Climate Change Risk and Farming Practices: Evidence from Small-scale Citrus Farmers in Indonesia

Abstract

This thesis examines climate-related risk behaviours among small-scale citrus farmers and their decision to adoption certified seedlings and use of agrochemical inputs in East Java, Indonesia. The analysis is important for understanding citrus farmers’ behaviours regarding climate change issues. Understanding farm households climate related behaviours is key to designing appropriate smallholder support and advisory services. Given the importance of climate change to rural agricultural communities in developing countries, governments, NGOs and international development agencies continue to make substantial efforts to improve the ability of small-scale farmers to adapt. Yet, too often, national adaptation policies and programs ignore insights from existing smallholder adaptation practices. Previous studies show that behavioural insights are critical in developing an understanding of climate risk management by farmers. An important aim of this thesis is to understanding climate-related influences on smallholders’ decisions. The research objectives are to: (i) understand the extent of perceptions of risk among small-scale citrus farmers related to a range of climate change events and to identify the drivers of their risk perception at aggregated and disaggregated levels; (ii) provide analytical insights into the adoption of certified citrus seedlings by small-scale farmers by analysing the extent to which they value the certification of citrus seedlings and the role of this factor in influencing the adoption of higher-yielding, climate-risk resilient and disease-free citrus varieties; and (iii) explore the extent of use of chemical inputs and the role of risk preferences, intrahousehold dynamics and social networks on the household expenditure spent on chemical inputs. The research uses data from a household survey of 500 citrus farmers with interviews of both the male and female household heads. The first research objective was analysed by employing seemingly unrelated regression models (SUR) and ordered logistic regression models (OLM), the second objective was estimated using a multinomial logit model, and the third objective employed joint modelling of risk, intrahousehold dynamics and spatial factors in a spatial regression model. Among the key contributions of this thesis is integrating the research on complex patterns of risk behaviours, from both the economics and psychology literatures, into climate research on risk perceptions through a straight-forward extension of current approaches to the analysis of the risk perception index. An important result is the disadvantage of using only the aggregate approach in analysing risk perception because it could underestimate and simplify the complex representation of climate risk behaviours. This study also presents empirical support for the use of information and communication technology based extension as an efficient extension tool to reach more farmers than in traditional methods. A second result highlights how farmers' beliefs about the yield and production risks of particular seedling types, along with risk preferences, were significantly related to farmers’ intentions to adopt particular seedling types. This study also found the relationship between climate-related variables (i.e. climate information source and climate extension) and farmers’ decisions to use certified seedlings. Lastly, this thesis finds that more risk-averse households tend to have lower spending on insecticides and the use of this input is also significantly associated with higher profit variability. A wife’s leadership could lead to a considerably lower expenditure for fungicides, but higher herbicide expenses; and a higher disagreement between spouses is associated with more insecticides and fungicides costs. The pattern of chemical inputs usage is spatially dependent on endogenous effects, while spatial disturbance effect existed for the use of chemical fertilisers and herbicides.