A Multilevel Analysis of Drought Risk in Indian Agriculture: Implications for Managing Risk at Different Geographical Levels

Abstract

Drought is an important downside risk in Indian agriculture; and the spatial differences in its intensity and probability of occurrence are considerable. To develop strategies to manage the risk of drought, and to coordinate and implement these strategies, it is essential to understand the variation in drought risk across geographical or administrative levels. This paper, using a multilevel modelling approach, decomposes the variation in drought risk across states, regions, districts, villages and households and finds it disproportionately distributed. About half the variation is attributed to between-individual (i.e. household) differences and the rest to between-population differences, mainly to states and villages. These findings suggest the potential for a critical role of states (policies) and local institutions (communities) in enhancing resilience of agriculture to droughts through the correct targeting of policies and support for the most appropriate geographic level.

Keywords: Drought risk, multiple geographical levels, agriculture, adaptations, India

JEL Classification: Q18, Q50, Q54