Assessing the vulnerability of agricultural households to covariate and idiosyncratic shocks: a case study in Odisha, India

Abstract

ABSTRACTHouseholds in India face various covariate shocks, including cyclones, droughts and floods, and these extreme climatic shocks have a negative impact on their welfare. Although these are likely to increase in future due to climate change, households are also taking up various coping measures to deal with these extreme climatic shocks from their past experience. Hence, assessing the impact of these covariate shocks and identifying the determinants of various adaptation options have relevant policy implications in the context of designing a disaster mitigation policy. This study aims to assess farmers' vulnerability to climatic variability and climate change taking both irrigated and rain-fed regions of the country. Vulnerability analysis was done using an econometric method of ‘vulnerability as exposure to uninsured risk’ (VER) in order to test the determinants of household income loss due to covariate and idiosyncratic risk. Based on a survey of 400 farmers in Odisha, India, results show that households that access weather-related information reduce their level of vulnerability to climate change and improve their overall adaptive capacity. To address climatic vulnerability, policymakers need to emphasize farmers’ responses in different regions and can plan climate adaptation strategies based on the vulnerability assessment of entire regions.