Weather at Different Growth Stages, Multiple Climate Smart Practices and Farm Level Risks: Panel Data Evidence from the Nile Basin of Ethiopia 20-04

The present study investigates the effects of combinations of climate smart agricultural practices on risk exposure and cost of risk. We do this by examining the different risk components – mean, variance, skewness, and kurtosis – in a multinomial treatment effects framework by controlling weather variables for key stages of crop growth. We found that adoption of combinations of practices is widely viewed as a risk reducing insurance strategy that can increase farmers’ resilience to production risk. The hypothesis of equality of weather parameters across crop development stages is also rejected. The heterogeneous effects of weather across crop growth stages have important implications for climate change adaptation to maximize quasi-option value. For a country that has a vision to build a climate resilient economy, this knowledge is valuable to identify a combination of climate smart practices that minimizes the production risk under variable weather conditions.