Climate Risk Management (Jan 2023)
Economic value and latent demand for agricultural drought forecast: Emerging market for weather and climate information in Central-Southern Nigeria
Abstract
Provision of weather and climate services are expected to improve the capacity for rural households’ preparedness and response plans to weather shocks. With increase in public investments in developing and communicating weather information on local scale in Nigeria, uncertainty in timescales that meet farmers’ needs and economic value of the information is still poorly understood. It is now a policy concern on whether farmers’ preferences and demands might increase its uptake. This study analyzed the economic value, latent demand, and emerging market of weather and climate information in Central-Southern Nigeria. Farm-level cross-sectional data reveals that 76% of the respondents were willing to pay for improved weather information and early warnings in taking climate smart decisions. Within farmers who showed positive responses, 86% would pay for sub-seasonal to seasonal weather information while 38% would pay for medium and short range weather information respectively. The economic value of sub-seasonal to seasonal weather information was estimated at N1600 ($3.60) per year per capita with total aggregated value of N1.3 billion ($2.9 m) yearly for the derived savannah area. Predictive total market value of N17.43billion ($39 m) would be obtained from improved weather information in Nigeria. Simulated results of 5% increase in the uptake with better dissemination channel through mobile phones in addition to robust farmers’ oriented features will generate additional annual market value at N86m ($193,360) for service providers. Large farm size, good farm-income, mobile phone dissemination channels, and location-specific information were drivers of farmers’ uptake decisions of weather information in the dry savannah area. The huge emerging market for improved weather information should be developed into a public–private market to efficiently facilitate uptake and use in Nigeria.
