Inter-Research >  > Prepress Abstract

CR prepress abstract   -  DOI:

The role of risk in the context of climate change, land use choices and crop production: evidence from Zambia

Alessandro De Pinto*, Vincent H. Smith, Richard D. Robertson

*Corresponding author:

ABSTRACT: This study examines the empirical importance of the effects of the risk environment on the impacts of climate change on farmland allocations and consequent effect on agricultural output in Zambia. We use a discrete-choice model consistent with a mean-variance utility function to model farm-level land allocations among alternative crops. Results indicate that risk-reducing decisions can reinforce crop shifts driven by climate change impacts on mean temperatures and precipitation. While this form of adaptation appears to pay off as a computation of per-capita daily available nutrients reveals, the opportunity cost of these decisions is explored through a simulation scenario in which yield variability is reduced to zero. Reduction of yield variability leads to land allocations that result in a sizable increase in total crop production and a significant increase in available per-capita daily calories. Important conclusions can be derived from this analysis. First, the risk environment matters and should not be ignored. When the economic effects of climate change are considered, decision-making under uncertainty and risk should be at the forefront of the problems that need to be addressed. Second, concentrating on farm-level effects of responses to climate change is not sufficient. To understand the economy wide consequences of climate change, the aggregate effects of individual decisions should be assessed. Third, results indicate that increased efforts in risk management and in developing policies aiming at reducing risk can lead to significant positive outcomes for the nutritional status of low-income food-insecure populations.