This study investigates the impact of climate shock on Somali households' welfare status and examines the mediating roles of formal and informal financial institutions—mobile banking and remittances—in enhancing households' coping capacity. Using representative panel data, we show that climate shock has adverse effects on multiple welfare indicators for both female-and male-headed households. However, we find that female-headed households are more likely to fall below the poverty line, have a larger poverty depth, and shift their diet due to climate shock than male-headed households. Interestingly, we find that remittances decrease following climate shock, both on average and for female-headed households, but such reduction does not have a significant adverse effect on the households' coping ability. This could be an indication that Somali households rely on other coping mechanisms to shocks than remittances. Similarly, even though we find that mobile money increases the likelihood of receiving remittances, we find no evidence that this translates into a higher coping ability to climate shock. Further investigation is needed to identify Somali households' coping strategies. JEL Classification: D14; E42; G23; I3; L96; O17; Q54

Many governments provide a free agricultural extension service that aims to link farmers to scientific knowledge and yield-enhancing technologies. However, the impact of this service in achieving its aim has been unclear. This study focuses on Ethiopia to explore the impact of the agricultural extension service on farmers’ utilisation of various agricultural technologies. Using a large and representative data set, the study applies an instrumental variable method, along with other robustness checks, and finds that the impact of the extension service is heterogeneous to the type of farm technologies. The study finds that the agricultural extension service has a positive impact on chemical fertiliser and crop rotation use, but a negative impact on organic fertiliser use, and no impact on pesticide, herbicide and fungicide use. Based on these results, policy-makers interested in promoting the utilisation of organic fertiliser need to retrain the extension agents and redirect their efforts towards recommending organic fertilisers as much as they do chemical fertilisers and crop rotation.

In this article, we discuss a study to identify an effective agricultural knowledge transfer channel for smallholder farmers in Ethiopia, using a randomised training experiment together with focus group discussions, key informant interviews and a survey. We also examine the factors that determine learning among smallholder farmers. Our results revealed that involving extension agents and model farmers leads to above-average knowledge transfer. However, learning from extension agents is significantly more effective than learning from model farmers. Additionally, we found that trust, effort, and locus of control are important determinants of learning. On the other hand, we found no evidence that farmers exert more effort when they are trained by extension agents, hence this rules out effort as a mechanism for higher learning from the extension agents. Based on these results, we conclude that, on average, the extension agent system is more effective at conveying agricultural knowledge than model farmers are and that policy-makers can use the two channels as complements rather than substitutes.

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