The microeconomics of adaptation: Evidence from smallholders in Ethiopia and Niger

Abstract

Climate change is expected to bring higher temperatures, changes to rainfall patterns and in many places increased frequency and severity of extreme weather. Climate change is slated to affect the global food equation both on the supply and demand side as well as local level food systems where small farm communities often depend on local and their own production. As climate change has become more pronounced, the risk to land-based food security faced by many of the world's poor, such as rural communities in Ethiopia and Niger, seems to have become more intense and less predictable. To avoid food insecurity in response to climatic and other stressors, adaptation by small-scale, subsistence farms needs to be accelerated. To effectively intervene to do so, there is a need to understand adaptive behavior in terms of its drivers and its relation with welfare outcomes such as food security. In this paper, we develop a conceptual framework of risk and adaptation, use regression and cluster analysis and the most recent version of the Living Standards Measurement Surveys data for rural areas in Ethiopia and Niger, to advance our understanding. We find that adaptation is associated with lower food insecurity in Ethiopia but not in Niger. Formal education appears as a central element of adaptive capacity and is associated with both adaptive production and income strategies. Female-headed households are much less adapted to a changing climate. Perceived risk based on past hazard experience is crucial for adaptation. Results from the cluster analysis confirm that spatial poverty traps exist. To maintain or enhance welfare in the short term and resilience in the long run in the face of a changing climate, policy makers would do well to focus on micro-regions identified as highly food insecure and build adaptive capacity through, for example, gender inclusive education interventions.