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

Climate change increases weather variability, preventing farmers from tailoring investments to the upcoming monsoon. In theory, accurate, seasonal forecasts overcome this challenge. We experimentally evaluate monsoon onset forecasts in India, randomizing 250 villages into control, forecast, and benchmark insurance groups. Forecast farmers update their beliefs and behavior: receiving “good news” relative to a farmer’s prior increases cultivation, farm inputs, farm profits (for those unaffected by flooding) and reduces business; receiving “bad news” reduces cultivated land and farm profits but increases business. Overall, forecasts raise a welfare index by 0.06 SD. Unlike insurance, forecasts reduce climate risk by enabling tailoring.