1. The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis Paper prepared for presentation at the 16 th ICABR Conference – 128 th EAAE Seminar “T HE P OLITICAL E CONOMY OF THE B IOECONOMY : B IOTECHNOLOGY AND B IOFUEL ” Ravello, Italy, June 24-27, 2012 Authors: Christine Bosch and Manfred Zeller, University of Hohenheim

2. Table of contents 1. Research questions and objectives 2. Methods 3. Results 4. Discussion and conclusion Source: JatroSolutions 2011 2 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis

3. Research questions and objectives Did plantation incomes contribute to poverty alleviation? Did the additional income improve food security and diet diversity? Is income inequality declining? What are other effects for the communities? 3 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis

4. Methods (1/4) Data collection  Data from 3 villages surrounding the plantation  Quantitative data: Household survey, 315 households, two data rounds in 2008 and 2010, recall period 12 months  Qualitative data: Group interviews  Treatment households (Jatropha households) and control households Treatment group: households with at least one member working on the plantation in the reference period 4 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis

5.  Mean comparison of the variables Income, Expenditures and Food security of households in the time between 2008 and 2010  Propensity Score Matching to compare Jatropha and control households, Difference-in-difference analysis to compare the two groups and between the two years  Assessment of poverty with the help of the poverty line  Assessment of income inequality with the help of the Gini coefficient  Assessment of other effects for the communities with the help of group interviews 5 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis Methods (2/4) Data analysis

6.  Significant socio-economic differences between households result in biased outcomes  Households are matched according to their propensity of working on the plantation (based on a binary logit model) and only similar households are compared to each other  Results from 2008 suggest higher incomes for Jatropha households for a subsample of the households below the poverty line, no or ambiguous impacts on food security Methods (3/4) Comparison Jatropha / Control households – Propensity Score matching 6 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis Source: Ravallion (2001), Caliendo and Kopeinig (2009)

7.  Two differences: Between two groups at two different points in time, ideally before and after the „program“  Compare changes in incomes and food security from 2008 to 2010 and between Jatropha and control households  Matching of households based on Propensity Scores Methods (4/4) Comparison Jatropha / Control households over time – Difference-in-Difference 7 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis Source: Ravallion (2001), Caliendo and Kopeinig (2009)

8. The plantation offers regular work for a majority of households, more than 60 % of households had at least one member who worked on the plantation. Jatropha households 2010 Control households 2010 Total Jatropha households 2008 18636222 39,3 % 7,6 % 46,9 % Control households 2008 115136251 24,3 % 28,8 %53,1 % Total301172473 63,6 % 36,4%100,0 % Results (1/13) Plantation employment 8 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis

9.  In 2010, 517 persons out of the sample worked on the plantation (269 in 2008), between 6 and 308 working days (2-312 in 2008), on average 103 days (114 in 2008)  46,7 % women and 53,3 % men, mean age 30.2 years  Workers earn an average daily wage of 3.000 Ariary, which is slightly lower than mean agricultural wage (opportunity costs for labour mostly higher than wage)  Low availability of other income sources Results (2/13) Plantation employment 9 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis

10. Reduction of food production?  Only 2 households stated to have reduced agriculture due to the work on the plantation  Agriculture is most important income source for over 40 % of households, only 1 % named plantation, for 55 % agriculture and plantation are equally important  Real impact on food production difficult to estimate as agricultural production decreased considerably in 2010 (reduction of 62% for main food crops, compared to average production)  Households from the control group show a significant higher consumption of home-produced food Results (3/13) Agriculture/Food production 10 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis

11. Who works on the plantation?  Significant differences between Jatropha households and control households:  Less agricultural area (total and per workforce), less cattle  Less yields and lower stocks  Less access to off-farm income sources  Lower value of household and agricultural assets  Younger and bigger households, more members able to work  These differences did not change over time Results (4/13) Determinants for working on the plantation 11 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis

