Poverty Traps and Climate Risk: Limitations and Opportunities of Index-Based Risk Financing

Barrett, Christopher B.; Barnett, Barry J.; Carter, S.; Chantarat, Sommarat; Hansen, James; Mude, Andrew G.; Osgood, Daniel E.; Skees, Jerry R.; Turvey, Calum G.; Ward, Martin

doi:10.2139/ssrn.1141933

Cited by 84 publications

(67 citation statements)

References 77 publications

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Section: Introductionmentioning

confidence: 99%

“…Africa is the hardest hit to climate change despite its little contribution to greenhouse emission due to its dependence on rain-fed agriculture [1]. Climate variability is a disincentive to agricultural investment prompting the risk-averse farmer to take precautionary strategies that buffer against climatic extremes [2,3].In Ghana, ten areas have been predicted to be affected by climate change. These areas are; water resources, agriculture and food security, biodiversity, human health, coastal zones, land management, national revenue, hydropower, production, tourism, women and the poor [4].…”

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confidence: 99%

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Climate Variability: Cocoa Farmers Perception and Coping Strategies, Suaman District of Ghana as the Focal Point

Selase¹,

Lu²,

Worlanyo³

2017

Environ Pollut Climate Change

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Coping strategies; Ghana IntroductionAgriculture is both a victim and a culprit to climate change. Africa is the most vulnerable continent to climate change due to our dependence on rain-fed agriculture, poor infrastructure, high levels of poverty, and high levels of human and physical capital. Africa is the hardest hit to climate change despite its little contribution to greenhouse emission due to its dependence on rain-fed agriculture [1]. Climate variability is a disincentive to agricultural investment prompting the risk-averse farmer to take precautionary strategies that buffer against climatic extremes [2,3].In Ghana, ten areas have been predicted to be affected by climate change. These areas are; water resources, agriculture and food security, biodiversity, human health, coastal zones, land management, national revenue, hydropower, production, tourism, women and the poor [4]. Low rainfall levels contribute to the downward trend in food production in Africa hence climate variability is a threat to achieving food sufficiency in developing countries and the whole world at large.The Agricultural sector has been described as the bedrock of the Ghanaian economy in the post-independence history. The overall economic growth and development of a country depends upon the health of the agricultural sector [5]. The cocoa sub-sector dominates Ghana's agricultural exports and to a larger extent contributes significantly to the country's GDP. The share of cocoa to small household annual income is between 70-100%. It is estimated that cocoa production is responsible for the livelihoods of over 800,000 smallholder families (350,000 farm owners).In 2013, the cocoa sub-sectorial growth rate was 3.7% despite a 5.0% percent target from a 6.9% decline growth in 2012 [6]. Rates of development of cocoa pests and pathogens are altered by climate variations. Oluwatusin [7], in his work indicated that every stage of cocoa beans production depends on favourable environmental variations with rainfall greatly influencing variations in yield hence there is the need to assess the level of cocoa farmer's perception on climate variability. Since perception is a precondition for adaptation, there is the need to also to determine the factors that influence cocoa farmers' perception on climate variability and further estimate the factors that affects cocoa farmers' coping strategies. AbstractThe study employed a treatment effect model in estimating factors that influence perception and coping strategies to climate variability. A simple random technique in selecting six (6) communities and respondents (cocoa farmers) from these communities was used since the study area is homogeneously a cocoa growing arena. A total of one hundred and twenty (120) respondents were interviewed with twenty (20) cocoa farmers randomly selected from each community for the study. From the result, 48.33% of respondents perceived climate variability correctly (thus rainfall is decreasing while temperature is increasing) whiles 51.67% perceived otherwise. The factors...

