Source: Timothy J. Dalton, 785-477-8239, tdalton@k-state.edu
News release prepared by: Tyler Sharp, 785-532-2535, media@k-state.edu

Thursday, Aug. 11, 2011

RISKY BUSINESS: AG ECONOMIST PART OF RESEARCH TEAM EXAMINING EFFECT OF CLIMATE CHANGE ON AFRICAN AGRICULTURE

MANHATTAN -- Climate change in Africa, including increased temperatures and decreased rainfall, is causing an uncertain future for African farmers. But an international research team that includes a Kansas State University agricultural economist hopes to bring clarity to the situation.

Timothy J. Dalton, K-State associate professor of agricultural economics, recently completed two separate research projects related to African agriculture and the effects of climate change. The projects involved African farmers' response to using drought-tolerant maize seed and how climate change was impacting their decision-making and production systems.

The Bill and Melinda Gates Foundation, Howard G. Buffet Foundation and other charitable sources sponsored the research team's Water Efficient Maize for Africa project. Dalton visited Africa multiple times to conduct the research, specifically working in South Africa, Tanzania and Kenya.

To gauge the effects on farmer's decision-making, Dalton and his colleagues created a lottery-based system with certain gambles. Farmers were given an explanation of probability and discussed rainfall prior to the experiment. Two different colored chips representing positive and negative outcomes were placed in a jar in varying quantities. Positive outcomes would yield as much as a day and half's worth of wages. For each gamble, farmers were asked if they wanted to make the gamble or accept a reduced -- or safer -- amount. Dalton's team was attempting to determine the certainty equivalent or point in which farmers shifted from taking the gamble to the safe bet.

"We found most farmers switched before their expected value, and that indicated they were risk averse, just like most people up to a point," Dalton said.

Dalton's team later returned to the same farmers with more ambiguous information. This portion of the experiment was designed to mirror reality for many farmers. Tanzania features two rainy seasons: one short, the other long. A month typically separates the two seasons and functions as a signal for farmers to begin planting. In recent years, however, the rainy seasons have merged into one. Similarly, Kenya was experiencing decreased rainfalls, which were adversely affecting maize crops. Farmers in the country were faced with whether to continue growing maize, which fetches better prices and has better markets, or switch to drought-tolerant alternatives such as sorghum.

"They are caught in this trap without a proper signal on what to take," Dalton said. "This what we are trying to simulate with the experiment."

High chances of winning and ambiguous information caused many farmers to take a lesser certainty equivalent. Conservative behaviors were expected with the lack of clarity in what to plant, according to Dalton. Results were similar in all three countries as the probabilities began decreasing. When farmers reached the point where there was a 10 percent chance of winning, there was a higher certainty equivalent. Dalton attributes that to farmers believing the situation could be no worse. This illustrated that many farmers who should not be growing maize were continuing to do so at the risk of crop failure. Other farmers were not taking risks when they should be. An air of uncertainty accompanied the ambiguity.

"With climate change, information becomes less diffuse and less valuable," Dalton said.

Potential policy responses include providing rural farmers with accurate weather data to ensure an appropriate planting period. Providing subsidies for yields, fertilizer use or approved seed were also considered. Establishing crop insurance mechanisms in Africa similar to the U.S. and developing more drought-tolerant grains were other considerations.

Drought tolerance was the focus of Dalton's other research project: drought-tolerant varieties of maize. Farmers were presented with hypothetical new seeds and asked whether they would purchase the variety. The seed types and other important traits were varied. They also received graphical data for each variety. After being presented with the information, some farmers continued to gravitate toward the cheaper seeds, but the majority selected new drought-resistant varieties. The results were consistent in Tanzania and Kenya, but a large segment of the population was more willing to purchase herbicide-tolerant seeds in South Africa.

Dalton hopes these findings will help in the development of targeted programs to assist with purchase of drought-tolerant seed varieties. Until then, he will continue to research adaptations to climate change.

"While climate change still may be a contentious issue in the United States, many people are having to deal with it in the lower latitude and equatorial countries where changes are occurring right now," he said. "It's at the forefront of many people's minds."

Dalton presented the two sets of research at the 15th annual Conference of the International Consortium on Applied Bioeconomy Research in Frascati, Italy, in late June and at the American Association of Applied Economists annual conference in Pittsburgh, Pa., July 24.