12. Results (5/13) Differences Jatropha / Control households – T-test Outcome variables (2010)N Control N Treated Mean CMean TMean total sample Mean difference T - C P (sign. level) Income per capita (in Ariary)97199116,369142,633134,02626,2460.120 % income on national poverty line 3 9719924.8230.4328.595.600.120 Food expenditures per capita 4 171301 214,357186,694 196,716-27,663 0.017 Home- produced food cons. 171301 96,88280,455 86,40616,427 0.060 Total expenditures per capita 4 170300 312,939282,638 293,597-30,301 0.033 Diet diversity (Number of single foods)17130024.1024.3624.270.260.400 Meals with rice (week before) 171300 14.9914.02 14.37-0.97 0.040 Meals with vegetables (week before)17130014.0214.5514.360.520.212 Meals with meat (week before)1713000.950.770.83-0.180.111 Days not enough to eat (month before) 171300 2.453.91 3.381.46 0.007 Months less than 3 meals per day (year before) 171300 0.080.35 0.250.27 0.001 1 Control group: Households with no member working for the plantation 2 Treatment group: Households with at least one member working for the plantation 3 Poverty line 2010: 468.800 Ariary (INSTAT 2010) 4 Expenditures with home-produced consumption 12 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis

13. Results (6/13) Differences Jatropha / Control households – Propensity Score matching 2008 2010 2010 Outcome variableFull sampleSubsampleFull SampleSubsample (N=285)(N=142)(N=285)(N=142) Income per year and capita Treated381,340199.323135,736117,648 Controls524,247150,928163,113102,772 ATT-142,90748,395-27,37714,876 % per capita income on poverty line Treated92.4548.3528.9525.10 Controls133.0437.1534.7921.92 ATT-40.5811.2-5.843.18 Expenditures per year and capita Treated186,738178,576171,319165,765 Controls186,624153,069184,781167,881 ATT11425,508-13,462-2,126 Food expenditures per year and capita Treated104,883105,429108,641108,580 Controls92,92984,409109,989108,785 ATT11,95421,020-1,349-215 13 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis

14. Results (6/13) Differences Jatropha / Control HHs 2008 2010 2010 Outcome variableFull sampleSubsampleFull SampleSubsample Diet diversity (Number of single foods consumed per year) Treated20.9820.8824.5924.66 Controls18.8017.7924.3424.86 ATT2.18**3.090.25-0.20 Meals with rice week before Treated14.0813.2814.6914.22 Controls14.7714.2611.4810.21 ATT-0.69-0.99***3.214.01 Meals with vegetable consumption week before Treated9.138.2214.8314.65 Controls8.916.0414.7215.24 ATT0.222.180.12***-0.59 Meals with meat week before Treated0.7 0.960.93 Controls0.971.00.900.42 ATT-0.27-0.30.06***0.51 Days with less than three meals month before Treated6.416.553.594.30 Controls7.349.033.033.63 ATT-0.92-2.48***0.56***0.67 Months with less than three meals month before Treated1.001.040.260.28 Controls1.281.570.400.63 ATT-0.28***-0.53-0.14-0.36 *, **, *** significant at the 0.1, 0.05 and 0.01 level respectively, Significance levels calculated with bootstrap standard errors

15. Results (7/13) Changes over time – T-test Outcome variablesNMean 2008Mean 2010Mean difference P (sign. level) Income per capita (in Ariary) 296405,413134,026-271,3870.000 % income on national poverty line 3 29999.5028.59-70.910.000 Food expenditures per capita 4 308110,715106,734-3,9810.474 Total expenditures per capita 4 314228,732170,847-57,8850.000 Diet diversity 31219.9624.294.340.000 Meals with rice (week before)30614.0014.320.320.384 Meals with vegetables (week before) 3069.1714.325.150.000 Meals with meat (week before)3060.750.870.110.351 Days not enough to eat (month before) 3067.233.40-3.830.000 Months with less than 3 meals per day (year before) 3061.160.23-0.940.000 3 Poverty line 2010: 468.800 Ariary (INSTAT 2010); Poverty line 2008: 407.433 Ariary (Grass 2011, based on INSTAT 2005) 4 Without own consumption, inflation-adjusted (Inflation in 2009 was 8.4 and in 2010 8.1 % (World Bank 2011) 15 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis

