Health and Environmental Benefits of Reduced Pesticide Use in Uganda: An Experimental Economics Analysis

Two experimental procedures were employed to value both health and environmental benefits from reducing pesticide use in Uganda. The first experiment, an incentive compatible auction involved subjects with incomplete information placing bids to avoid consuming potentially contaminated groundnuts/water in a framed field experimental procedure. Three experimental treatments (information, proxy good, and group treatments) were used. Subjects were endowed with a monetary amount (starting capital) equivalent to half the country’s per capita daily income (in small denominations). Two hundred and fifty seven respondents were involved in a total of 35 experimental sessions in Kampala and Iganga districts. The Kampala sample consisted of urban (professional) residents while the Iganga sample consisted of rural (groundnut farmer) residents. Analyses with Tobit models indicated that subjects are willing to pay significant amounts to avoid ill health outcomes, although these values vary by region, by treatment and by socio-economic characteristics. Gender differences were important in explaining bid behavior, with male respondents in both study areas bidding higher to avoid ill health outcomes than females. Consistent with a priori expectation, rural population’s average willingness to pay to avoid ill health outcomes was lower (by 11.4 percent) than the urban population’s willingness to pay perhaps reflecting the poverty level/low incomes in the rural areas and how it translates into reduced regard for health and environmental improvements. Salaried respondents in Kampala were willing to pay more than those on hourly wages. Tests of hypotheses suggested: (i) providing brief information to subjects just prior to the valuation exercise does not influence bid behavior, (ii) subjects are indifferent to the source of contamination: willingness to pay to avoid health outcomes from potentially contaminated water versus groundnuts are not significantly different, and (iii) the classical tendency to free-ride in public goods provision was observed in both urban and rural areas, and this phenomenon was more pronounced in the urban than the rural area. The second experimental procedure, choice experiments, involved 132 urban respondents making repeated choices from a set of scenarios described by attributes of water quality, an environmental good. Water quality was represented by profiles of water safety levels at varying costs. Analysis using a conditional (fixed effects) logit model showed that urban subjects highly discount unsafe drinking water, and were willing to pay less for safe agricultural water, a result not unexpected considering that the urban population is not directly involved in agricultural activities and thus may not value agricultural water quality as much as drinking water quality. It was also found that subjects’ utility increased with the cost of a water sample (inconsistent with a downward sloping demand curve), suggesting perhaps that they perceived higher cost water to be associated with higher quality water. Advertisements for bottled water in Uganda would have consumers believe that higher cost bottled water is higher quality.