Climate Shocks and Farmers’ Responses: Evidence from Indonesia

• In Event: Environmental Risks and Disasters: Considerations of Justice and Productivity

Abstract

This paper investigates the adaptive responses of Indonesian farmers to climate-induced shocks, focusing on the effects of extreme temperature and rainfall variability. Using panel data from the Indonesian Family Life Survey (IFLS) matched with high-resolution meteorological records, we exploit within-subdistrict variation over time to identify the causal impact of weather shocks on household behavior. We find that both high temperatures and low monsoon rainfall significantly depress rural household expenditure, suggesting substantial income losses. In response to these shocks, households deplete both productive (e.g., livestock) and liquid (e.g., savings, jewelry) assets, highlighting the limited capacity for consumption smoothing through income diversification alone.

 

Paradoxically, adverse climate shocks increase agricultural labor intensity, even as they diminish overall agricultural productivity. Low rainfall increases agricultural labor hours while reducing non-agricultural work hours, particularly among men in rice-farming households with access to irrigation. High rainfall, a positive productivity shock, leads to reduced farm labor hours and a shift toward non-agricultural work. Temperature shocks are associated with some increases in agricultural work hours and do not lead to meaningful shifts into non-agricultural work. 

 

Our findings suggest that rural households are better equipped to adjust to rainfall variability — likely due to existing irrigation infrastructure — than to rising temperatures, which remain difficult to mitigate. These insights underscore the need for targeted policies that enhance climate resilience, particularly through investment in irrigation and non-farm employment opportunities.

Author

• Xing Xia, National University of Singapore
  Presenting Author