Climate-Smart Agriculture, Non-Farm Employment and Welfare: Exploring Impacts and Options for Scaling Up

Abstract

Climate-smart agriculture (CSA) has been receiving increasing attention in recent policy dialogues for its potential to improve agricultural transformation, risk management, and welfare. This study seeks to provide evidence on the welfare impacts of CSA adoption and its complementarity with non-farm employment using household-level data from Ethiopia combined with novel historical weather data. The study uses a multinomial endogenous switching regression model to deal with selection bias and farmer heterogeneity. The results show that households adopting CSA enjoy higher welfare benefits than non-adopter households. Households experience a higher welfare impact (lower monetary and multidimensional poverty rate) when CSA and non-farm employment are adopted simultaneously. However, there is less evidence regarding the complementarity between CSA and non-farm employment when considering per capita consumption expenditure. The study findings will have important policy implications for climate change adaptation, resilience, and poverty reduction in low-income countries.