16. Results (8/13) Changes over time – T-test Income (in Ariary and per capita) N Mean 2008 Mean 2010 Mean difference P (sign. level) Farm309256,78820,672-236,1160.000 Livestock31423,89529,4985,6040.180 Plantation30965,24456,929-8,3150.155 Off-farm30971,69517,436-54,2590.000 Total296405,413134,026-271,3870.000 Share of plantation income on total income16%43%27 % Expenditures (in Ariary and per capita) N Mean 2008 Mean 2010 Mean difference P (sign. level) Food308110,715106,734-3,9810.474 Necessities30811,27610,157-1,1190.086 Clothes31619,40711,025-8,3820.000 Social obligations28712,1405,163-6,9780.005 Luxury expenditures30874,91135,522-39,3890.000 School3135,4993,064-2,4350.010 Total314228,732170,847-57,8850.000 Share of food on total expenditures48.4 %62.5 %14.1 % All variables are inflation-adjusted (2009: 8.4% and 2010: 8.1%, Worldbank 2011) 16 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis

17. Results (9/13) Changes over time – Difference-in-Difference Full sample (N=285)Subsample (N=142) Δ Income per capita Treated-245,605-81,674 Controls-361,134-48,156 DID estimate115,530-33,581 Δ % Poverty line Treated-64.64-74.9 Controls-93.88-78.1 DID estimate29.243.2 Δ Expenditures per capita Treated3,758-16,465 Controls17,060-75,426 DID estimate-13,30258,961 Δ Food expenditures per capita Treated-15,418741.67 Controls-1,843-30.820 DID estimate-13,57631,562  Less reduction in incomes for full sample less reduction in expenditures for subsample 17 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis

18. Results (10/13) Changes over time – DID estimates Δ Diet diversityFull sample (N=285)Subsample (N=142) Treated3.613.78 Controls5.417.07 DID estimate-1.94-3.29 Δ Rice consumption Treated0.620.95 Controls-3.29-4.05 DID estimate3.905.0 Δ Vegetable consumption Treated5.76.42 Controls5.89.20 DID estimate-0.1-2.78 Δ Meat consumption Treated0.250.24 Controls-0.07-0.58 DID estimate0.320.82 Δ Not enough 30 days Treated-2.83-2.25 Controls-4.31-5.40 DID estimate1.483.15*** Δ Not enough 12 months Treated-0.74-0.76 Controls-0.88-0.93 DID estimate0.14***0.17 *, **, *** significant at the 0.1, 0.05 and 0.01 level respectively, calculated with bootstrap standard errors 18

19. Results (11/13) Assessment of poverty 20082010 Poverty line (in Ariary)407,433468,800 % of households below (income)70.2 (N=315)97.6 (N=315) Number of households below217289 Mean % income on poverty line99.5028.59 % of households below (expenditures)n.a. 89.6 Mean % expenditures on poverty linen.a.37.38  Poverty has increased from 2008 to 2010, number of households as well as severity of poverty.  Plantation incomes amounted to 43 % of total incomes in 2010, therefore poverty would be higher without the plantation. 19 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis

20. Results (12/13) Changes in income inequality  Without incomes from plantation work, income inequality would have increased significantly.  Based on expenditures, differences between households have decreased significantly.  Income decomposition suggests that plantation incomes have a small negative marginal effect on the Gini coefficient and that they favor the poor households more 20082010Δ Gini coefficient (based on total income per capita)0.430.470.04 Gini coefficient (without plantation income)0.480.610.13*** Gini coefficient (based on total expenditures per capita) 0.480.300.18*** *** significant at the 0.01 level, significance estimated with jackknife procedure 20 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis

21.  Decrease in harvest and cattle theft  Investments in schools and wells  Additional income sources, market effects  Credits for JatroGreen workers on the market  Fear of expansion of plantation Results (13/13) Other effects for the communities 21 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis

22.  Small control group, especially households with a low probability to work on the plantation (no common support)  High range of working days (6-308), range of incomes (team leaders) therefore high variance in incomes  Spillover: Control group households benefit as well (higher purchasing power leads to more market activity, selling fertilizer to the plantation, renting rooms)  Income and expenditures in 2008 were already influenced by the plantation and on a higher level, the true impact of the plantation may therefore be underestimated. Discussion Shortcomings Propensity Score Matching / Difference in difference 22 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis

