Reducing Impediments to Managing Climate Risk for Heterogeneous Farms

(Project Leaders: Karina Schoengold, Brad Lubben, and Michael Hayes)

Background/Justification. With global climate change, the frequency and intensity of weather extremes such as drought and flood are likely to increase in the future (IPCC 2007). Agricultural production is one of the most vulnerable sectors to climate risk. To mitigate the effects of climate variability and change and to enhance the sustainability of the rural community it is important to determine how producers manage climate risk through a combination of government programs, new technologies, and conservation practices. This knowledge will allow government policies to adapt to changing conditions to assist producers in managing risk in a cost-effective manner. Previous research has found that government payments do have an effect on farm size distribution (Yee and Ahern, 2005; Key and Roberts, 2006). Other research has confirmed that producers recognize the risk management benefits of using practices such as conservation tillage (Davey and Furtan, 2008; Ding, Schoengold, and Tadesse, 2009; Magnan et. al., 2011). However, existing research has not simultaneously looked at the role of government programs and farm size on production methods and climate risk management decisions.

Objectives. The primary goal of this project is to determine how producers jointly utilize government programs and production practices to manage climate risk. The analysis will incorporate farm size and geographical heterogeneity in measuring producers decisions.