Discussion Paper

The Effect of Risk, Ambiguity, and Coordination on Farmers’ Adaptation to Climate Change: A Framed Field Experiment

Sep 21, 2009 | Francisco Alpízar, Fredrik Carlsson, Maria Naranjo

This was created in partnership with Environment for Development .

Abstract

The risk of losing income and productive means due to adverse weather can differ significantly among farmers sharing a productive landscape and is, of course, hard to estimate or even “guesstimate” empirically. Moreover, the costs associated with investments in adaptation to climate are likely to exhibit economies of scope. We explore the implications of these characteristics on Costa Rican coffee farmers’ decisions to adapt to climate change, using a framed field experiment. Despite having a baseline of high levels of risk aversion, we still found that farmers more frequently chose the safe options when the setting is characterized by unknown risk (that is, poor or unreliable risk information). Second, we found that farmers, to a large extent, coordinated their decisions to secure a lower adaptation cost and that communication among farmers strongly facilitated coordination.