What a Terrible Thing to Waste: Providing a Market-based Alternative to Crop Residue Burning

Nan Sandi

No 360773, 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO from Agricultural and Applied Economics Association

Abstract: Crop residue burning significantly contributes to air pollution in low- and middle-income countries (LMICs). This paper presents a causal estimate of the capital rental subsidy on crop residue burning. I involve 1,024 farmers in a field experiment with two arms: a control arm and a capital rental subsidy arm. Using high-resolution satellite imagery, I find that the capital rental subsidy reduces crop residue burning. The finding suggests that financial constraints rather than information constraints drive crop residue burning. The effects are concentrated among farmers who faced high financial constraints, but not among those who faced information constraints at baseline. Crop residue burning also decreases among neighbors, indicating that green technology generates significant spillover effects within the village. The results suggest that the capital rental subsidy can be a cost-effective measure to address negative externalities, i.e., air pollution, in the agricultural sector.

Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Pages: 48
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea25:360773

DOI: 10.22004/ag.econ.360773

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