Global fertilizer crisis and willingness to pay for chemical fertilizers: empirical evidence from Nepal

Abstract

PurposeThe purpose of the study is to estimate the willingness to pay (WTP) for major chemical fertilizers and revisit the fertilizer subsidy policy in Nepal.Design/methodology/approachWe surveyed 619 households from six districts and assessed farmers’ WTP for urea, diammonium phosphate (DAP) and muriate of potash (MOP) during the fertilizer crisis. Our study elicited the WTP for fertilizers when fertilizers were not available on the market. A modified payment card approach was used to elicit farmers’ WTP.FindingsThe study found that farmers who buy fertilizer from agrodealers, buy from gray markets, have bank accounts, are willing to take a risk, have strong or medium economic conditions and incur higher travel costs have a higher WTP for fertilizers. Farmers in sampled areas, on average, are willing to pay 31 percent more for urea, 13 percent more for DAP and 19 percent more for MOP than the government recommended fertilizer price.Research limitations/implicationsThe design of the payment card and the estimation techniques used to fit the valuation function are likely to influence WTP.Originality/valueOverall, literature on households’ WTP for fertilizers in developing countries is scarce. Our study contributes to the knowledge of WTP for fertilizers.