Incentivizing Sustainability or Intensification? Evaluating the Impact of Pakistan's Kissan Card Subsidy on Farming Practices

Abstract

ABSTRACT

In the wake of mounting environmental pressures and growing demands for food security, agricultural subsidy programs have emerged as critical policy tools in developing countries. In Pakistan, the Kissan Card Subsidy Program (KCSP) represents a key government effort to modernize agriculture and improve farmer welfare. Against this context, the current study investigates the determinants and impacts of farmers' participation in the Kissan Card program in Punjab, with a particular focus on its influence on the adoption of sustainable agricultural practices (SAPs). Employing a two‐stage recursive bivariate probit (RBP) approach, the analysis first identifies key drivers of subsidy participation, highlighting the pivotal role of access to digital tools and targeted support services. Farmers equipped with Information and Communication Technology (ICT) resources and guided assistance are significantly more likely to engage in the program, whereas off‐farm participants and tenant farmers remain less likely to benefit due to time, financial, and tenure constraints. In the second stage, the study uncovers a nuanced pattern: participation in the subsidy program substantially increases adoption of improved stress‐tolerant high‐yield crop varieties (STV) but reduces uptake of integrated pest management (IPM) and organic manuring (OM). This dual effect indicates that while the program alleviates liquidity constraints and facilitates modern input adoption, it may inadvertently promote input‐intensive practices at the expense of long‐term ecological sustainability. The findings underscore the need for more inclusive and sustainability‐oriented subsidy frameworks, including expanded digital infrastructure and targeted financial and technical support for ecological practices. Although limited by the cross‐sectional design, the study provides important insights into the behavioral and systemic impacts of agricultural subsidies, highlighting the challenge of aligning short‐term productivity gains with long‐term environmental stewardship.