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Managing Environmental Risk In Presence Of Climate Change: Evidence From Ethiopia

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  • Di Falco, Salvatore
  • Veronesi, Marcella

Abstract

This study investigates the impact of climate change adaptation on farm households’ downside risk exposure in the Nile Basin of Ethiopia. The analysis relies on a moment-based specification of the stochastic production function. We use an empirical strategy that accounts for the heterogeneity in the decision on whether to adapt or not, and for unobservable characteristics of farmers and their farm. We find that (i) past adaptation to climate change adaptation reduces current downside risk exposure, and so the risk of crop failure; (ii) climate change adaptation would have been more beneficial to the non-adapters if they adapted, in terms of reduction in downside risk exposure; and (iii) climate change adaptation is a successful risk management strategy that makes the adapters’ more resilient to climatic conditions.

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Bibliographic Info

Paper provided by European Association of Agricultural Economists in its series 126th Seminar, June 27-29, 2012, Capri, Italy with number 126010.

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Date of creation: 20 Jun 2012
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Handle: RePEc:ags:eaa126:126010

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Keywords: adaptation; climate change; downside risk exposure; environmental risk; Environmental Economics and Policy; Risk and Uncertainty; D80; Q18; Q54;

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Citations

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Cited by:
  1. Salvatore Di Falco & Marcella Veronesi, 2011. "On Adaptation to Climate Change and Risk Exposure in the Nile Basin of Ethiopia," IED Working paper 11-15, IED Institute for Environmental Decisions, ETH Zurich.
  2. Thomas Epper & Helga Fehr-Duda & Renate Schubert, 2011. "Energy-Using Durables: The Role of Time Discounting in Investment Decisions," IED Working paper 11-16, IED Institute for Environmental Decisions, ETH Zurich.
  3. Blasch, Julia & Farsi, Mehdi, 2012. "Retail demand for voluntary carbon offsets – a choice experiment among Swiss consumers," MPRA Paper 41259, University Library of Munich, Germany.
  4. Teklewold, Hailemariam & Kassie, Menale & Shiferaw, Bekele & Köhlin, Gunnar, 2013. "Cropping system diversification, conservation tillage and modern seed adoption in Ethiopia: Impacts on household income, agrochemical use and demand for labor," Ecological Economics, Elsevier, vol. 93(C), pages 85-93.
  5. Michele Baggio, 2012. "The Optimal Management of a Natural Resource with Switching Dynamics," IED Working paper 12-19, IED Institute for Environmental Decisions, ETH Zurich.
  6. Kim, Chung-Sil & Jung, Hye-Kyung & Lee, Sang-Ho & Park, Soo-Young & Takei, Atsuo, 2012. "An Analysis on Determinants of Farmers´ Adaptation to Climate Change in Korea," Journal of Rural Development/Nongchon-Gyeongje, Korea Rural Economic Institute, vol. 35(2), July.
  7. Tambo, Justice A. & Wünscher, Tobias, 2014. "Building farmers’ capacity for innovation generation: what are the determining factors?," 88th Annual Conference, April 9-11, 2014, AgroParisTech, Paris, France 170351, Agricultural Economics Society.
  8. Ines Kapphan & Pierluigi Calanca & Annelie Holzkaemper, 2011. "Climate Change, Weather Insurance Design and Hedging Effectiveness," IED Working paper 11-17, IED Institute for Environmental Decisions, ETH Zurich.

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