23.  Poverty reduction potential, especially in years with limited agricultural production  Positive effects in 2008 have been mitigated by the reduction in food production in 2010  Contribution to rural development  Decreasing income inequality  Not all possible benefits have been realized/quantified yet (energy supply, substitution of firewood, erosion potential) Conclusions 23 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis

24. Thank you for your attention! This study is part of the project „Jatropha cultivation in Madagasar“ funded by the foundations EnBW- Regenwaldstiftung and Stiftung Energieforschung Baden- Württemberg, data collection was partly funded by the foundation fiat panis (More information at https://jatropha-madagaskar.uni-hohenheim.de) Acknowledgements 24 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis

25. Backup 25 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis

26. Backup – Decomposition of Gini by income source 2008 2010 SkGkRkShare% ΔSkGkRkShare% Δ Income source Farm0.610.520.850.630.020.160.760.600.16-0.00 Livestock0.060.820.560.060.000.230.860.770.330.10 Off-farm0.170.800.620.200.030.140.830.360.09 -0.05 Plantation0.160.760.390.11-0.050.460.650.670.42-0.04 Total1.000.431.000.47 Sk: Share of income source on total income Gk: Gini coefficient for each income source Rk: the Gini correlation of income from source k with the distribution of total income Share: share of each income source in total inequality % Δ: refers to the impact that a 1% change in the respective income source will have on inequality 26 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis

27. Backup – Determinants for working at the plantation VariablesCoefficientSignif. Marginal effect 95% Confidence interval Sum Workforce0.26530.0160.06610.01250.1197 Land per worker-0.21420.018-0.0534-0.0978-0.0090 Dummy Sakafia1.63370.0010.35440.19880.5099 Dummy Maroilo-2.74530.000-0.5631-0.6642-0.4620 Own business-0.67940.027-0.1682-0.3143-0.0220 Public service-1.54170.019-0.3411-0.5571-0.1251 Year of household formation0.02220.0340.00550.00040.0106 Dummy Zebu-0.63300.049-0.1569-0.3101-0.0037 Constant-46.5860.036 N336 Pseudo R 2 0.2970 Chi square0.0000 Pos. predictive value75.94 Neg. pred. value84.68 Correctly classified79.17 27 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis

29. 29 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis

30. 30 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis

31. Methods (2/5) Outcome variables over time Variable Expected sign Explanation Total income+ Higher total income due to income from plantation work and market effects Agricultural production 0 Few households decreased their production due to plantation work, few households increased their production due to availability of inputs, the majority of households did not change their farming patterns Expenditures+ Higher expenditures due to an increase in income Food expenditures+ Higher food expenditures due to an increase in income Food security/ Diet diversity +More income is available to sustain consumption over lean season and to purchase on market and no change in production level 31 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis

32. Common support 32 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis Common support for full and subsample Source: Own data, computed in Stata with psmatch2

33. Matching success 33 The impacts of a Jatropha plantation on food security and income of rural households in Madagascar – A panel data analysis VariableSampleMean TMean C% bias% Δ biasp>|t| WorkforceUnmatched2.6252.42915.10.197 Matched2.6252.750-9.636.40.373 Own businessUnmatched0.2060.353-33.10.005 Matched0.2060.1884.287.30.674 Public/Military ServiceUnmatched0.3750.045-3.80.744 serviceMatched0.3750.0189.4-146.30.312 Dummy SakafiaUnmatched0.2750.03072.20.000 Matched0.2750.306-9.287.20.540 Dummy MaroiloUnmatched0.0500.466-107.70.000 Matched0.0500.0441.698.50.792 More than 2Unmatched0.2310.383-33.30.005 ZebusMatched0.2310.338-23.330.20.035 Land perUnmatched0.8241.319-30.00.010 workforceMatched0.8241.033-12.757.80.135 Year of HHUnmatched1995199041.70.000 FormationMatched19951996-9.078.50.375 SamplePseudo R2LR chi2p>chi2 Unmatched0.312126.10.000 Matched0.0229.770.282