(Updated December 5, 2024 to reflect new results)
Climate change is making weather more variable, with rainfall patterns becoming less predictable and extreme temperatures occurring more frequently. Agriculture is particularly sensitive to these changing conditions, jeopardizing the livelihoods of the majority of the world’s poor who depend on agriculture for survival. Highly variable weather makes it challenging for farmers to prepare for the coming season because they don’t know if this year will be like the last. But accurate long-range weather forecasts have the potential to help farmers decide how much to plant, what to plant, or whether to plant at all—which could make them much better off.
EPIC Scholars Fiona Burlig and Amir Jina, along with their colleagues Erin Kelley, Gregory Lane and Harshil Sahai from the University of Chicago, study what happens when farmers in India are given a forecast of when the monsoon will begin. An earlier monsoon typically means a longer growing season, suited to cash crops like cotton. Later monsoons are generally worse, forcing farmers to grow lower-value subsistence crops like paddy. On a pre-season visit to the farmers, the researchers found that farmers’ predictions about when the monsoon would arrive varied widely. Then, the researchers gave the farmers an accurate forecast of when the monsoon rain would begin in the coming year. The new information changed the farmers’ minds and their farming behaviors—and they were better off as a result.
Overly optimistic farmers, for whom the forecast brought “bad news” of a shorter-than-expected growing season, took steps to cut down on their investments—such as by cultivating 20 percent less land and growing fewer cash crops. They also reduced their expenditures on inputs (like fertilizer) by 10 percent. While their agricultural output, crop sales, and farming profits took a hit because they engaged in less farming overall, these farmers also tended to find other ways to make money, such as working in non-agricultural businesses.
On the other hand, overly pessimistic farmers, for whom the forecast brought “good news” that the growing season would be longer than they expected, increased their investments—cultivating 20 percent more land and growing more cash crops. They also spent 30 percent more on farm inputs. On-farm profits increased by nearly 50 percent for forecast farmers in this group (excluding those hit by heavy flooding that was outside of the scope of the forecast).
The forecast allowed all farmers to change their farming behavior in beneficial ways, enabling an overall improvement in household well-being. On average, farmers who received a forecast benefitted from a 7 percent increase in per-capita food consumption. These farmers appear to also have more valuable assets, and higher savings (net of debt) at the end of the growing season. Overall, the forecast delivered meaningful benefits to households.
These farmers also saw positive net savings. Given the safety net of the insurance, farmers increased their spending on agriculture substantially—cultivating 10 percent more land and spending 20 percent more in expenditures than those who did not have the forecast information or insurance. At the outset, their spending may or may not have been justified—they had no way of knowing until it was too late.
The study was funded by the Becker Friedman Institute for Economics at the University of Chicago, The International Growth Center (IGC), J-PAL’s Agricultural Technology Adoption Initiative and King Climate Action Initiative, and the World Bank.