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The Economy-wide Impacts and Risks of Malawi's Farm Input Subsidy Program

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  • Channing Arndt
  • Karl Pauw
  • James Thurlow

Abstract

We estimate the impact of Malawi's Farm Input Subsidy Program using an economy-wide approach. This approach yields benefit-cost ratios about 60% higher than existing partial equilibrium studies, a result of our accounting for indirect benefits. Fertilizer response rates remain the determining parameter for benefit-cost ratio levels. Even with lower-end response rates, the program is pro-poor and generates double-dividends through higher and more drought-resilient yields. Overall, for macro-economically significant programs, our approach strongly complements survey-based evaluations. For Malawi, our results buttress arguments for a focus on program improvements.

Suggested Citation

  • Channing Arndt & Karl Pauw & James Thurlow, 2016. "The Economy-wide Impacts and Risks of Malawi's Farm Input Subsidy Program," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(3), pages 962-980.
    • Handle: RePEc:oup:ajagec:v:98:y:2016:i:3:p:962-980.
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    File URL: http://hdl.handle.net/10.1093/ajae/aav048
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    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O22 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Project Analysis
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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