Risk management in agriculture and adaptation to climate change

Аннотация

The study examines agricultural risk management policies in Russia and its response to conditions of climate change. Two types of policies are analysed: individual yield insurance triggered by observed yield shocks on the farm and ex post payments triggered by a large systemic shock. The impact of climate change differs depending on the location. For example, the most reliable sources now prove that climate change will increase production risk, measured by yield variability of the main crops in Russia. In the Southern Far East there is evidence that some crops show increased production risk and others show reduced risk. This research provides valuable information of the policies interact with risk management and adaptation strategies, and how to solve the problems of the policy-making under strong uncertainties. There are strong links between risk management and adaptation policies, and government responses to protect farmers from climate change risks that will affect their strategies. For example, support of insurance schemes and of ex post payments may reduce the incentive to diversify farm production giving up production of more climate sensitive crops and farm practices. In this sense these government supported instruments can potentially crowd out appropriate adaptation strategies by farmers.