Production impacts of climate change on agricultural livelihoods among smallholder panel households across Ethiopia

Abstract

This study analyzes the production impacts of climate change on smallholder agricultural households across Ethiopia. Hypothesizing that climate change affects agricultural livelihoods mainly through productive and distributive effects, this article examines an integrated farm [crop, livestock, mixed] production impacts overtime. Methodically, the comprehensive Ethiopian socioeconomic survey (ESS] panel data, and nation-wide observatory 60-years climate data- precipitation and temperature [1960-2019] were merged to form a joint panel database; then analyzed using Ricardian panel model with random effects regression. Objectively, factor productivity, the rate of convergence, the historical, real, and seasonal climate impacts were investigated against net-agricultural return overtime. The applied panel model augments both the temporal, spatial, and individual effects and yields more efficient and consistent estimates than the cross-sectional and time series models. The results revealed that CC poses net-negative, increasing and significant impacts on factor elasticity, percapita farm output, and net-farm revenue [NFR] due to diminishing marginal returns; the progressive temporal impacts; regressive duration impacts; divergence effects on the growth of net-farm return; and mixed regional, farm, and HH impacts. Therefore, introducing institutionalized sustainable livelihoods framework [green institutions, finance, education, training, research, inputs, subsidy, insurance, market] in agricultural production system would enhance sustainable production and improved welfare among smallholder households even under changing climate.