What Factors Drive Whether and How Farmers Adapt to Climate Change?

Natalie Loduca and Scott Swinton
Agriculture, Food, and Resource Economics

Presented at the All Scientist Meeting and Investigators Field Tour (2021-09-23 to 2021-09-23 )

As humans grapple to respond to climate change, decisions will be affected strongly both by our risk preferences and by how we perceive climate-related probabilities of outcomes that we care about. Climate change adaptation is particularly urgent for farmers, whose livelihoods rely directly on climate outcomes. While scientific predictions attempt to forecast future climate scenarios, farmers then must process this information to quantify their potential exposure to such changes as periodic drought or flooding.

Key to farmers’ decisions in the face of uncertainty about future climate is how they subjectively perceive changing probabilities and how they feel about managing risk. We will conduct economic experiments to elicit risk preferences through lottery games in which participants are presented with the lottery payoffs and corresponding probabilities. Subjective probabilities are often formed through experience or analyzing the relative frequency of past occurrences and projecting future probabilities based on both facts and opinions. We will elicit subjective probabilities via an interview process to aid the interviewees in quantifying their subjective probabilities regarding future crop yield. We will then link estimates of subjective probabilities and risk preferences to their past and anticipated future choices of climate change adaptation tactics.

The questions that we will be exploring are: Facing changes in precipitation, how will farmers adapt? How do perceptions of changing probabilities interact with risk attitudes in shaping those adaptation strategies? Are there ways to improve farmer decisions about adaptation to climate change?

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