Climate Volatility Change and Precautionary Behaviour

Project Active from to Energy

Climate change has generated much attention. Upward trends in average temperature are well documented facts. While somewhat less attention has been devoted to the impact of the increase in climate volatility on behavior is relatively less studied. In standard models with uncertainty or risk, precautionary behavior, and lack of formal insurance, agents self-insure by building up assets, or engaging in other type of behavior designed to reduce to impact of risk on outcomes. The goal of our project is to look at the impact of increasing climate volatility on choices made by farmers around the world, and in particular in developing countries. This first note provide a data description for several data sources as well as a descriptive analysis of the relationship between crop yields, farmed land and number of farmed crops and long-run temperature volatility. Preliminary and descriptive results point towards a negative relation between temperature volatility and crops’ yields. At the same time temperature volatility is related to a modest expansion in cultivated land and number of harvest crops.