital Information Selection on Farmers’ Ecological Production Technology Adoption: A Study on Wheat Farmers in China

The application of ecological techniques by farmers is important for ensuring the environmentally sustainable advancement of the grain sector. Based on micro-level survey data from 921 Chinese wheat growers in the Hebei and Henan provinces, this study employed an endogenous switching probit model and counterfactual analysis to investigate the impact and mechanisms of digital information utilization on ecological production technology adoption. The results indicated that 43.87% of sample wheat farmers had a low level of adoption of ecological techniques. The utilization of digital information significantly promoted farmers’ adoption. If farmers who currently used digital information were to opt-out, the probability of their high adoption would decrease by 11.26%. The utilization of digital information significantly enhanced the adoption of ecological technologies through three mediating factors: technological cognition, production monitoring, and market channels. Therefore, it is imperative to encourage farmers to broaden their social networks and enhance their perception of the importance of digital information. Additionally, it is essential to promote the industrialization and scale operation of wheat production, direct policy subsidies towards new types of management entities, and ensure the accuracy of the supply of digital information for green production through multiple channels. Therefore, it is imperative to expand farmers’ social networks and leverage rural communities to increase their perceived importance of digital information. Governments should increase subsidies and promote the scale and industrialization of wheat production. Moreover, the accuracy of digital information supply for sustainable production should be promoted through digital learning platforms, production monitoring systems, and e-commerce networks.

Farmers’ cooperatives and smallholder farmers’ access to credit: Evidence from China

Farmers’ cooperatives serve as effective means of transforming smallholder farmers’ production methods in the process of agricultural modernization in developing countries. This paper aims to examine the credit effects of farmers’ cooperatives by employing a framework based on institutional finance theory. Based on the 2021 China Household Finance Survey data, an endogenous switching probit model is employed to explore the impact of cooperative membership on smallholder farmers’ access to credit. The research findings indicate the following: i) Farmers’ cooperatives possess information advantages, as financial institutions gain access to smallholder farmers’ information through the organized value chains of farmers’ cooperatives, leading to a direct reduction in transaction costs and an improvement in access to credit. ii) Farmers’ cooperatives can promote smallholder farmers’ agricultural investments, increase household income for smallholder farmers, enhance the liquidity of farmland, and further improve access to credit for smallholder farmers. Therefore, farmers’ cooperatives represent an inevitable trend in the agricultural modernization of developing countries. Rural financial institutions should alter their financial models and resolve adverse selection and moral hazard issues in the credit process through organizational approaches, thereby enhancing access to credit for smallholder farmers.

The Impact of Digital Finance on Farmers’ Adoption of Eco-Agricultural Technology: Evidence from Rice-Crayfish Co-Cultivation Technology in China

Eco-agricultural technology is crucial in alleviating agricultural resource scarcity and environmental pressures. However, financial constraints affect its successful promotion. Digital finance significantly impacts farmers. However, existing research neglects the impact of digital finance on farmers’ adoption of eco-agricultural technology. This study focuses on rice-crayfish co-cultivation technology. It utilizes survey data from 1063 households in China. An endogenous switching probit model is employed to solve self-selection bias. The results are as follows: First, the average treatment effect is 51.5%. This indicates that if farmers who use digital finance were to stop using it, the probability of adopting rice-crayfish co-cultivation technology would decrease by 51.5%. Therefore, digital finance is beneficial for farmers in adopting this technology. Second, heterogeneity analysis shows that the promoting effect of digital finance is a greater promoting effect on older farmers, and on those with lower education levels and higher proportions of agricultural income. This suggests a greater reliance on digital financial services among vulnerable groups. Third, digital finance promotes farmers’ adoption of rice-crayfish co-cultivation technology by alleviating financial constraints, expanding information channels, and increasing social capital accumulation. Overall, the findings offer valuable insights for formulating supportive eco-agricultural policies.

Impact of specialized agricultural services on climate-smart agricultural practices: Evidence from biopesticide application in Jiangsu Province, China

