Financing Gap Approach to Determination of Climate Change Vulnerability: An Example of Plantain Producers in Southwest Nigeria

Mathew Paul Ojo and Adeolu Babatunde Ayanwale

No 289671, 93rd Annual Conference, April 15-17, 2019, Warwick University, Coventry, UK from Agricultural Economics Society - AES

Abstract: One of the factors affecting availability of productive capital and exacerbating farmers’ vulnerability to climate change risks, is that they lack access to formal safety nets to which they could turn in times of need as most smallholder farmers lack capital and are unable to access credit. This study used a multi-stage sampling procedure to obtain a cross-sectional data from 300 plantain farmers in Southwest Nigeria and estimated their financing gap as a measure of their vulnerability to climate change hazards. Collected data were analysed using the Stochastic frontier function, the Harold-Dorma equation and the Foster Geer-Thorbecke (FGT) to determine the degree of farmers’ vulnerability. The Probit regression model was also used to examine factors affecting climate change adaptation methods in the study area. Results showed that with the vulnerability line at $409.6, more than two-third (84%) of the plantain farmers were vulnerable to climate change risks due to financial constraints, with 36% of the farmers being severely vulnerable. It required an average amount of $225.28 to get a farmer out of financial vulnerability. Also, the Probit result showed that access to credit, climate insurance and climate information were the major determinants of the use of climate change adaptation methods in the study area. The financing gap approach enabled the determination and extent of each farmer’s vulnerability. Measures aimed at bridging the financing gap of individual farmer through increased access to credit and improved climate change information services should therefore be vigorously pursued, to reduce vulnerability in the study area.

Keywords: Agricultural Finance; Environmental Economics and Policy (search for similar items in EconPapers)
Pages: 23
Date: 2019-04-15
New Economics Papers: this item is included in nep-agr, nep-dev and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aesc19:289671

DOI: 10.22004/ag.econ.289671

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