Page - (000159) - in Evaluating Climate Change Action for Sustainable Development

the government has been encouraging the cultivation ofHYVrice,mostly via the BAAC(BankofAgricultureandAgriculturalCredit), thedummyisexpected tobe positively correlatedwithBAACpresence.25 Water Presence Scarcity of water is an important resource constraint in this region.Walker (2002) in a detailed study of theMaeUamcatchment area of the Mae Chaem district of Chiang Mai, finds that even cultivation of dry-season varietiesof soybean,which requires relatively lesswater,has reached itshydrolog- ical limit. Dry season varieties of soybean (typically grown in the region) and upland rice are crops that require little water.26 On the other hand paddy rice requires a lot of water to grow. Availability of water is used as a proxy for productivityof land. In thisanalysis,presenceofwater ismeasuredbytheresponse to thequestion“Did this villagehave sufficientwater to growshort run (long run) crops?” The dummy variable is equal to 1 if there is sufficient water and is zero otherwise. Irrigation is usually provided by rain and, to a lesser extent, by small man-madeweirs and canals.27 AcidicSoil Theother variable used tomeasure theproductivity of land is acidity of soil.Acidityof soil is anundesirablequality.Thevariable is expected tohavea negative effect on agricultural area and intensity of cultivation. In this dataset it is recorded as 1 if soilwithin a village suffers fromhigh acidity, and0otherwise. PerceptionsofLandOwnership Secure land titlesaredefinedas titles that allow landtobeusedascollateralorsold.Iexpect that farmerswhohavesecurelandtitles willbemorewilling to invest in landandgrowcashcrops. Iuseadummyvariable, which is equal to 1 if the village headman responds that “secure land titles were held bymost farmers in the village”. Credit Use Credit use is expected to increase the intensity of cultivation. The BAAC is the lender of first resort in most of these villages since it provides relatively low interest credit. Credit obtained from the BAAC is assumed to bemainlyforagriculture,unlikecreditprovidedbyprivatemoneylenders (because of the conditions that BAAC imposes). Clearly, credit use is endogenous.28 The variableused to indicateuseof credit in this study is “Dovillagersusecredit from theBAAC”.Thisvariable equals1 if people in thevillageusecredit fromtheBank ofAgriculture andAgriculturalCredit, and0otherwise. 25Thus the variable is used as an instrument in theBAACcredit use equations. 26Althoughupland rice requires rainfall, it does not require standingwater like paddy rice does. 27Palmet al. (2004). 28One reviewer suggests theuseof aBAACcredit dummywhich is¼1 for theyear that avillage starts usingBAACcredit and then, irrespective of response, is coded¼1, for all years thereafter. The object here is tomeasure the use of credit and not somuch the availability of credit. The endogeneity of credit use is not discussed more in this paper but is discussed in detail in Puri (2006). 8 UsingMixedMethods toAssessTrade-OffsBetweenAgriculturalDecisions. . . 143