The Impact of Risk-Sharing Mechanisms on Smallholder Farmer Climate Adaptation Strategies

Nicolas Choquette-Levy , Princeton University
Matthias Wildemeersch, IIASA
Michael Oppenheimer, Princeton University
Simon Levin, Princeton University

Climate change poses significant risks to smallholder farmers’ livelihoods, with potential impacts on rural-urban migration. While previous studies identified correlations between temperatures, crop yields, and migration flows, the role of migration in the context of other adaptation options is still poorly understood. This project investigates the impact of risk-sharing networks on the use of migration as an adaptation strategy in subsistence farming communities. We develop a stylized agent-based model (ABM) to model smallholder farmer adaptation strategies for climate stress on crop yields under different risk-sharing mechanisms. Agents consist of farming households with heterogeneous risk preferences, wealth, and social capital; they interact by sharing information on the perceived payoffs of different strategies with other households in their networks. The ABM models how these interactions influence the adoption of different adaptation strategies, e.g. migration and crop diversification, under increasing climate stress. The model is calibrated using climate and socioeconomic data from South Asian subsistence farming regions. Without climate effects, approximately 60 and 55 percent of households engage in migration and crop diversification, respectively, over a 30-year timeframe. However, accounting for both slow- and fast-onset climate effects significantly decreases farm incomes and the number of households adopting these strategies (45 and 30 percent of households, respectively). This restricts information exchange between households about alternative strategies, which further “traps” households in subsistence farming. While a formal index-based insurance program does not significantly alter these results, allowing for partial sharing of remittances within household networks substantially increases the proportion of households who can migrate.

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 Presented in Session P999. Development, Environment and Space