ABSTRACT
This chapter distinguishes the effects of climatic shocks (droughts), weather (during one year) and climate normals (long-term average weather conditions) on Kenyan smallholder farmers' decisions to intensify maize production, measured as the share of maize area per farm allocated to hybrid seeds. We also ask how such intensification affects the vulnerability of expected crop income, crop income variability and downside risk. We find that maize intensification is strongly affected by weather, climate shocks and climate normals. We also find that maize intensification has a positive effect on expected crop income but no significant effect on crop income variability or downside risk. Moreover, relying on a higher proportion of hybrid seed use, which is negatively associated with persistent climatic shocks, is not enough to statistically significantly reduce the likelihood that crop income falls below a given threshold (downside risk). Importantly, cropping system decisions are related to longer-term investment choices, while decisions on specific hybrid types are annual decisions. Thus, maize intensification alone is not an effective strategy. Further, our results suggest that farmers are not adapting optimally to climate change. Suboptimal choices might reflect market failures, such as credit constraints, poor access to input and output markets, and information asymmetries. Our results also suggest that rising population density provides incentives to shift toward more intensive farming systems. Finally, we find trade-offs between nonfarm employment and crop income. Our findings lead us to recommend that the government of Kenya play an active role in encouraging smallholder adaptation to changing climate patterns and climate shocks. Smallholders need better access not only to hybrid seeds and other inputs through decentralized, competitive markets but also to effective, widely diffused market information services and other insurance mechanisms.
