Long-Range Forecasts as Climate Adaptation: Experimental Evidence from Developing-Country Agriculture

101 Pages Posted: 27 Feb 2024

See all articles by Fiona Burlig

Fiona Burlig

University of Chicago

Amir Jina

Harris Public Policy, University of Chicago ; National Bureau of Economic Research (NBER)

Erin Kelley

World Bank - Development Research Group

Gregory Lane

University of Chicago

Multiple version iconThere are 2 versions of this paper

Date Written: February 24, 2024

Abstract

Climate change increases weather variability, exacerbating agricultural risk in poor countries. Risk-averse farmers are unable to tailor their planting decisions to the coming season, and underinvest in profitable inputs. Accurate, long-range forecasts enable farmers to optimize for the season ahead. We experimentally evaluate monsoon onset forecasts in India, randomizing 250 villages into control; a forecast group receiving information well in advance of onset; and a benchmark index insurance group. Forecast farmers update their beliefs and their behavior: farmers who receive "bad news" relative to their priors substantially reduce land under cultivation and certain input expenditures, while those receiving "good news" significantly increase input expenditures. The forecast also impacts crop choice, as farmers tailor their investments. These investment changes meaningfully alter ex post outcomes. In contrast, insurance, which provides no information, increases investments but does not change crops. Our results demonstrate that forecasts are a promising tool for climate adaptation.

Keywords: Climate, forecasts, agriculture, risk, development JEL Codes: D81, D25, O12, O13, Q12, Q54

JEL Classification: D81; D25; O12; O13; Q12; Q54

Suggested Citation

Burlig, Fiona and Jina, Amir and Kelley, Erin and Lane, Gregory, Long-Range Forecasts as Climate Adaptation: Experimental Evidence from Developing-Country Agriculture (February 24, 2024). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2024-21, Available at SSRN: https://ssrn.com/abstract=4739069 or http://dx.doi.org/10.2139/ssrn.4739069

Fiona Burlig (Contact Author)

University of Chicago ( email )

5757 S. University Ave
Chicago, IL 60637
United States

Amir Jina

Harris Public Policy, University of Chicago ( email )

1155 East 60th Street
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Erin Kelley

World Bank - Development Research Group ( email )

Washington, DC 20433
United States

Gregory Lane

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

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