Shocks and Agricultural Investment Decisions
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Shocks and Agricultural Investment Decisions. / Newman, Carol; Tarp, Finn.
In: Food Policy, Vol. 94, 101810, 2020.Research output: Contribution to journal › Journal article › Research › peer-review
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TY - JOUR
T1 - Shocks and Agricultural Investment Decisions
AU - Newman, Carol
AU - Tarp, Finn
PY - 2020
Y1 - 2020
N2 - This study explores the impact of weather shocks on the investment decisions of farmers. We distinguish between the long-term effect of exposure to weather shocks, measured as past exposure to deviations in average rainfall levels, and the effect of weather-related shocks that have recently occurred. We examine how households cope with shocks in the short term, in terms of consumption smoothing and the depletion of liquid assets, and whether over the longer-term shock exposure impacts on household investment decisions and welfare. Our results show that households on average manage to smooth consumption in the face of recent shocks by depleting savings and borrowing. Over the longer-term, households that are exposed to shocks invest less in productive assets leading to lower consumption levels. Moreover, the investment strategies of these households do not appear to pay off once additional shocks occur later on.
AB - This study explores the impact of weather shocks on the investment decisions of farmers. We distinguish between the long-term effect of exposure to weather shocks, measured as past exposure to deviations in average rainfall levels, and the effect of weather-related shocks that have recently occurred. We examine how households cope with shocks in the short term, in terms of consumption smoothing and the depletion of liquid assets, and whether over the longer-term shock exposure impacts on household investment decisions and welfare. Our results show that households on average manage to smooth consumption in the face of recent shocks by depleting savings and borrowing. Over the longer-term, households that are exposed to shocks invest less in productive assets leading to lower consumption levels. Moreover, the investment strategies of these households do not appear to pay off once additional shocks occur later on.
KW - Faculty of Social Sciences
KW - Rainfall
KW - Weather shocks
KW - Investment
KW - Shock-coping
U2 - 10.1016/j.foodpol.2019.101810
DO - 10.1016/j.foodpol.2019.101810
M3 - Journal article
VL - 94
JO - Food Policy
JF - Food Policy
SN - 0306-9192
M1 - 101810
ER -
ID: 234511538