Blog Decision tools for climate change adaptation

The first step involves identifying both the ongoing and promising practices related to the scope and stage of the value chain. The second step includes selecting the two most promising practices at each step of the value chain (input purchase, production, post-harvest, and marketing). This is dependent on a selected criterion, for instance, the severity of climate hazards such as floods or droughts. The third stage is the ranking of the selected CSA practices by order of importance. Criteria selected include the practice lifecycle, impact on productivity, building resilience, and mitigation benefits.

The final stage of the CSA-PF involves conducting a comprehensive Cost-Benefit Analysis (CBA) to evaluate the economic viability of the prioritized CSA practices. The aim is to achieve economic efficiency and providing reliable information for value chain stakeholders to make rational decisions.

We applied the CSA-PF framework on selected value chains in five sub-Saharan African countries: Ethiopia- fava beans (Vicia faba L.), Kenya- sweet potatoes (Ipomoea batatas), Malawi- soybean (Glycine max), peanut (Arachis hypogaea), and cassava (Manihot esculenta), Nigeria- potatoes (Solanum tuberosum) and rice (Oryza sativa), and Zambia- soybean (Glycine max) and peanut (Arachis hypogaea). Evidence suggests that smallholder farmers in the selected countries prioritize three categories of CSA practices: Improved seed varieties, conservation agriculture (CA), and good agricultural practices (GAPS).

Improved seed varieties are important at the input stage and production stage as they improve productivity and therefore more income to the smallholder farmers. However, the availability and accessibility of the seeds are limited across countries. This may be due to inadequate information dissemination, accessibility to rural areas with dilapidated roads also pose a challenge. Another aspect is the high costs of purchasing making it unaffordable to financially constrained smallholder farmers. Advancement of credit facilities and strengthening of farmer groups and farmers cooperatives make purchasing of improved seeds easier and accessible to all.
 

There is an overlap between CSA strategies considered under CA and GAPs. Agricultural scientists consider the practices under CA, thus minimum tillage, mulching, and intercropping or crop rotation as GAPs. GAPs are applicable at all stages of the value chain and are considered more of regulations than practices. However, in the context of climate change adaptation, other examples include use of clean seeds, weed control, pest management, proper use and application of fertilizer, timely planting to avoid drought, pests, and diseases, water management, proper post-harvest handling, proper storage of harvest, residue and chemical management in the final product among others.

A CBA tool developed by the International Centre for Tropical Agriculture (CIAT) was used to assess the economic viability of the prioritized CSA practices for the selected value chains. The economic indicators of Net Present Value (NPV), Internal Rate of Return (IRR), Benefit-Cost Ratio (BCR), and the Payback Period (PP) were applied in the assessment. NPV is the difference between the present value of the flow of revenues and the present value of the flow of costs. The decision criteria are to implement any project, in this case, CSA practice with an NPV >0 (positive and greater than zero). The IRR is a measure of the discount rate that sets the NPV to zero. The higher the IRR, compared to the predetermined interest rate, the better the investment. The BCR is an indicator that measures the relationship between the benefits and costs of the CSA practices. A BCR >1 is preferable since the benefits outweigh the costs and therefore the CSA practice should be implemented. The payback period is a measure of risk associated with investing in the CSA practice. It represents the time required for the total amount invested to be repaid by the net cash flows generated. The shorter the PP the more preferred the CSA practice will be.

The costs associated with the CSA practices were categorized into three: installation costs, maintenance costs, and operations costs. Installation costs are realized at the beginning of implementing the practice. These are one-off costs. Maintenance costs are incurred every year or per season depending on the crop but exclude the one-off costs. Operation costs are the costs that deal exclusively with the harvest. For instance, threshing, labor for harvesting, machinery, and tools used for harvesting and storage facilities. Table 1 shows the results from the CBA. All the practices are economically viable with NPV>0, an average PP <2, IRR>r, and BCR>1. Of all the CBA profitability indicators discussed, NPV is the most appropriate measure to show whether a practice is worthwhile or not. The IRR and the B/C ratio are applicable where there is only one alternative under consideration while the NPV is very useful where there is more than one alternative to choose from.

NB: r = discount rate at which the NPV has been discounted, IRR = internal rate of return, T = practice life cycle,

PP = practice payback period, Yrs =years, GAP = Good Agricultural Practices, CA = Conservation Agriculture

Issues within the climate change discipline are interdisciplinary as adaptation strategies often require efforts of more than one sector. Cross-sectorial coordination needs to be recognized and fostered through suitable institutions for effective actions on adaptation strategies. In the context of this study, several policy recommendations are suggested. Considering the vulnerability of the agricultural sector, especially within the SSA region, to the negative effects of climate change, adaptation becomes the most relevant action to take. Appropriate prioritization for CSA practices is essential. Best-bet CSA options include those that are least costly to implement, are highly effective, and are feasible both socially and technically.
Based on criteria identified by value chain stakeholders, a list of prioritized CSA practices can be mapped out based on scoring criteria. For the selected value chains in the SSA countries identified for this study, the prioritized practices include the adoption of improved seed varieties, application of GAP, and conservation agriculture practices.

A CBA analysis of these strategies provides further clarity on their feasibility, especially at the farm level. Smallholder farmers who are financially and resource-constrained can make informed decisions in increasing their profitability. A solid identification and classification of various CSA alternatives are, therefore, necessary. 
Institutions such as local government agencies, producer organizations, cooperative societies, savings and loans groups, research organizations, and non-governmental organizations play a critical role in shaping adaptation to climate change. This is achieved through promoting skill development, leadership, networking, information gathering and dissemination, and resource mobilization. The strengthening of these institutions could to a great extent improve the resilience of agricultural systems to risks posed by climate change. The constant provision of education to farmers can be enhanced to expand the knowledge base on the use of new technologies. In the process, new knowledge could also emerge on how best to improve the efficiency of technologies already familiar among smallholder farmers in developing economies.

It is important to note that adaptation strategies are context specific. Thus, they could vary depending on the agricultural value chain under consideration and the country or focus region. Therefore, local solutions and innovations should be developed to adapt to the local problems. For instance, the establishment of technologies such as seasonal weather forecast information can play a crucial role in guiding decision-making on climate change adaptation. Finally, the development of policies that contribute to optimal resource allocation and utilization could lead to increased economic growth and ensure environmental sustainability.

Explore the full publication:

Cost-benefit analysis of prioritized climate-smart agricultural practices among smallholder farmers: evidence from selected value chains across Sub-Saharan Africa

For more information, please contact Dr. Stanley Karanja Ng’ang’a