Introduction

Successful adaptation to climate change will require more accurate weather forecasts that can inform investment and production decisions, alongside financial products that can help farmers manage shocks.

Agriculture will be severely affected by climate change. Higher temperatures and increased variability pose an enormous threat to agricultural production. Not only are developing countries disproportionately exposed to climate change, they are also more vulnerable to its impacts owing to higher prevalence of subsistence farming, food insecurity, and extreme poverty.

With major climatic changes now inevitable and irreversible, adaptation is necessary. Undertaking adaptation efficiently and effectively will be difficult as, like the returns to agricultural decisions, it will depend on the weather. Investing in adaptation prior to changes in the weather is risky because weather changes may not occur. On the other hand, waiting until the weather does change may limit the potential actions that can be deployed in response. Greater weather variability will add variability to the costs and benefits of adaptation strategies.

More accurate weather forecasts can help farmers form more accurate expectations about the future, supporting profitable investment decisions. Investments in weather information services could increase the accuracy, accessibility, and usability of weather information for farmers in the developing world.

Even with perfect forecasts, farmers will not be able to fully adjust to increasing weather variability. Farmers will require mechanisms that can help smooth their consumption during shocks. Access to financial products, such as weather-based index insurance, climate-related loan products, or guaranteed credit lines, can help alleviate some of the risk that comes with climate change.

Key messages

  1. Climate change will make agriculture less productive.

Higher temperatures and greater weather variability pose a dual threat to agricultural production. In turn, lower or more variable agricultural output will have significant ramifications for food security, poverty, and development.

  1. Adapting to higher weather variability will be more challenging than adapting to increases in average temperature.

Like other agricultural outcomes, adaptation’s implications for farmers’ profits will depend on whether expected weather changes actually happen. Ex ante and ex post adaptation actions have different costs and benefits.

  1. More accurate weather forecasts can help farmers make more profitable decisions.

Greater access to and accuracy of weather information appears to increase agricultural profitability on average. Weather and climate information services are an increasingly popular policy tool in developing countries.

  1. Market mechanisms that lower agricultural risk can lead to greater investment and better management of shocks.

As climate change increases risk, it may lead to adverse impacts on farmer investment. Weather-based insurance and tailored loan products are promising tools to lower risk and support farmers’ incomes and investment.