Shocks and agricultural investment decisions
Carol Newman () and
Finn Tarp ()
Food Policy, 2020, vol. 94, issue C
This study explores the impact of weather shocks on the investment decisions of farmers. We distinguish between the long-term effect of exposure to weather shocks, measured as past exposure to deviations in average rainfall levels, and the effect of weather-related shocks that have recently occurred. We examine how households cope with shocks in the short term, in terms of consumption smoothing and the depletion of liquid assets, and whether over the longer-term shock exposure impacts on household investment decisions and welfare. Our results show that households on average manage to smooth consumption in the face of recent shocks by depleting savings and borrowing. Over the longer-term, households that are exposed to shocks invest less in productive assets leading to lower consumption levels. Moreover, the investment strategies of these households do not appear to pay off once additional shocks occur later on.
Keywords: Rainfall; Weather shocks; Investment; Shock-coping (search for similar items in EconPapers)
JEL-codes: D14 D81 O12 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:jfpoli:v:94:y:2020:i:c:s0306919219306323
Access Statistics for this article
Food Policy is currently edited by J. Kydd
More articles in Food Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().