A PRESENTATION DURING THE AFRICAN DISSEMINATION WORKSHOP ON INNOVATIVE APPLICATION OF ICTS IN ADDRESSING WATER - RELATED IMPACTS OF CLIMATE CHANGE, 12TH DECEMBER, 2014, AT MAKERERE UNIVERSITY, KAMPALA. BY FRANCIS ONYANGO ODUOR Bsc. Agric Econ (Egerton), Msc. Agric Econ (Moi)

 Smallholder adaptation strategies are more autonomous  The adaptation strategies employed are at sub- optimal levels i.e. MB ≠ MC

 Growth of the Kenya’s economy correlates to growth and development in agriculture  Smallholder farmers provide 75% of the labour force and 75% of the market output produce (Alila & Atieno 2006)  However, climatic variability affects smallholders’ efforts  Smallholders invest to adapt to climate variability

 Economic analysis of climate change adaptation strategies of agriculture.  Deltaic wetland ecosystem  Prone to drought and floods  Farmers invest to reduce impacts of the shocks

The framework for analyzing the cost and benefit of climate change adaptation Global mean Temperature Cost without adaptation Residual damage Net benefit of adaptation Total cost of climate change after adaptation Gross benefit of adaptation Cost of adaptation + Residual damage Cost of climate change Source: Stern (2006)

FINDING #1: Agricultural adaptation strategies are autonomous

 Adaptation strategies Soil & Water Mgt Off-farm activities  Ratooning

Constraints to agricultural adaptation strategies

Determinants agricultural adaptation strategies Characteristics of household headOdds RatioP>|Z| Sex Age Household size Farm size Number of years lived in the village Education level Income Logit regression of socio-economic determinants

FINDING #2: Costs and Benefits of agricultural adaptation strategies

Cost DimensionValue (USD Million) Cost without adaptation (Gross damages)43 Adaptation Cost6 Gross Benefit (Damage avoided cost)21 Residual Damages22 Total cost of climate adaptation28 Net benefit15 NPV (50years; 2072) 2%42 15%17,000 Marginal Cost (MC)6 Marginal benefit (MB)21 ROI [(MB-MC)/MC]250% FINDING #2: Costs and Benefits of agricultural adaptation strategies

Optimal agricultural adaptation ? Marginal Costs Marginal Benefits Adaptation Residual Damages Adaptation Effort (Cost) E*E R* R

Improved investment on adaptation initiatives is needed  Increased budgetary allocations to climate change adaptation initiatives / projects (a) Investment in climate information provision (b) Research and development  Promotion of affordable agricultural credits (a) Community- Based Adaptation initiatives like ROSCAs (b) Credit guarantee systems  Incentives for conservation like PES