IMPACT OF MARKET PRICE SUPPORT MEASURES ON CHEMICAL FERTILIZER USE IN CHINA

Abstract

This paper evaluates the impact of a market price support measure (TPSP) on the chemical fertilizer use in China. This policy was implemented by the government to support farmers’ income and grain production in four provinces in Northeast China. This paper collected data of 390 counties before and after the policy implementation, then applied difference-indifferences (DID) and DID-matching approaches to evaluate the treatment effects and find evidence that supports this identification strategy. The results show that an average of approximately 8.7% of chemical fertilizer was overused by each county that implemented the policy compared to the counterfactual scenario with no policy. Our findings suggest that the impact of market price support measures on the environment needs to be considered.

Keywords

• chemical fertilizer
• overuse
• market price support measure
• subsidy
• treatment effect