Impact Evaluation for Nicaragua’s Rural Business Development Services Activity
The Rural Business Development (RBD) Project is part of Nicaragua’s five-year Compact that was signed in 2005. The project is designed to reduce poverty and increase investment by increasing value-added of farms and enterprises in León-Chinandega. For more information on the project, see the
Nicaragua Country Page. The RBD Project is one of many MCC-funded projects related to agriculture. For more information about evaluations of MCC’s agriculture projects, see the
The impact evaluation will estimate the change in beneficiary household income and other measures of welfare that can be attributed to the Project. The evaluation methodology relies on the randomized sequencing of geographic communities, with approximately 40-50 communities selected randomly to receive business services early and 40-50 communities selected randomly to receive services later. All other eligible communities will receive the program at any time. To estimate impact, the average income of those receiving services early will be compared to the average income of those who received services later.
Although the evaluation covers the crops that the majority of farmers grow, it was noted that this evaluation does not cover two crops funded under the Project: rice and plantain. These products are covered by a supplemental evaluation. Together, these evaluations will inform on the impact of the RBD Project.
Using two rounds of survey data and a randomized rollout strategy, the interim impact evaluation found that the average increase in RBD household incomes is small (2% more than the change in household income for those not yet receiving the Project) and not statistically different from zero. The very small magnitude of change in incomes may reflect the limited amount of time between the provision of services and the measurement of change; if this is true, one would expect to see more significant change in the final evaluation.
The evaluator did find some evidence that the RBD Project may work better for some than others, and this pattern appears to reflect more than the normal variation around the mean found in any survey data. In light of this preliminary, suggestive evidence of uneven impact among participants, the evaluators will attempt to clarify why some households gain significant impact from the Project while others do not. Variables such as credit constraints and tenure conditions might explain some of this impact heterogeneity. Project expenditures also are higher for some activities (e.g., livestock) than for others (e.g., sesame), and it may be that the larger benefits simply reflect this differential.
The analysis also shows that the RBD Project did not directly serve many households below the mid-point of the rural income distribution. How far down the income distribution a technology and business skill transfer project can go is an important and always challenging question. The results obtained from this interim study suggest that the effect of the Project is unrelated to the initial living standard of a household. In other words, poorer households close to the eligibility floor appear to receive the same absolute benefit from the RBD Project as earned by more prosperous households. If substantiated with more complete data and robust specifications, this finding suggests that this RBD Project (and perhaps other similar interventions) might be able to focus more efforts at poorer households without sacrificing cost-effectiveness standards.
Read more about the interim impact evaluation here.
The final evaluation will build upon the findings of the interim evaluation by analyzing Project impacts over a longer period of time. One expects to see different levels of impact if it takes time for participants to incorporate program lessons into their agricultural practices. The final evaluation will rely on another round of data collection and be completed in 2011.
The evaluation relies on household surveys and community profiles. The household surveys cover approximately 1600 rural households. Each household has already been surveyed twice, once for the baseline (before any farmers benefited from the Project), and a second time for the interim report (after first round of implementation). These households will participate in a third (final) survey. For each enumeration area, household surveys are complemented by community profiles.