Valuing meteorological services in resource-constrained settings: Application to smallholder farmers in the Peruvian Altiplano

Alexandra Brausmann (), Moritz Flubacher () and Filippo Lechthaler ()
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Alexandra Brausmann: ETH Zurich, Switzerland
Moritz Flubacher: Federal Office of Meteorology and Climatology MeteoSwiss, Switzerland
Filippo Lechthaler: ETH Zurich, Switzerland
Authors registered in the RePEc Author Service: Alexandra Brausmann Vinogradova

No 19/324, CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich

Abstract: Changing climate and weather patterns have resulted in reduced agricultural productivity in some parts of the world and put pressure on global food security. Availability and improved quality of meteorological information is seen as a potentially propitious means of adaptation to changing climate conditions. Forecasts of extreme weather events are especially valuable in resource-poor settings where climate-related vulnerability is high, such as for smallholder farmers in the developing world. In this paper we provide estimates of frost warnings valuation in the context of small-scale quinoa production in the Peruvian Altiplano. We first present a detailed contextual assessment of quinoa production in the study region based on agrometeorological and socio-economic data that was obtained through a representative farm household survey conducted in December 2016. Building on this assessment, we propose a stochastic life-cycle model, replicating the lifetime cycle of a quinoa-producing household, in order to derive a theoretical valuation of frost warnings. Calibrating the model to our data we provide estimates of potential frost-warning valuation which are in the range of $30-50 per household and year, depending on the forecast accuracy and agents' risk aversion. In a last step, using the observational data from the farm household survey, we show that access to existing meteorological services is empirically associated with avoided losses in agricultural production that amount to $18 per average household and per year. Our findings point to high climate vulnerabilities of smallholders in the Peruvian Altiplano and potentially large welfare gains from incorporating improved meteorological services into their decision-making process.

Keywords: Valuation; meteorological information; uncertainty; agriculture; quinoa farming; climate change (search for similar items in EconPapers)
JEL-codes: C25 D81 H41 O13 Q12 Q16 Q51 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2019-08
New Economics Papers: this item is included in nep-agr, nep-dev and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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