EfD Discussion Paper,
Environment for Development, University of Gothenburg

Abstract: Climate change has compounded the uncertainties inherent in agriculture. Farmers have to make decisions faced with increasingly fluctuating weather, leaving them vulnerable. Access to climate-related information in developing countries, incidentally also the hardest hit by the adverse effects of climate change, is very limited. Given a choice set of technologies that yield different payoffs depending on seasonal weather outcomes, ambiguity arising from imprecise weather information may lead to sub-optimal choices. Using data from a framed experiment carried out with 300 farmers in northern Namibia, this study investigates how uncertainty about the weather affects farmers’ decision making. To establish the demand for weather information, the study elicits farmers’ willingness to pay for information at different levels of uncertainty. The experiment results show that high levels of weather uncertainty, in addition to subjective ambiguity aversion, dampen technology uptake. There is also a high demand for weather information that reduces this uncertainty, regardless of individual attitudes towards uncertainty. The results also show that access to weather information enables farmers to make welfare-improving choices given a set of farming technologies. These results highlight the importance of investing in the provision of weather information to farmers as a means of enhancing take-up of technology that creates resilience in agricultural production, in the face of the changing climate.

Keywords: climate; weather uncertainty; weather information; technology adoption; risk

JEL-codes: C93; D81; Q16; Q54

Language: English

29 pages, December 1, 2019

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