Global climate change is aggravating the occurrence of pests and diseases, however, pesticide residue caused by the abuse of chemical pesticides is emerging as a worldwide issue with a great threat to the ecological environment, human health, and food security. Biopesticide application, a component of climate-smart agricultural practices, is viewed as a vital alternative for agricultural sustainable development. Due to the additional cost attached to externalities and information insufficiency, the adoption rates of biopesticide are still quite low in most developing countries. By using panel data of 3143 rural households from 2020 to 2021 in Jiangsu Province, this paper builds a theoretical framework of whether and how specialized agricultural service (SAS) for specialized pest control affects farmers' biopesticide application, and then employs an Endogenous Switching Probit model to verify this effect and its channels empirically. The empirical results show that the SAS purchase can increase significantly the probability of smallholders' biopesticide adoption by 30.8%. Without consideration of the self-selection bias, this probability would drop to 16.2%. The potential channels of the SAS influencing farmers' biopesticide application are technology popularization (training) and machinery substitution resulting from SAS. Moreover, our findings also indicate that the effects of SAS on biopesticide adoption are heterogeneous, and vary with farmers' education level, cooperative members, and land size. This paper provides the first empirical evidence for the effect of SAS on biopesticide promotion, which is expected to contribute to agricultural sustainable development and food safety in most developing countries.

Adoption of drought tolerant maize varieties and farmers’ access to credit in Nigeria: Implications on productivity

In this study, we examined the determinants of choice of variety including DTMV, local variety and combination of the two varieties using multivariate probit model. In addition, we examined factors influencing adoption of DTMV and access to credit among the maize farmers using endogenous switching probit model (ESPM). Consequently, we ascertained the probable effects of adoption of DTMV on maize productivity using endogenous switching regression model (ESRM). We used IPWRA to correct for biased estimates of ATT, ATE and POM of the endogenous treatment. Our results are in four folds: First, from the multivariate probit model, we found that age, gender, household size, farming experience, membership in farmers association, access to extension contacts, location and access to credit variables influenced the maize farmers’ decision to choose between DTMV, local varieties and combination of both. Second, the result of the ESPM shows that variables age, gender, farm size, years of formal education and membership in association affects maize farmers’ access to credit. Third, from ESRM results, we found that gender, household size, marital status, membership in association, access to extension contacts and location variables translates to increase maize productivity for the maize farmers who adopted DTMV. Lastly, the result of IPWRA indicates that adoption of DTMV increased the productivity of the maize farmers. To ensure access to DTMV seed varieties, stakeholders and government should take lead in dissemination of these varieties to reach the target farmers.

Are vulnerable farmers more easily influenced? Heterogeneous effects of Internet use on the adoption of integrated pest management

The Internet is believed to bring more technological dividends to vulnerable farmers during the green agriculture transformation. However, this is different from the theory of skill-biased technological change, which emphasizes that individuals with higher levels of human capital and more technological endowments benefit more. This study investigates the effects of Internet use on farmers’ adoption of integrated pest management (IPM), theoretically and empirically, based on a dataset containing 1 015 farmers in China's Shandong Province. By exploring the perspective of rational inattention, the reasons for the heterogeneity of the effects across farmers with different endowments, i.e., education and land size, are analyzed. The potential endogeneity issues are addressed using the endogenous switching probit model. The results reveal that: (1) although Internet use significantly positively affects farmers’ adoption of IPM, vulnerable farmers do not benefit more from it. Considerable selection bias leads to an overestimation of technological dividends for vulnerable farmers; (2) different sources of technology information lead to the difference in the degree of farmers’ rational inattention toward Internet information, which plays a crucial role in the heterogeneous effect of Internet use; and (3) excessive dependence on strong-tie social network information sources entraps vulnerable farmers in information cocoons, hindering their ability to reap the benefits of Internet use fully. Therefore, it is essential to promote services geared towards elderly-oriented Internet agricultural technology information and encourage farmers with strong Internet utilization skills to share technology information with other farmers actively.

Choices between adaptation and coping strategies as responses to cyclonic shocks and their impact on household welfare in villages on the east coast of India

Mitigation against climate extremes is not an option anymore but a necessity. Households maximize their utility with bounded rationality, yet there are gaps in the choices which make them poor and vulnerable. This is because of the loss aversion behavior toward adopting strategies. Tropical Cyclones Coping Strategies (TCCS) are ex-post short-term immediate strategies, which are preferred to Tropical Cyclones Adaptation Strategies (TCAS), which are ex-ante long-term strategies. These choices are intertemporal, and they impact the welfare of the households. We surveyed 504 households in 13 villages of Odisha state on the east coast of India, which are affected by recurrent cyclones. The multivariate probit model is applied to find the determinants affecting the choice of each TCAS and TCCS. After that, we quantify household welfare by using the endogenous switching probit model and its treatment effects. The results show that formal education, formal credit, and risk behavior are key determinants of TCAS and TCCS. Household welfare increases when households embark on various TCCS, but there does not seem to be any such benefit or loss from TCAS. However, there is welfare loss for those who haven't undertaken any strategy. We find that the behavior of the coastal households is loss aversive, where they discount the future more and value the present. Hence, they ignore adaptation strategies, assuming that coping strategies will adequately help them recover. We conclude that household behavior needs transformation, and policies and regulations should be inclined toward attracting long-term strategies more, with effective private and public interventions.