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Section: Introductionmentioning

confidence: 99%

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confidence: 99%

Climate Variability: Cocoa Farmers Perception and Coping Strategies, Suaman District of Ghana as the Focal Point

Selase¹,

Lu²,

Worlanyo³

2017

Environ Pollut Climate Change

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“…For example, an increase in frequency of floods might result in increased water-borne diseases, which may decrease ability of the household breadwinner to cope long-term with productive work and result in decreased income for the family. In addition, this may decrease the ability of women to cope with housework and bear children , withdrawal of children from school, sale of land and unproductive, conservative use of land, inability to send children back to school, thus passing on the inescapability of poverty into future generations (Barrett et al, 2007) 3. Poverty-stricken population often reside in marginal lands, that are exposed to the vagaries of nature, as sloping eroded areas (e.g.…”

Section: Effects Of Climate Change On the Poor And The Current State mentioning

confidence: 99%

Poverty index as a tool for adaptation intervention to climate change in northeast India

Malini

Ravindranath

Sharma

et al. 2013

Climate and Development

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(2007) reports that the number of extreme events of precipitation and temperature in India are projected to increase in the short-term. The negative effects of this climate change in rural populations of India may include crop and livestock loss, livelihood risk, health and sanitation disruptions and shelter risk. Overseas Development Assistance, in the form of aid, will help the rural communities in countering these losses; several development agencies already require that the adaptation to climate change risks be included in as project activities in the aid program. However the accurate targeting of developmental aid is often difficult in developing countries due to uneven and cluster-like development of areas. To help counter this problem, we develop a poverty index intended to assist the prioritization of the development aid towards the communities at risk, in order of their need. The district-wise poverty index was created for seven states of North-East India, a region that has high imbalances in development, to exhibit its effectiveness. The poverty index has been developed from the district-wise data available from the North-East Data Bank (DoNER). The indicators chosen were selected to adequately represent the poverty of the people as well as to act as a prioritizing mechanism in a data scarce region. The inclusion of a Gini coefficient of land distribution is new to the development of a poverty index, this is a tool included to capture the high inequality in land distribution pattern in North East India, which in turn affects the distribution of income, since most of the population is Agriculture-dependent. Although primarily developed for North-East India, this poverty index can be used in developing countries with regional imbalances of development. If the biophysical factors affecting vulnerability are known, this index can be used in a weighted combination with vulnerability.

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“…These risks also contribute both directly and indirectly to the existence of chronic poverty, especially for those living in rural areas that are either engaged in agricultural activities or have their livelihoods tied to the well-being of the farming sector (Yaron, Benjamin, & Piprek, 1997;Barrett et al, 2008;Skees, 2008a). Poorer households in developing rural areas often lack access to formal financial markets that can facilitate agricultural production.…”

Section: Introductionmentioning

confidence: 99%

“…Poorer households in developing rural areas often lack access to formal financial markets that can facilitate agricultural production. While microfinance has shown significant promise in some settings, this success has been limited in rural areas and for farming activities that require longer-term loans than customary in microfinance (Armendáriz & Morduch, 2005;Barrett et al, 2008;Skees, 2008b).…”

Section: Introductionmentioning

confidence: 99%

Demand for New Loan Product by Farming Households in Northwest China: Case Study of Shaanxi and Gansu Provinces

2013

CUBR

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Based on a survey of 897 farming households in Shaanxi and Gansu provinces, our results show that while farming households had high demands for capital, 47.7% have experienced having their application for a Rural Credit Cooperative (RCC) loan denied because of their low income. Agricultural production and income are significantly influenced by weather risks, and agricultural income accounts for the majority of farming households' annual income, especially poorer households. Furthermore, in Gansu province, fluctuations in traditional crop yields and income caused by weather risks were higher than fluctuations in Shaanxi province. To improve the confidence of formal financial institutions to loan to farming households and to stabilize agricultural production and income, this research combined both formal financing and weather insurance to produce a new product, and analyzed the level of farming households' interest in this new product and its influence factors, 51.1% of the farming households were interested in this product. Overall, agricultural acreage and debt showed a negative influence on farming households' interest. Farming households in Gansu were more concerned with the distance between their village and the RCC office, while farming households in Shaanxi province stated that too long a RCC loan approval period reduced their interest in the product.

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Poverty Traps and Climate Risk: Limitations and Opportunities of Index-Based Risk Financing

Cited by 84 publications

References 77 publications

Climate Variability: Cocoa Farmers Perception and Coping Strategies, Suaman District of Ghana as the Focal Point

Climate Variability: Cocoa Farmers Perception and Coping Strategies, Suaman District of Ghana as the Focal Point

Poverty index as a tool for adaptation intervention to climate change in northeast India

Demand for New Loan Product by Farming Households in Northwest China: Case Study of Shaanxi and Gansu Provinces

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