As a response to a sharp increase in global grain and fertiliser prices, the Tanzanian Government, together with the World Bank, invested around US$300 million in 2008 to implement a voucher subsidy programme in an attempt to preserve national food security and raise agricultural productivity. The National Agricultural Input Voucher Scheme (NAVIS) provided 50% subsidies for new seed varieties and chemical fertilisers to 2.5 million smallholder farmers. NAVIS was largely considered to be a success by aiding smallholder farmers to harvest more than 2.5 million tons of additional maize and rice grains. However, in theory, increased agricultural productivity could induce farmers to expand their farming activity and raise the pressure to clear forests for new land. This raises the question on whether the policy had a non-negligible effect on Tanzania’s forests. The researchers hypothesise that the voucher programme induced farmers to expand cropland which significantly contributed to the country’s rate of deforestation.
The empirical research design exploits the spatial and temporal variation of the input subsidy programme and high-resolution satellite data on forest loss, land use, nightlights, and a range of climatic variables such as precipitation and temperature to assess the policy’s impact on environmental outcomes. NAVIS initially targeted 11 high-potential growing regions and, due to political pressure, ultimately expanded to a nationwide programme in 2011. This natural experiment allows a comparison of targeted regions before and after they received subsidies with regions in which farmers did not get offered vouchers up until 2011. However, given that the programme targeted regions in high-rainfall zones with relatively high potential yields of maize and rice grains, treated and non-treated regions would presumably have developed very different in the absence of the policy. Hence, the researchers employ a difference-in-discontinuity design by exploiting the high-resolution nature of satellite imagery to compare areas just outside and just inside regions in which farms received vouchers.
Around 38% of Tanzania’s forests have already been lost, mostly to crop and livestock grazing. In fact, subsistence agriculture and smallholder farming are the main drivers of deforestation in Tanzania. Hence, policies aiming to increase agricultural production should be in tandem with conservation efforts to reduce the pressure on forests to be cleared for agriculture. Forests play a vital role in regulating the Earth’s climate because they capture and store greenhouse gases from the atmosphere. Global deforestation accounts for almost one-fifth of annual emissions. To put this into perspective, deforestation contributes more to greenhouse gas emissions than the global transportation sector and roughly the same amount of emissions as the entire United States each year. Hence, conservation policies are central for efforts to combat climate change.