Do Pesticide Retailers’ Recommendations Aggravate Pesticide Overuse? Evidence from Rural China

In rural China, pesticide retailers are often accused of recommending farmers apply more pesticides than the scientifically recommended rate, while playing an important role in providing technical information regarding pesticide use to farmers. However, there is little empirical evidence on the relationship between pesticide retailers’ recommendations and farmers’ pesticide overuse. Using survey data from 1084 rice farmers in four provinces, this study utilized an endogenous switching probit model to examine the impact of pesticide retailers’ recommendations on the overuse of pesticides at the level of pest-control observation, accounting for potential self-selectivity bias. Results show that the proportion of pesticide overuse at the level of pest-control observation for controlling major pests, secondary pests, and weeds is 58.5, 55, and 40.6%, respectively. Pesticide retailers’ recommendations are found to increase the probability of pesticide overuse at the level of pest-control observation for controlling major pests, secondary pests, and weeds by 62.1, 59.3, and 58.3%, respectively. The robustness check using a conditional mixed process model provided consistent findings. Accordingly, this study proposes that more efforts should be made to provide additional technology training activities for pesticide retailers, strengthen regulations on pesticide retailers’ information recommendations, and further improve socialized agricultural technology services.

Cooperative membership effects on farmers’ choice of milk marketing channels in Rwanda

Although cooperatives play a critical role in reducing transaction costs and enhancing farmers’ adoption of better farming practices, little is known on the effects of dairy cooperative membership on the choice of milk marketing channels. This paper employs an endogenous switching probit model to estimate the determinants of farmers’ choice of milk marketing channels while controlling for the potential selection bias of cooperative membership. We find that cooperative membership has positive and significant effects on the choice of both MCCs and milk traders as marketing channels along with a negative effect on the choice of other buyers (direct consumers and restaurants). The varying effect of cooperative membership on choice of different marketing channels holds also for non-members had they been cooperative members. Furthermore, we find that the selling price positively affects farmers’ choice of MCCs, but the longer distance to MCCs may make farmers (including cooperative members) to choose milk traders who offer lower prices than MCCs. Since the MCCs are managed by dairy cooperatives and they are the only marketing channels that conduct basic milk quality tests while offering higher prices to farmers, we recommend policies that support easy access to MCCs and enhance dairy cooperatives’ governance. This will facilitate dairy farmers’ access to a better marketing channel while meeting an already growing consumer demand for products safety and quality in the food industry.

Impact of cooperative membership on market performance of Nepali goat farmers

AbstractIn developing countries, agricultural cooperatives are increasingly used by farmers as a mechanism to gain market power in input and output markets. To assess the impact of cooperative membership on market channel selection and pricing outcomes, we conducted a survey of 661 Nepali goat farmers in 2019–20 and applied an endogenous switching probit model to analyze the data. Our findings indicate that cooperative membership had a significant and positive influence on farmers choosing cooperatives as their market channel. Additionally, farmers who sold their goats through cooperatives received significantly higher prices than those who sold through local markets or to goat collectors. We also observed that farmers who had access to price information were able to obtain better prices for their goats. Overall, our study highlights the potential benefits of promoting cooperative membership and marketing through cooperatives, as these efforts can help farmers improve the returns on their agricultural investments.

Cooperative membership and adoption of green pest control practices: Insights from rice farmers

AbstractReducing the use of chemical pesticide while preserving crop yield is a practical strategy that makes agricultural production economically, socially and environmentally sustainable. Although the adoption of green pest control practices can help achieve such a goal, its adoption rate remains quite low. This study explores whether membership in agricultural cooperatives improves smallholder farmers' adoption of green pest control practices, utilising farm‐level data surveyed from rice farmers in China. To enrich our understanding, we also investigate how the adoption of green pest control practices mediates the effects of cooperative membership on chemical pesticide expenditures. An endogenous switching probit model and a bootstrap‐based mediation method are employed to achieve these goals. The empirical results show that cooperative membership significantly increases the probability of adopting physical pest control practices (e.g. pest‐killing lamps or sticky plate traps) and biological pest control practices (e.g. biopesticides) by 6% and 19%, respectively. Cooperative membership significantly reduces chemical pesticide expenditures through its mediation effect on improving the probability of adopting biological pest control practices. There is also a complementary relationship between physical and biological pest control practices in pest management of rice production. The adoption of physical pest control practices significantly increases rice yield, while the adoption of biological pest control practices does not.

