Climate change and financing adaptation by farmers in northern Nigeria

Terfa W Abraham,William M Fonta

doi:10.1186/s40854-018-0094-0

Abstract

This paper examines farmers’ perceptions of their exposure to climate change in rural northern Nigeria. It also examines whether there is a significant relationship between the exposure of farmers to climate change and their need for financial access as an adaptation strategy. Questionnaires were administered to 320 respondents in rural communities in northern Nigeria. Descriptive analysis shows that rural farmers are affected by climate change through increased temperature, prolonged dry seasons, floods, and drought, which lead to low harvest and, in turn, low income. An estimate from a non-parametric test also shows a significant relationship between farmers’ perceived exposure to climate change and their need for credit. Although the Spearman correlation results show a 63% association between exposure to climate change and the need for finance, 96% of those seeking credit to mitigate these impacts would be unable to do so due to financial exclusiveness. The paper recommends that the Central Bank of Nigeria should ensure that microfinance institutions refocus their products/services to those who need them the most in order to enhance access to financial resources and enable farmers to build resilience that will maximize post-harvest gains. Lastly, considering that climate change is a global phenomenon with local effects, perhaps the international community could support lending to smallholder farmers through central banks by insuring the loans that banks give to farmers towards financing climate change adaptation strategies.

Highlights

Farmers have always found ways to adapt to the impact of changing weather and climate conditions
While evidence of the effectiveness of access to credit as a poverty reduction strategy is mixed in the literature, others (e.g. Sorensen 2000; Pettengell 2010; World Bank 2012; Collier 2013) suggest that access to finance could have some effect as a climate change adaptation strategy
Among the various adaptation strategies considered to mitigate the adverse effects of climate change on the poor, whether financial innovation aimed at increasing the access of households to financial services would enhance their adaptive capacity is not clearly established

Summary

Introduction

Farmers have always found ways to adapt to the impact of changing weather and climate conditions. Global climate and environmental changes, increase the scale at which farmers need to build and implement resilient strategies (see IISD 1995; von Braun 2002; Hess 2003; Ayers and Huq 2009; Aiello 2009; Akter and Fatema 2011; World Bank 2012; Kim 2013; Collier 2013; IFAD 2014). Sorensen 2000; Pettengell 2010; World Bank 2012; Collier 2013) suggest that access to finance could have some effect as a climate change adaptation strategy. Among the various adaptation strategies considered to mitigate the adverse effects of climate change on the poor, whether financial innovation aimed at increasing the access of households to financial services would enhance their adaptive capacity is not clearly established. A quote is taken from Agrawala and Carraro (2010), who provide insight into the relevance of assessing the role of financial inclusion in fostering adaptation to climate change:

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