Climate Variability, Agricultural Productivity and Household Welfare Outcomes in Uganda

Abstract

Eighty-five percent of Ugandans depend largely on rain-fed agriculture to make a living. Thus, they are exposed to the effects of variability in climate. Evidence shows that changes in climate are taking place in all regions of Uganda with noticeable changes in precipitation and temperature including persistence of adverse weather occurrences such as prolonged drought, floods, landslides, and rising temperatures. According to the World Bank, climate variability is projected to cause a global agricultural production loss of about US$1.5 billion by the year 2050. This is likely to extend to Uganda’s main foreign exchange earning crops (such as coffee and maize) leading to combined economic losses among farm households of about US$1.4 billion by the year 2050. Against this backdrop, this thesis investigates the effect of variability in climate on the productivity of agriculture and the welfare outcomes of households in Uganda. The thesis further explores the factors influencing the decision of households to adapt to variability in climate and assesses welfare differences between the adapting and non-adapting households. The thesis uses two data types – historical climate variability data obtained from the United States National Oceanic and Atmospheric Administration (NOAA) and household level survey data sourced from six waves of the Uganda National Panel Survey (UNPS). The UNPS waves data is countrywide repeated cross-sectional data collected from 2009 to 2019 by the Uganda Bureau of Statistics (UBoS). The thesis used the total factor productivity approach to evaluate the effect of variability in climate on agricultural productivity in Uganda (Essay 1). Weighted pooled Ordinary Least Squares (OLS) and random effects models were used in Essay 2 to examine the effect of climate variability on household welfare outcomes (consumption expenditure). The Endogenous Switching Regression (ESR) model was applied to assess the difference in welfare outcomes between the adapting and non-adapting households (Essay 3). Findings in Essay 1 show a significant U-shaped effect of the variability of precipitation on productivity of agriculture in Uganda with regional analysis indicating that relative to other regions of the country, Eastern Uganda is the region that is most prone to extreme occurrences because of the variability in climate. However, the findings further present that the negative effect of the variability of precipitation on the productivity of agriculture disappears with access and availability of extension services. In Essay 2, the results show that variability of climate has a significant nonlinear effect on households’ welfare outcomes with prolonged variability in

precipitation associated with household welfare loss. However, variability in the highest and lowest temperatures have different effects on household consumption expenditure. The findings show that variability in the lowest temperature results in reduced consumption, while variability in the highest temperature leads to an increase in household consumption expenditure. Essay two results further indicate that households’ improved access to extension services and the level of education of the household head improve household welfare. The Essay 3 findings show that adaptation to climate variability by farm households is beneficial as it safeguards against welfare deterioration among the adapting households and that the households that practice farming are more inclined to adapt to variability in climate under extreme or continuous cases of precipitation variability as compared to under mild or a few cases of climate variability. The results from the three essays highlight the need to build resilience and design policies and interventions that are not only aimed at mitigating variability in climate but also at increasing productivity in agriculture across the country, enhancing household welfare outcomes and increasing adaptation among the farming households. Based on the study findings, this thesis recommends the need for the Ugandan government and the other stakeholders including development partners to prioritise access and availability of extension services to all farmers across the country to empower farmers to deal with varying climate and its associated impacts. Secondly, there is a need to sensitise farmers on the benefits of adaptation and if possible, subsidise some of the adaptation mechanisms such as irrigation equipment, climate variability tolerant seed varieties, climate forecast information and availing water for irrigation.