Targeting Technology to Increase Smallholder Profits and Conserve Resources: Experimental Provision of Laser Land-Leveling Services to Indian Farmers

With heterogeneous demand and consumption externalities, market segmentation and targeting can improve social welfare. We use a selective trial for laser land leveling (LLL) in India to understand such targeting strategies. We elicit farmer demand for and benefits from LLL services. LLL reduces groundwater extraction by 24%, with comparable fuel savings from reduced pumping. To leverage positive externalities, we combine farmer demand, LLL pumping effects, and service provider costs to evaluate the cost-effectiveness and other impacts of potential targeting strategies. A first-hour LLL discount—a second-degree price discrimination strategy—emerges as the most cost-effective targeting strategy for reducing groundwater extraction.