Cooperative membership and new technology adoption of family farms: Evidence from China

AbstractVarious policies have been implemented to encourage the development of family farms and cooperatives in the past decade in China. New technology adoption is a crucial part in promoting the performance of family farms. However, empirical evidence on whether and how cooperatives would facilitate family farms to adopt new technologies remains unclear. To address the gap, this paper examines the impact of family farms’ cooperative membership on new technology adoption (i.e., new varieties, new machinery, new fertilizers, new pesticides, new pest control techniques, new production methods and new management methods). Using novel survey data from 848 family farms in China, and employing both propensity score matching approach and endogenous switching probit model, we find that for family farms, cooperative membership has positive and significant impacts on new technology adoption. When looking into different types of technology, we find that the impacts are larger on the adoption of new methods than new techniques. Moreover, the impacts are larger for family farms with lower operation income and smaller size. The findings provide important insights for policymakers tasked with promoting agricultural technology adoption.

Farmers' perceptions of drought-severity and the impacts on ex-ante and ex-post adaptations to droughts: Evidence from maize farmers in China

This study examines the impacts of farmers' drought-severity perceptions on two adaptation strategies—ex-ante use of drought-tolerant varieties and ex-post irrigation use—employing a large-scale survey data of maize farmers in northern China. The former is helpful for saving water while the latter may increase the intensity of water use in drought season. An endogenous switching probit model is employed to account for the potential selection bias and endogeneity of farmers' drought-severity perceptions in regressions of adaptation strategies. The results show that perceiving increasing drought-severity might increase farmers’ probabilities of using drought-tolerant varieties (DTVs) by 8.1% on maize plots but lower the probability of irrigation by 15.1%. However, once the use of the DTVs is controlled for, the perception of drought-severity has no additional predictive powers for irrigation. Furthermore, the use of drought-tolerant varieties may reduce the probability of irrigation by 27.5%. The findings highlight the need for policymakers to enhance farmers’ perceptions and differentiate adaptation options and consider their interrelationships in allocating resources to maximise their effectiveness.

A study assessing the impact of income relative deprivation and cooperative membership on rural residents' health: A pathway towards improving the health status of rural residents

Rural residents' health status is related to their happiness, socioeconomic status, personal development, and the ideals of living, but individual income relative deprivation has a negative impact on their health. Hence, this study aimed to examine that how to alleviate the negative impact of income relative deprivation on rural residents' health. Based on a literature review, it is the first study to propose that cooperative membership could help alleviate the adverse effects of income relative deprivation on rural residents' health. It survey data from 466 farm households in Shandong Province in China and employs an endogenous switching probit model to solve the endogenous problems. The results show that relative deprivation positively affects farmers' membership in a cooperative but negatively impacts their health. More importantly, the results indicate that membership in a cooperative improves farmers' health and alleviates the adverse effects of relative deprivation. These findings not only expand the empirical research on the positive impact of relative deprivation but also provide a new pathway towards improving the negative impact of income relative deprivation on rural residents' health. That is, the government should guide smallholder farmers to join professional cooperatives and encourage the development of ‘multi-functional’ cooperatives to play a greater role in improving rural residents' health.

Cooperative membership, service provision, and the adoption of green control techniques: Evidence from China

The excessive use of chemical pesticides threatens human health and food safety. The wide application of green control techniques (GCTs) is helping improve the quality and safety of agricultural products. This work examined whether agricultural cooperatives can be used as an institutional arrangement to promote the adoption of GCTs by farmers, using cross-sectional data from a survey of farmers in Shandong Province, China. An endogenous switching probit model that accounted for selection bias was employed in the analysis. The empirical results revealed that cooperative membership significantly improved the probability of farmers adopting GCTs. Access to production services, technical training, and credit services provided by cooperatives significantly increased the probability of adopting GCTs. However, marketing services had no statistically significant impact on the GCT adoption probability. These findings highlight the positive role of contemporary agricultural cooperatives in promoting green production. The government should improve the cooperative service system, strengthen the supervision of cooperative production and operation, and support more farmers to join agricultural cooperatives that practice and enforce cleaner production methods.

