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Purpose – The purpose of this paper is to analyze smallholder farmers’ perceptions of climate change and its adverse effects, identify major adaptation strategies used by farmers and analyze the factors that influence the choice of adaptation strategy by smallholder farmers in eastern Ethiopia. Design/methodology/approach – The study was based on a cross-sectional survey of 296 sample households selected from three districts in east Ethiopia. Data were collected with the aid of a semi-structured questionnaire and review of literature, documents and databases. Findings – The study provides empirical evidence that majority of farmers in the study area are aware of climate change patterns and their adverse effect on income, food security, diversity, forest resources, food prices and crop and livestock diseases. In response to these adverse effects, major adaptation strategies used by farmers include cultivating different crops, planting different crop varieties, changing planting dates, use of soil and water conservation techniques, conservation agriculture practices and engaging in non-farm income activities. Choice of adaptation strategies are influenced by gender of household head, household size, farm size, distance from market and number of farm plots. Practical implications – The study suggests that developing more effective climate change adaptation strategies need support from the government. Such an effort needs provision of the necessary resources such as credit, information and extension services on climate change adaptation strategies and technologies, and investing in climate smart and resilient projects. Originality/value – The study adopts multivariate probit model that models farmers’ simultaneous adaptation choice behavior which has been rarely addressed by previous researches.

Climate‐smart innovations have been receiving increasing attention in policy dialogues for their potential to transform agricultural systems and improve the well‐being and resilience of farm households. Using recent panel data from Ethiopia combined with novel historical weather data, we provide microeconomic evidence of the welfare effects of conservation agriculture (CA), a climate‐smart agricultural practice. We use a panel data endogenous switching regression model to deal with selection bias and farmer heterogeneity in CA choice. The study finds that the CA practices that play a pivotal role in addressing the exigencies of rural poverty are minimum tillage, cereal‐legume intercropping, and their combination. These practices reduce the incidence and depth of poverty in areas prone to rainfall stress, which is an indication of their risk mitigation role. In contrast, crop residue retention and its combination with minimum tillage appear not to be economically attractive CA options. The results show that CA portfolios that include minimum tillage and cereal‐legume associations can accelerate efforts to reduce rural poverty and improve climate risk management. We caution against exaggerated expectations of CA's economic benefits and a rigid recommendation of CA.

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