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INCREASED ADAPTATION FOR REDUCED
RESIDUAL DAMAGE COSTS FOR
SMALLHOLDERS
A PRESENTATION DURING THE AFRICAN DISSEMINATION WORKSHOP
ON INNOVATIVE APPLICATION OF ICTS IN ADDRESSING WATER RELATED IMPACTS OF CLIMATE CHANGE, 12TH DECEMBER, 2014,
AT MAKERERE UNIVERSITY, KAMPALA.
BY
FRANCIS ONYANGO ODUOR
Bsc. Agric Econ (Egerton), Msc. Agric Econ (Moi)
KEY MESSAGES

Smallholder adaptation strategies are more
autonomous

The adaptation strategies employed are at suboptimal levels i.e. MB ≠ MC
BACKGROUND
Growth of the Kenya’s economy correlates to
growth and development in agriculture
 Smallholder farmers provide 75% of the labour
force and 75% of the market output produce
(Alila & Atieno 2006)
 However, climatic variability affects
smallholders’ efforts
 Smallholders invest to adapt to climate
variability

A CASE OF NYANDO WETLANDS STUDY

Economic analysis of climate change adaptation
strategies of agriculture.
Deltaic wetland ecosystem
Prone to drought and floods

Farmers invest to reduce impacts of the shocks


NYANDO WETLANDS STUDY CONT
Cost of climate change
The framework for analyzing the cost and benefit of
climate change adaptation
Cost without adaptation
Cost of adaptation + Residual damage
Net benefit
of adaptation
Gross benefit
of adaptation
Total cost of climate
change after adaptation
Global mean Temperature
Source: Stern (2006)
Residual damage
NYANDO WETLANDS STUDY CONT
FINDING #1: Agricultural adaptation strategies are autonomous

Adaptation strategies
Soil & Water Mgt
Off-farm activities

Ratooning
Constraints to agricultural adaptation strategies
Labour constraints
11.8
CONSTRAINTS TO ADAPTATION
Inadequate machines and equipment
8.9
Lack of property rights
3.5
Inadequate markets
1.9
Insufficient access to inputs
7.9
Inadequate information
11.9
Gender barriers
3.5
Inadequate saving
18.8
High poverty level
8.4
Inadequate access to credit
14.2
Inadequate Government intervention
9.2
0
2
4
6
8
10
12
% RESPONSE
14
16
18
20
Determinants agricultural adaptation strategies
Logit regression of socio-economic determinants
Characteristics of household head
Odds Ratio
P>|Z|
Sex
1.90
0.049
Age
2.25
0.008
Household size
1.59
0.047
Farm size
1.15
0.015
Number of years lived in the village
0.91
0.059
Education level
1.26
0.004
Income
0.99
0.026
FINDING #2: Costs and Benefits of agricultural
adaptation strategies
FINDING #2: Costs and Benefits of agricultural
adaptation strategies
Cost Dimension
Value (USD Million)
Cost without adaptation (Gross damages)
43
Adaptation Cost
6
Gross Benefit (Damage avoided cost)
21
Residual Damages
22
Total cost of climate adaptation
28
Net benefit
15
NPV (50years; 2072)
2%
15%
42
17,000
Marginal Cost (MC)
6
Marginal benefit (MB)
21
ROI [(MB-MC)/MC]
250%
Optimal agricultural adaptation ?
Adaptation Residual Damages
Marginal Costs
R
R*
Marginal Benefits
E
E*
Adaptation Effort (Cost)
POLICY RECOMMENDATIONS
Improved investment on adaptation initiatives is
needed



Increased budgetary allocations to climate change
adaptation initiatives / projects
(a) Investment in climate information provision
(b) Research and development
Promotion of affordable agricultural credits
(a) Community- Based Adaptation initiatives like
ROSCAs
(b) Credit guarantee systems
Incentives for conservation like PES
THANK YOU