Can TikTok be a good way to extend the adoption of green control techniques? Evidence from rural China

ABSTRACT In the context of agricultural digitalisation in China, TikTok is becoming widely popular in rural areas and a novel way for agricultural technology extension. Based on survey data on 770 rice and wheat farmers in Hubei and Henan provinces in China, the endogenous switching probit model was used to verify the influence of TikTok usage on the adoption of Green Control Techniques (GCT). We found that farmers’ adoption probability of GCT will be significantly increased by 9.3–11.8% with their use of TikTok to browse GCT content. This shows that TikTok is an effective way to extend GCT. Furthermore, TikTok can complement traditional offline training as a digital agriculture extension for small-scale, older, and non-plain-area farmers, who are often of unequal status and are unable to obtain government agricultural extension services. These findings evaluate the effectiveness of short video software as a digital agriculture extension platform, which contributes to the rapid and effective extension of GCT. It is suggested that more GCT online promotion platforms should be built and applied in China.

Does mobile broadband use promote smallholder entrepreneurship? Evidence from rural China

ABSTRACT This study explored the impact of mobile broadband use on smallholders’ entrepreneurial engagement and willingness using data from a household survey collected from three provinces in China. We used an endogenous switching probit model to account for the potential selection bias associated with mobile broadband use. The empirical results indicated that mobile broadband use exerted positive and statistically significant impacts on smallholders’ entrepreneurial engagement and willingness. In particular, we found that mobile broadband use increased the probability of smallholders’ entrepreneurial engagement and willingness by 15.1 and 50.9% points, respectively. Further analysis revealed that the effects of mobile broadband use on smallholder entrepreneurship were heterogeneous across regions. Additionally, we found that while the impact of mobile broadband use on entrepreneurial engagement was the largest for smallholders with high income, its impact on entrepreneurial willingness appeared to be the greatest for smallholders with low income. This study extended the literature by analysing smallholder entrepreneurship and provided evidence on the effect of mobile ICT on smallholder entrepreneurship.

Does Adoption of Climate Change Adaptation Strategy Improve Food Security? A Case of Rice Farmers in Ogun State, Nigeria

The southwestern part of Nigeria, particularly Ogun State, is more vulnerable to the vagaries of climate change due to the high dependence on rain-fed agriculture and limited capacities to respond to climate change. In this study, factors influencing climate change adaptation strategies and its impacts on household food security of smallholder rice farmers in Ogun State were estimated. A multistage sampling technique was employed to select 120 smallholder rice farmers in the study area. The factors influencing the adoption of climate change adaptation practices and their impacts on household food security among smallholder rice farmers in Ogun State were examined using a probit model and an endogenous switching probit model (ESPM). According to the results of household dietary diversity score (HDDS), adopters of climate change adaptation techniques have higher levels of food security than non-adopters. The outcome of the ESPM shows that access to market information, access to extension agents, gender, off-farm income, and membership in cooperatives all contribute to the variations in food security experienced by both adopters and non-adopters of climate change adaptation strategies. A unit increase in adoption of climate change adaptation measures will increase household food security by about 3 units while decreasing severity in food insecurity by about 3.2 units. Therefore, it is recommended that policies that would support smallholder farmers’ decisions to embrace measures for coping with climate change should be encouraged in order to stimulate their adaptive capacity. Additionally, in order to secure the inclusive sustainability of the agricultural sector, stakeholders and NGOs must collaborate with each other to enhance the circumstances under which farmers may receive climate change information, timely agricultural loans, and policy incentives.

Does Farmland Transfer Contribute to Reduction of Chemical Fertilizer Use? Evidence from Heilongjiang Province, China

Promoting the reduction of chemical fertilizers is an important measure to promote the green and sustainable development of agriculture. Farmland transfer is a new way to minimize the need of chemical fertilizers. However, there is debate over this causality. This paper examines the relationship between farmland transfer and chemical fertilizer reduction. After the theoretical analysis, based on the data of 442 corn farmers in Heilongjiang Province, the study employed the endogenous switching probit model to empirically test the effect of farmland transfer on the reduction of chemical fertilizer. The study finds that in the survey area, the overall actual chemical fertilizer application rate was 12.12 kg/mu higher than the economic optimal application rate, which had more room for chemical fertilizer reduction. Moreover, farmland transfer-in reduced the chemical fertilizer application during corn production. If farmland transfer-in farmers decided not to transfer into the farmland, the chemical fertilizer reduction treatment effect would decrease, while it would increase if farmland non-transfer-in farmers decided to transfer into the farmland. Finally, the chemical fertilizer reduction treatment effect would decrease if farmers who had transferred into farmland concentratedly chose to transfer into farmland dispersedly, while it would increase if farmers who had transferred into farmland dispersedly chose to transfer into farmland concentratedly. These findings can provide experience for achieving more effective farmland transfer and chemical fertilizer reduction.