A risk - based approach for the economic impact of climate change assessment

Abstract

This paper contributes to shed light on the economic impacts of changes in water availability due to climate change on small-scale agriculture. We provide an hydro-economic modelling framework that captures the socio-economic effects of water shocks on smallholder at river basin scale. This approach link a farm risk-based economic optimization model and a hydrologic simulation model specified for the basin. Large differences in the economic impacts across the studied farm types are found. In this context, the smallest farmers will be most negatively affected by the change in water availability. These results suggest large distributional consequences of climate change for the economy of the small-scale farmers in the basin, challenging the public policy to generate reliable tools to cope with climate change small-scale farmers’ vulnerability