Effects Of Climate Change Risks on the Financial Performance of Agricultural Firms in Zambia: Evidence from Kabwe District

Climate change has emerged as one of the most significant and far-reaching challenges confronting agricultural production and economic stability in the contemporary world. Across developing nations, agriculture serves not only as an economic sector but also as the foundation of livelihoods, food security, and national development. In Zambia, the agricultural sector employs a substantial proportion of the population and contributes significantly to national gross domestic product. This study examines the effects of climate change risks on the financial performance of agricultural firms in Kabwe District. The research adopts a convergent parallel mixed-methods design, combining quantitative and qualitative approaches. Stratified random sampling was used to select agricultural firms for the quantitative analysis, while qualitative insights were obtained to complement statistical findings. The results indicate that drought is the most prevalent climate-related factor affecting financial performance, followed by extreme temperatures, floods, and pest and disease outbreaks. A large proportion of firms reported significant revenue reductions attributable to climate variability. Regression analysis confirms that climate change risks collectively have a statistically significant effect on financial performance, with extreme temperature emerging as the only individually significant predictor. Other factors influence financial performance indirectly through increased operational costs and reduced output. The study concludes that climate change poses substantial financial risks to agricultural firms and recommends the adoption of climate-resilient strategies, improved risk management practices, and policy interventions to enhance sustainability in the agricultural sector.