Bundling agricultural technologies to adapt to climate change

doi:10.1016/j.techfore.2011.02.008

Technological Forecasting and Social Change

Volume 78, Issue 6, July 2011, Pages 982-990

https://doi.org/10.1016/j.techfore.2011.02.008 Get rights and content

Abstract

Farmers can respond to climate change by modifying their technologies or management practices, or both. In this paper, we examine the choice of crop, irrigation, and cover as a bundled decision by a farmer. Using discrete choice analysis and a cross section of farms from Israel, we test whether these decisions are sensitive to climate and find that they are. In the case of Israel, the farmers completely substitute capital for climate. Simulating increase in temperature suggests that warming would lead Israeli farmers to shift mainly to orchards under cover and irrigation. But it is likely that bundling adaptations will provide flexibility and sustainability for future farmers in many locations under climate change conditions.

Research highlights

► We study the choice of crop, irrigation and cover as a bundled decision of farmers. ► Using discrete choice analysis we test the sensitivity of the decisions in response to climate. ► In the case of Israel farmers completely substitute capital for climate. ► Future warming would lead to a shift to orchards under cover and irrigation. ► Bundling adaptations will provide flexibility and sustainability for future farmers.

Introduction

Climate change will affect agricultural production in various world regions [1]. Predictions suggest that the agricultural sector in low latitude regions may be threatened, while regions in the northern hemisphere may benefit [1]. The livelihoods of millions of poor rural people could be at risk [2]. Large potential damages have been predicted for different regions by many agronomic studies [2], [3], [4], [32]. However, these studies do not take into account adaptation by farmers and governments. In contrast, impact studies that account for adaptation suggest smaller damages, even in developing countries [5], [6], [7], [33], [34], [35].

There is growing evidence that both institutional and private adaptations could play a major role in responding to likely impacts of climate change in agriculture. Adaptation has been a major challenge to international development agencies as well as to researchers in this field. Smit and Skinner [8] suggest a typology of adaptation that involves private and public involvement, and a mix of technologies, crops, and management options.

A number of positive farm adaptation studies that specifically identify what kinds of adaptations farmers might undertake provide insight from US, Africa and South America. The studies examine what factors affect farmer's choices to invest in irrigation [9], [10], [11], switch crop species [6], [9] or switch livestock species [6]. Another line of work [12], [36] looks at the choice of farm type. In the long-run, farmers choose whether or not to have livestock or to grow rainfed crops or irrigated crops. All of these choices are sensitive to climate and so they will be affected by climate change.

In this paper, we explore another perspective of adaptation. We examine how farmers bundle the choice of crop species, technology, and climate. We argue that farmers look at the exogenous conditions (e.g. climate, farm size, and soil) and simultaneously decide what crop to grow, what type of irrigation to use, and whether or not to use cover.¹ For example, a farmer may choose field crops, sprinkler, and no cover or alternatively flowers, drip irrigation, and a greenhouse.

We test this bundling concept using detailed data from Israeli farmers. Israel has a harsh dry climate, but it has some advantages as well. It is close to the European market and can provide some fresh produce to that market earlier than local producers from Europe. Israel develops new crop varieties that attract the market. Israel also has sophisticated production technologies. It has learned how to substitute capital for climate, using drip irrigation technologies and cover technologies. Israel is consequently a good place to examine adaptation, although one must also recognize that Israel is not representative of most places with harsh climates.

In this paper, we study the choice of adaptation technology bundles by Israeli farmers and test whether they are sensitive to climate change. Discrete choice analysis with cross sectional data is used to estimate the choice functions of farmers. Farmers choose among a limited set of bundles, which crop-technology combination is best, given their exogenous constraints. In the long run, as climate changes, we assume that farmers will adapt to the new climate according to these choice equations.

Section snippets

Theoretical model

Farmers can respond to climate change (e.g., increased temperature and reduced water availability) in several ways. Assuming profit maximization behavior, farmers adjust their farming practices to the external conditions under which they operate, and starting with the immediate cost effective adaptation, farmers first adjust the level of inputs, such as water quantity, fertilizers, and labor. Then they may involve in more aggressive (and expensive) adaptation, including switching from existing

Data, empirical specifications and hypotheses

Data on farm operations were collected through a face-to-face survey among a representative sample of farmers between January and May, 2003.³ The sampled farmers were chosen according to their location in the geo-climatic zones and type of settlement. The different types of rural settlement define three strata, which were represented proportionally in the sample. Three maps were created, each showing the geo-climatic

Results

The most intensively grown crops in our sample are flowers, the majority of which are for export to the European market. Although only 1% of the total land in the survey sample is used for growing flowers, they account for nearly 13% of the total output value. Fruit orchards and vegetables are also grown intensively. Fruit orchards capture 13% of the land and 38% of the output value, and vegetables capture 8% of the land and 23% of the output value. All of the land used for flower growing is

Conclusions and policy implications

This study uses data from a survey of farmers in Israel to test the hypothesis that technology savvy farmers maximize their profits by choosing among bundles, which include crop, irrigation and cover technologies. The bundles vary from relatively low value crops with no irrigation and no cover in very large plots to high value crops with drip irrigation grown in greenhouses. A discrete choice analysis of the bundles as a function of climate and other farm and exogenous attributes suggests that

Acknowledgments

The work leading to this paper was funded in part by the German Federal Ministry of Education and Research (BMBF) in collaboration with the Israeli Ministry of Science and Technology (MOST) in the framework of the project GLOWA Jordan River and by the World Bank under the study ‘Climate Change and Rural Development’. The views expressed in this paper are those of the authors and should not be attributed to the World Bank.

Aliza Fleischer is an Associate Professor at the Department of Agricultural Economics and Management, and Head, Hospitality, Food Resources and Tourism Management Program, Hebrew University of Jerusalem, Rehovot, Israel.

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Robert Mendelsohn is Edwin Weyerhaeuser Davis Professor of Forest Policy; Professor of Economics; and Professor, School of Management, Yale University, New Haven, USA.

Ariel Dinar is Professor of Environmental Economics and Policy and Director, The Water Science and Policy Center, Department of Environmental Sciences, University of California, Riverside, USA.

View full text

Bundling agricultural technologies to adapt to climate change

Abstract

Research highlights

Introduction

Section snippets

Theoretical model

Data, empirical specifications and hypotheses

Results

Conclusions and policy implications

Acknowledgments

Global Environmental Change

Ecological Economics

Technological Forecasting and Social Change

Ecological Economics

Climate Change 2007 — Impacts, Adaptation and Vulnerability

Agriculture in a changing climate: impacts and adaptation

Potential impact of climate change on world food supply

Nature

The impact of global warming on agriculture: a Ricardian analysis

The American Economic Review

Climate change impacts and adaptations on animal husbandry in Africa

African Journal of Agricultural and Resource Economics

The impact of climate change on China's agriculture

Agricultural Economics

Adaptation options in agriculture to climate change: a typology

Mitigation and Adaptation Strategies for Global Change

A Ricardian analysis of the impact of climate change on African cropland

African Journal of Agricultural and Resource Economics

Climate, water, and agriculture

Land Economics

Changing farm types and irrigation as an adaptation to climate change in Latin American agriculture

Long-term differential adaptation by selection of farm types across agro ecological zones in Africa

Diffusion of Innovations

Sophisticated irrigation technology and biotechnology adoption: impacts on groundwater conservation

AgBioForum

Discrete Choice Analysis