Research / BFI Working PaperFeb 25, 2024

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

Fiona Burlig, Amir Jina, Erin M. Kelley, Gregory Lane, Harshil Sahai

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 pro table 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” signi cantly 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.

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