Report

Cost-effectiveness through bundled distribution: impacts of a package of goods on livelihoods in Rural Tanzania

Using a randomized controlled trial, we test a new model of aid delivery called the Human Development Fund (HDF).

Zoé Allier-Gagneur , Ali Hakim , Nisha Hariharan , Marc Shotland , Dan Stein 30 November 2019

There are a wide variety of development interventions that have been shown to improve welfare of poor, rural households. However, these are frequently delivered piecemeal. Using a randomized controlled trial, we test a new model of aid delivery called the Human Development Fund (HDF) in which a bundle of promising income-generating goods (such as fertilizer and hybrid chickens) and preventative health products (such as insecticide-treated bednets and corn-soy nutritional powder) are given to rural households in Tanzania using a low-cost one-time distribution system. We find large and positive effects of the HDF program on income and household consumption. Net income derived from maize, chickens, and energy increases by 144 USD, resulting in a tripling of total net income in these categories, and a 35% return on the cost of the income-generating assets of HDF. Household consumption also increases by 6.1% in the year following the HDF bundle distribution. However, the vast majority of the income increase is driven by maize profits, with the other income-generating goods (hybrid chickens and solar lamps) yielding disappointing results.

Photo by CDC on Unsplash

Conclusion

Using a randomized controlled trial, we find that the HDF pilot program met its pre-specified goals of delivering income greater than the cost of the bundle, as well as increasing household consumption. Overall, we find that the HDF pilot program in Tanzania delivered substantial benefits to farmers, offering an impressive social return on investment. The benefit-cost and SROI figures from the program compare favorably to those of other agricultural interventions, graduation programs, and cash transfer interventions. Therefore, the HDF model could provide an attractive opportunity for funders or implementers seeking to benefit a large number of poor, agrarian households at a relatively low cost per household and with minimal complexity. However, the positive impacts from the HDF intervention are by and large a result of the maize inputs included in the bundle, rather than the hybrid chickens or solar lamps. These results suggest that a version of the HDF intervention that focused on maize inputs (and potentially a small number of other products) would be more cost-effective than the pilot bundle.

This study leaves several areas open for further exploration. Although the results on maize production were impressive, it’s unclear whether they are reliant on the fact that there was excellent rainfall during the study period. We also do not know whether treatment farmers will continue to experience higher maize profits than control farmers in subsequent years (e.g., because they reinvest in improved maize seeds or fertilizers). In addition, although we estimated the impacts of hybrid chickens and solar lamps in future years via proxy measurements, the actual future impacts of these products may differ from these estimates. Finally, the long-term health and income impacts of ITNs, CSB, harvest bags, and tree seedlings remain unknown. A follow-up study after the next maize harvest could help shed light on these questions. Such insights would allow for more direct comparisons between HDF and poverty graduation interventions, which aim to increase the long-term welfare of beneficiary households.