Sampling: Our sample will consist of dairy farmers who delivered an average of 25 - 2,000 kgs of milk per month to Nyala Dairy from January to March, 2022. This results in a sample of 9,203 dairy members, 72% of all active Nyala producers over the period. We remove members with average monthly milk deliveries less than 25 kgs because this is the approximate amount necessary to pay the full tank price within three years using milk earnings alone. We further remove large producers and producers that are evidently not households (e.g. schools) to focus our analysis on smallholder farming households.
Randomization: Members will be randomized into 5 main treatment arms: Control (12.5%), Layaway (12.5%), 2-year ACL (25%), 3-year ACL (25%), and Hybrid (25%). The price of the water tank offered to each member will also be randomly assigned. Both randomizations will be stratified by the nearest Nyala Vision SACCO branch and milk production quartile.
Baseline Survey: Eligible dairy farmers will then be approached for a baseline survey, which will be conducted either at their homes. The survey will collect information on demographics, farming practices and milk production, asset ownership, water access and storage, time use, health outcomes, and social groups. At the end of the survey, treated farmers will be given information on the terms of the four possible contracts and told that they may be offered a discount. They will be invited to visit their local SACCO branch within the three months to register for a contract. Members will not be told at this stage which contract or price they will be offered.
Loan Approval: The research team will share the ID numbers of all members interested in purchasing a water tank with Nyala Vision SACCO. Nyala will not be informed of the treatment status or given any individual-level survey data. Nyala will then choose whether or not to approve each member for a two-year loan contract. Approved members will be our main sample for this analysis.
Becker-DeGroot-Marschak (BDM) Elicitation: When approved members visit the SACCO branch to register for a contract, a surveyor will administer a Becker, DeGroot and Marschak (1964) preference elicitation. Farmers will be asked if they would like to take out each contract at various prices, ranging from the retail price down to zero. Then, the surveyor will then reveal the true randomly selected contract offer and price. If the farmer’s stated willingness-to-pay for the randomly-assigned contract was as least as high as the price drawn, the farmer will be given the contract for that price. Otherwise, the farmer will not be given a financing contract. Until the price is revealed, neither the potential borrower nor the surveyor will know the contract or price assigned.
Administration: Nyala Vision SACCO will administer contracts to those who took them out during the BDM elicitation, and they will collect administrative data on repayment that will be used as outcome data. During tank installation, a subset of households connected to piped water will be fitted with a water meter, which will collect data on piped water usage.
Endline Survey: IPA will collect an endline survey to gather data on outcomes including water tank ownership, storage capacity, milk production, and related outcomes.