@phdthesis{Sawhney2025, author = {Sawhney, Udit}, title = {Incentivizing Sustainable Agriculture in Indonesia: Empirical Essays on the Role of Social Norms and Information Provision}, url = {http://nbn-resolving.de/urn:nbn:de:bvb:739-opus4-16095}, school = {Universit{\"a}t Passau}, pages = {xvi, 157 Seiten}, year = {2025}, abstract = {The Green Revolution (GR) was one of the most transformative events in modern agricultural history. It was characterized by the widespread adoption of high-yield crop varieties, synthetic fertilizers and pesticides, and advanced irrigation systems. By significantly increasing agricultural productivity, the GR responded to global food shortages and hence played a crucial role in educing hunger, particularly in developing economies. However, while the GR alleviated food insecurity and stimulated economic development, it also brought about several unintended consequences like environmental degradation, as well as, widening socio-economic inequalities. Farmers, particularly in South and Southeast Asia, indulged heavily in fertilizer overapplication, which led to declining soil health and long-term sustainability concerns. Recognizing these challenges, the United Nations' Sustainable Development Goals (SDGs) placed significant emphasis on sustainable agriculture, particularly through SDG - 2, which seeks to end hunger and promote sustainable food production. In line with these efforts, there has been a growing movement by several countries and international organizations towards promoting sustainable agricultural practices that balances agricultural productivity with environmental conservation. This dissertation contributes to this discourse on sustainable agriculture by examining key socio-economic factors that influence the adoption of sustainable farming practices among smallholder farmers in Indonesia. Indonesia's agricultural landscape, particularly its rice farming sector, has been shaped by decades of Green Revolution policies, with Java serving as a focal point for agricultural intensification. While these policies led to impressive yield increases and national self-sufficiency in rice production by the mid-1980s, they also resulted in several environmental and economic challenges, including excessive use of chemical fertilizers, soil nutrient imbalances, and long-term land degradation. In response, the Indonesian government introduced several sustainability-focused policies, including Integrated Pest Management (IPM), Farmer Field Schools (FFS), and the "Go Organic 2010" initiative. Despite these efforts, adoption of sustainable farming practices remains limited, raising critical questions about the barriers that prevent smallholder farmers from transitioning away from intensive chemical input use. The dissertation focuses on three interrelated research questions that explore the role of social networks, information provision, and economic incentives in shaping farmers' decisions regarding sustainable agriculture. These questions are addressed through a combination of mixed-methods research and randomized controlled trials (RCTs) conducted in Java, specifically in the regions of Yogyakarta and Tasikmalaya. The first research question investigates whether and how social networks and peer effects influence farmers' input decisions, particularly regarding fertilizer application. This study builds on existing literature on social networks in agriculture and examines the extent to which perceptions of farming norms - the visible greenness levels of rice plants - affect farmers' willingness to adopt more sustainable practices. Using a mixed-methods approach, including survey experiments and social network analysis, the study finds that personal opinions about the importance of plant greenness significantly influence farmers' input decisions. However, second-order perceptions - farmers' beliefs about how others in their farming network think about their farming choices - do not play a decisive role in shaping actual adoption behaviour. This finding contrasts with previous studies that emphasize the role of social pressure in agricultural decision-making, suggesting that while social learning plays an important role, it does not always operate through peer-effect mechanisms. The results highlight the complexity of social influences in agricultural adoption decisions and the need for more nuanced approaches to integrating behavioural insights into policy interventions. The second research question investigates the role of information provision, particularly about site-specific nutrition, in promoting sustainable soil management practices among smallholder farmers. A large-scale RCT was conducted in 69 villages to assess whether targeted agricultural extension trainings, along with soil testing services, can drive farmers' adoption of sustainable soil management practices. Villages were randomly assigned to - a treatment group (T1) that received one-day training on soil health management, a second treatment group that received both training and soil tests (T2), and a control group. The study reveals that while training sessions increased awareness and adoption of simple sustainable practices - such as the use of the Leaf Colour Chart (LCC) - there was limited impact on broader behavioural changes, such as the adoption of organic fertilizers or precision fertilizer application. However, the additional provision of soil testing led to measurable reductions in nitrogen fertilizer use while simultaneously increasing yields, demonstrating the potential for personalized, site-specific soil nutrient recommendations to improve both economic and environmental outcomes. A cost-benefit analysis reveals that additional day of soil testing training resulted in an average economic gain of USD 15.71 per farmer and also reduced CO2 emissions by approximately 2 kg per farmer. These findings highlight the potential for scalable, information-based interventions as well as the need for sustained follow-up support to reinforce behavioural changes among farmers. The third research question explores farmers' willingness to pay (WTP) for soil testing services and compares two different market-dissemination models - a private service model (where farmers purchase individual soil tests) and a collective (club good) model (where farmer groups collectively purchase a soil testing kit). Using an incentive-compatible auction based on the Becker- eGroot-Marschak (BDM) method, the study finds that farmers are willing to pay approximately 43\% of the actual cost of soil tests, indicating strong demand for personalized soil fertility information. Furthermore, there is no significant difference in WTP between the private and club good models, suggesting minimal free-riding behaviour within farmer groups. The qualitative data further suggests that group-based models foster a sense of joint responsibility and knowledge-sharing, making them a viable alternative to individual service provision. A deeper analysis reveals that while private service models are more effective in low-subsidy environments, club good models become preferable when subsidies are higher, offering valuable insights into cost-sharing mechanisms for agricultural policy design. Taken together, the findings of this dissertation have important implications for policymakers seeking to promote sustainable agricultural practices in developing economies. First, the dissertation highlights the nuanced role of social networks in shaping farmers' adoption decisions, suggesting that interventions targeting social learning should account for the complexity of social networks and peer influence mechanisms. Second, the dissertation underscores the importance of integrating soil testing and personalized information into agricultural extension programs, as site-specific soil nutrient recommendations can enhance both farming productivity as well as environmental sustainability. Third, the study provides empirical evidence on cost-effective ways to scale up soil testing services, demonstrating that well- esigned market-dissemination strategies can increase farmers' access to sustainability-enhancing technologies while maintaining financial viability. Beyond its immediate policy relevance, this dissertation also contributes to broader theoretical debates in development economics, agricultural economics, and environmental sustainability. By integrating experimental research methods, the dissertation advances understanding of how farmers make technology adoption decisions under conditions of uncertainty and social influence. Additionally, the study provides a methodological contribution by demonstrating the effectiveness of combining RCTs with qualitative approaches to capture the complexities of real-world decision-making. Despite its contributions, the dissertation also identifies several avenues for future research. One key limitation is that the analysis focuses primarily on short - to medium-term impacts, leaving open questions about the long-term sustainability of behaviour change. Future studies should explore whether farmers continue to adopt sustainable practices once external support is removed. Additionally, further research is needed to examine the role of digital agricultural advisory services, mobile-based soil testing platforms, and remote sensing technologies in complementing traditional extension services. Finally, more work is needed to explore the broader policy ecosystem surrounding agricultural sustainability, including the role of subsidies, market linkages, and certification schemes in incentivizing long-term adoption. In conclusion, this dissertation provides a comprehensive analysis of the social, informational, and economic factors that drive sustainable agricultural transitions in Indonesia. By offering evidence-based insights into the design of more effective extension programs, market dissemination strategies, and cost- haring mechanisms, it contributes to ongoing efforts to create more resilient and environmentally sustainable food systems. The findings are not only relevant for Indonesia but also offer valuable lessons for other developing economies that are facing the challenge of balancing agricultural productivity with sustainability.}, language = {en} }