Assessing the Economic Sustainability of Price Intervention Policies: Evidence from Thailand’s Cassava Market

While many countries worldwide have shown a trend toward restraint in applying agricultural price interventions, these policies are still employed intermittently by the Thai government with potential adverse consequences for economic sustainability over the longer term. In the current work, which examines the cassava price intervention policy from 1981 to 2024 in Thailand through a supply and demand framework, the authors estimate a Dynamic Simultaneous Equation Model (DSEM) via the Lag-Augmented Three-Stage Least Squares (LA-3SLS) approach in order to measure the welfare effects of these interventions. The results indicate that the policy mainly reallocates welfare among market participants rather than enhancing economic efficiency. Producers experience temporary gains during intervention years, but these gains fade once the policy is withdrawn, leaving long-run total surplus largely unchanged. After accounting for fiscal costs, the program generates a net welfare loss, indicating that the policy does not contribute to long-term economic sustainability. To support progress toward the Sustainable Development Goals (SDGs), policy should shift from direct price controls to income-stabilization instruments and productivity-enhancing measures. The welfare-based dynamic framework developed in this study provides a sustainability metric for evaluating the long-term consequences of price-intervention policies and offers evidence to support the design of more sustainable policy tools.