Thanks for the post, it seems like you’re doing valuable work!
I’m curious how you’d compare One Acre Fund’s work to the baseline of just directly giving the farmers cash to spend as they see fit? And if you did this, do you expect they would spend it on the kind of things One Acre Fund is providing?
Based on this post, possible arguments I see:
You believe that loans make the approach more efficient as money is often paid back
You can provide expertise and teaching which is hard to purchase, or people may not value correctly
I don’t know anything about One Acre Fund in particular, but it seems plausible to me that a well-run intervention of this sort could potentially beat cash transfers (just as many Givewell-recommended charities do).
Increasing African agricultural productivity has been a big cause area for groups like the Bill & Melinda Gates Foundation for a long time. Hanna Ritchie, of OurWorldInData, explains here why this cause seems so important—it just seems kinda mathematically inevitable that if labor productivity doesn’t improve, these regions will be trapped in poverty forever. (But improving productivity seems really easy—just use fertilizer, use better crop varieties, use better farming methods, etc.) So this seems potentially similar to cash transfers, insofar as if we did cash transfers instead, we’d hope to see people spending a lot of the money on better agricultural inputs!
Notably, people who are into habitat / biodiversity preservation and fighting climate change, really like the positive environmental externalities of improving agricultrual productivity. (The more productive the world’s farmland gets, the less pressure there is to chop into jungle and farm more land.) So if you are really into the environment, maybe those positive eco externalities make a focused intervention like this much more appealing than cash transfers, which are more about the benefits to the direct recipients and local economy.
One could look at this as a kind of less-libertarian, more top-down alternative to cash transfers, which makes it look bad. (Basically—give people the cash, and wouldn’t they end up making these agricultural improvements themselves eventually? Wouldn’t cash outperform, since central planning underperforms?) But you could also look at it as a very pro-libertarian, economic-growth-oriented intervention designed to provide public goods and create stronger markets, which makes it look good. (Hence all the emphasis about educating farmers to store crops and sell when prices are high, or preemptively transporting agricultural inputs around to local villages where they can then be sold. Through this lens I feel like “they’re solving coordination problems and providing important information to farmers. Of course a sufficiently well-run version of this charity has the potential to outperform cash!”) This is basically me rephrasing your second bullet point.
Just a feeling, but I think your first bullet point (loans are more efficient because the money is paid back) wouldn’t obviously make this more efficient than cash transfers? (Maybe you are alluding to this with your use of “you believe”.) Yes, making loans is “cheaper than it first seems” because the money is paid back. But giving cash transfers is also “better than it first seems” because the money (basically stimulus) has a multiplier effect as it percolates throughout the local economy. Whether it’s better for people to buy farming tools with cash they’ve been loaned (and then you get the money back and make more loans to more people who want to buy tools), versus cash they’ve been given (and then the cash percolates around the local economy and again other people make purchases), seems like a complicated macroeconomics question that might vary based on the local unemployment & inflation rate or etc. It’s not clear to me that one strategy is obviously better.
But these are all just thoughts, of course—I too would be curious if One Acre Fund has some real data they can share.
Thanks for the post, it seems like you’re doing valuable work!
I’m curious how you’d compare One Acre Fund’s work to the baseline of just directly giving the farmers cash to spend as they see fit? And if you did this, do you expect they would spend it on the kind of things One Acre Fund is providing?
Based on this post, possible arguments I see:
You believe that loans make the approach more efficient as money is often paid back
You can provide expertise and teaching which is hard to purchase, or people may not value correctly
I don’t know anything about One Acre Fund in particular, but it seems plausible to me that a well-run intervention of this sort could potentially beat cash transfers (just as many Givewell-recommended charities do).
Increasing African agricultural productivity has been a big cause area for groups like the Bill & Melinda Gates Foundation for a long time. Hanna Ritchie, of OurWorldInData, explains here why this cause seems so important—it just seems kinda mathematically inevitable that if labor productivity doesn’t improve, these regions will be trapped in poverty forever. (But improving productivity seems really easy—just use fertilizer, use better crop varieties, use better farming methods, etc.) So this seems potentially similar to cash transfers, insofar as if we did cash transfers instead, we’d hope to see people spending a lot of the money on better agricultural inputs!
Notably, people who are into habitat / biodiversity preservation and fighting climate change, really like the positive environmental externalities of improving agricultrual productivity. (The more productive the world’s farmland gets, the less pressure there is to chop into jungle and farm more land.) So if you are really into the environment, maybe those positive eco externalities make a focused intervention like this much more appealing than cash transfers, which are more about the benefits to the direct recipients and local economy.
One could look at this as a kind of less-libertarian, more top-down alternative to cash transfers, which makes it look bad. (Basically—give people the cash, and wouldn’t they end up making these agricultural improvements themselves eventually? Wouldn’t cash outperform, since central planning underperforms?) But you could also look at it as a very pro-libertarian, economic-growth-oriented intervention designed to provide public goods and create stronger markets, which makes it look good. (Hence all the emphasis about educating farmers to store crops and sell when prices are high, or preemptively transporting agricultural inputs around to local villages where they can then be sold. Through this lens I feel like “they’re solving coordination problems and providing important information to farmers. Of course a sufficiently well-run version of this charity has the potential to outperform cash!”) This is basically me rephrasing your second bullet point.
Just a feeling, but I think your first bullet point (loans are more efficient because the money is paid back) wouldn’t obviously make this more efficient than cash transfers? (Maybe you are alluding to this with your use of “you believe”.) Yes, making loans is “cheaper than it first seems” because the money is paid back. But giving cash transfers is also “better than it first seems” because the money (basically stimulus) has a multiplier effect as it percolates throughout the local economy. Whether it’s better for people to buy farming tools with cash they’ve been loaned (and then you get the money back and make more loans to more people who want to buy tools), versus cash they’ve been given (and then the cash percolates around the local economy and again other people make purchases), seems like a complicated macroeconomics question that might vary based on the local unemployment & inflation rate or etc. It’s not clear to me that one strategy is obviously better.
But these are all just thoughts, of course—I too would be curious if One Acre Fund has some real data they can share.
I think she partially replied here:
https://forum.effectivealtruism.org/posts/JvoePwTysZJDvkhEx/how-would-your-project-use-extra-funding-marginal-funding-1?commentId=smtaYauePK63RCsxx