11/22/2024 | News release | Archived content
Climate change is increasing the frequency of adverse weather events and reducing agricultural productivity, particularly in warmer regions of the world (Ortiz-Bobea et al 2021). Smallholder farming households in developing countries depend on agriculture for their livelihoods and spend a larger proportion of their income on food, making them the most vulnerable to harvest failures (Hallegatte et al 2020).
Households employ several strategies to prepare for potential income risks and to cope with the consequences of shocks. Yet these ex-ante and ex-post approaches both have downsides. Ex-ante risk management strategies such as reducing or forgoing investments can prevent the accumulation of productive assets and trap already poor households in persistent poverty (Carter and Barrett 2006). Ex-post risk coping strategies such as increased borrowing or reduced consumption can have negative implications for welfare.