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Heterogeneous returns to chemical fertilizer at the intensive margins: insights from Nepal
journal contributionposted on 2023-05-19, 05:15 authored by Takeshima, H, Rajendra Adhikari, Shivakoti, S, Kaphle, BD, Kumar, A
Increased fertilizer use is considered important for agricultural development in low-income countries. Promoting increased use of chemical fertilizer by lowering its price may be ineffective if demand is price inelastic. In theory, the price elasticity of demand depends on the returns to its use, but the evidence is scarce. Furthermore, while returns are often estimated for small changes in chemical fertilizer use, returns to larger changes in its use (intensive margins) are less understood. Through the inter-zonal comparisons in Nepal, we provide indicative evidence that greater returns to chemical fertilizer are associated with greater price elasticities of demand. Moreover, the evidence suggests that returns at the intensive margins, rather than returns to small changes, may largely account for inter-zonal differences in returns to chemical fertilizer within Nepal. The results suggest that better understanding the returns at the intensive margins is critical for effective agricultural inputs policies in developing countries.
Publication titleFood Policy
Department/SchoolTasmanian Institute of Agriculture (TIA)
PublisherElsevier Sci Ltd
Place of publicationThe Boulevard, Langford Lane, Kidlington, Oxford, England, Oxon, Ox5 1Gb
Rights statementCopyright 2017 Elsevier Ltd.