Adaptation to climate change and risk exposure: Insights from smallholder wheat farmers in China

Abstract

We analyze the impacts of adopting climate change adaptations (CCAs) on the risk exposure of wheat farmers using data collected from smallholder wheat farmers in China. A moment-based production function is used to calculate four risk exposure indicators: variance (variability of farm revenue), semi-variance, skewness (exposure to downside risk) and kurtosis. A two-stage predictor substitution approach is used to address the endogeneity of adopting climate change adaptations. The results show that the number of adaptations is determined mainly by family size, off-farm-worker ratio, asset ownership and insurance. The greater the number of adaptations, the lower the farmers' risk exposure as measured by variability, semi-variability, kurtosis and skewness of farm revenue. These fndings call for practical interventions to encourage climate change adaptations for the wheat sector, not only in China but also in other countries, as climate change threatens global agriculture.