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)

Smallholder adaptation strategies are more autonomous

The adaptation strategies employed are at sub-optimal levels i.e. MB ≠ MC

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

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

The framework for analyzing the cost and benefit of climate change adaptation

Global mean Temperature

Cost without adaptation

Residual damage Net benefit of adaptation

Total cost of climate change after adaptation

Gross benefit of adaptation

Cost of adaptation + Residual damage

Source: Stern (2006)

FINDING #1: Agricultural adaptation strategies are autonomous

Adaptation strategies

Soil & Water Mgt Off-farm activities

Ratooning

Constraints to agricultural adaptation strategies

Determinants agricultural adaptation strategies

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

Logit regression of socio-economic determinants

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% 42

15% 17,000

Marginal Cost (MC) 6

Marginal benefit (MB) 21

ROI [(MB-MC)/MC] 250%

FINDING #2: Costs and Benefits of agricultural adaptation strategies

Optimal agricultural adaptation ?

Marginal Costs

Marginal Benefits

Adaptation Effort (Cost)

E*E

R*

R

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