Do Zambian Farmers Manage Climate Risks?

Abstract

This study investigates the agricultural production responses to climate risk among small-scale farmers in Zambia by combining grid-level historical rainfall data with nationally representative household survey data. After identifying the importance of January and February rainfall in maize production, we define these two months' rainfall variations over the past 59 agricultural years as the climate risk index. We then relate this risk index to household-level agricultural decisions regarding risk diversification and farm investments. Results show little evidence of crop and plot diversification strategies in response to weather risks. Conversely, farmers in high climate-risk regions apply less fertilizer and consequently achieve lower maize yields than their counterparts in low-risk regions. The mediation analysis attributes underinvestment in fertilizer to 38.5% of the rainfall risk impact on maize productivity. Overall, Zambian farmers manage climate risk by reducing risky farm inputs at the expense of returns.