The challenge of making climate adaptation profitable for farmers: evidence from Sri Lanka’s rice sector

Increased incidences of drought and water scarcity due to climate change is an important challenge facing Sri Lanka’s agricultural sector. Identifying farm practices that can reduce its adverse impacts on agricultural production and farmers’ livelihoods is a key policy objective in Sri Lanka. This paper makes use of household survey data collected in Anurādhapura District to evaluate the impacts of 11 drought adaptation practices adopted by farmers in the district. The impacts of the practices are estimated simultaneously along two dimensions: 1) impact on sensitivity to water stress (measured in terms of the probability of experiencing crop loss due to wilting) and 2) impact on household livelihood (measured in terms of total value of crops harvested and total gross household income). After accounting for a wide range of confounding factors, five practices are found to be associated with a reduced sensitivity to water stress. However, only two of these are simultaneously associated with a higher gross value of crops harvested, while none is associated with significant differences in household income relative to non-adopters. The reasons for this vary by practice, but are linked to opportunity costs of household labour and market weaknesses for crops other than rice. Making climate adaptation practices profitable is a key challenge faced by policy-makers and will require a holistic research and extension approach that is bundled with complementary support to market institutions, such as appropriate mechanization services, value chain support for other field crops and input supply systems.