Peer effects and the choice of adaptation strategies

Abstract

AbstractThis paper analyzes the impact of peer choices on the decision to adapt to climate change in rural Ethiopia. Two IVs are employed (peer‐of‐peer choices and peer‐of‐peer information sources) in order to tackle the issue of endogeneity. Through the use of a 3‐year panel of farmers in the Nile Basin region, we find that peer choices positively affect the uptake of different adaptation strategies. A 10 percentage point increase in the share of peers using a specific strategy translates to an increase in the likelihood of adaptation between approximately 7% and 14%. This emphasizes the importance of social networks to achieve adaptation to climate change in sub‐Saharan Africa.