A Ricardian valuation of the impact of climate change on Nigerian cocoa production: Insight for adaptation policy

Abstract

Purpose - The purpose of this study is to examine the relative importance of climate normals (average long-term temperature and precipitation) in explaining net farm revenue per hectare (NRh) for supplementary irrigated and rainfed cocoa farms in Nigeria. Design/methodology/approach - NRh was estimated for 280 cocoa farmers sampled across seven Nigerian states. It was regressed on climate, household socio-economic characteristics and other control variables by using a Ricardian analytical framework. Marginal calculations were used to isolate the effects of climate change (CC) on cocoa farm revenues under supplementary irrigated and rainfed conditions. Future impacts of CC were simulated using Six CORDEX regional climate model (RCM) ensemble between 2036-2065 and 2071-2100. Findings - Results indicate high sensitivity of NRh to Nigerian climate normals depending on whether farms use supplementary irrigation. Average annual temperature increases and precipitation decreases are associated with NRh losses for rainfed farms and gains for supplementary irrigated cocoa farms. Projections of future CC impacts suggest a wide range of NRh outcomes on supplementary irrigated and rainfed farm revenues, demonstrating the importance of irrigation as an effective adaptation strategy in Nigeria. Originality/value - This paper uses novel data sets for simulating future CC impacts on land values in Nigeria. CORDEX data constitute the most comprehensive RCMs projections available for Africa.

Keywords

• Nigeria
• Climate change
• Climate change projections
• Net revenue per farm hectare
• Ricardian valuation