Investing in Climate Change Adaptation Boosts Small Farmers’ Household Incomes, says IFAD

June 9, 2015 – Rural development projects which fund adaptation to climate change can increase small farmers’ household incomes by up to 50 per cent, according to a new study carried out in the Mexican state of Oaxaca and funded by the International Fund for Agricultural Development (IFAD).

The study, Analysis of local economic impacts using a Village Social Accounting Matrix: the case of Oaxaca, revealed that “climate smart” investments, such as agroforestry, water resources management and crop diversification were more conducive to raising incomes than other types of investments that do not take future climate trends into account.

“We know that climate change is a threat to smallholders in the tropics. So we need more of this type of research that examines which policies and interventions are best-suited to make farming more sustainable and resilient to rising temperatures,” said the Director of IFAD’s Environment and Climate Division, Margarita Astralaga.

More drought, later rains and increased storm intensities due to climate change are all expected to make agriculture more difficult for Mexican small farmers. Presently, Oaxaca’s major export is high-quality Arabica coffee, but as temperatures rise, production is expected to be negatively affected, with a 30 to 40 per cent decline in crop suitability if no adaptation measures are taken.

Presently, IFAD is investing in sustainable forest management in Oaxaca state, but aims to fully mainstream climate smart approaches throughout its investment portfolio by 2018.

The study is based on household and business surveys in San Ildefonso and San Cristóbal Lachirioag municipalities, in Villa Alta district. Those findings were then merged with data from a variety of sources, including national accounting and census data, labour market surveys, the OECD’s economic outlook for Mexico and the IPCC’s regional forecast.

“In the short-term, over five years, there is not much difference between a climate-smart versus a traditional investment scenario. But looking farther out, over the next 15 to 20 years what we saw really surprised us. We concluded that adaptation to climate change is a necessity if small farmers are to continue with anything like the type of agriculture they practice now,” said the study’s co-author, IFAD’s Enrico Mazzoli

The paper will be published in the forthcoming edition of the Journal of Policy Modelling.

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