The Impact of Ethiopias Productive Safety Net Programme and Related Transfers on Agricultural Productivity

Ethiopias Food Security Programme provides income transfers through public works in its Productive Safety Net Programme (PSNP) as well as targeted services provided through the Other Food Security Programme (OFSP) and, later, the Household Asset Building Programme (HABP) designed to improve agricultural productivity. There is a trade-off in these two types of transfers between short-term improvements in food security and longer term food security achieved through increased agricultural productivity. Using the doseresponse models of Hirano and Imbens (2004), we investigate the relative impact of PSNP transfers alone and joint transfers from the PSNP and OFSP/HABP on agricultural output, yields, fertiliser use and agricultural investment for farmers growing cereals in Ethiopia from 2006 to 2010. We find that access to the OFSP/HABP programme plus high levels of payments from the PSNP led to considerable improvements in the use of fertiliser and enhanced investments in agriculture likely to improve agricultural productivity among households receiving both programmes. We find mixed effects of participation in both programmes in terms of impacts on yields. We also find that high levels of participation in the PSNP programme alone had no effect on agricultural input use or productivity and limited impact on agricultural investments. We suggest some mechanisms to explain why the combined transfers are more effective at increasing yields.