Climate risk perception and ex-ante mitigation strategies of rural households in Thailand and Vietnam

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1 Climate risk perception and ex-ante mitigation strategies of rural households in Thailand and Vietnam Songporne Tongruksawattana, Marc Völker, Bernd Hardeweg and Hermann Waibel ( ) Institute of Development and Agricultural Economics School of Economics and Management Leibniz Universität Hannover 117th EAAE Seminar on Climate change, food security and resilience of food and agricultural systems in developing countries: Mitigation and adaptation option University of Hohenheim: November 25-27, 2010

2 Outline 1. Introduction 2. Study site and data source 3. Methodology 4. Results 5. Conclusions and recommendations 2

3 Introduction Vulnerability to poverty remains an issue in South-East Asian emerging-market economies (ADB 2008, UNDO 2008, World Bank 2008) Climate change increases the number of severe weather events (ADB 2009, IPCC 2007) High adaptation costs (ADB 2009) 3

4 Introduction Adverse impact of shocks on welfare depends on households ability to apply effective ex-ante mitigation strategies (Dercon 2002, Morduch 1995, Townsend 1995) Adoption of such strategies depends on socio-economic household and location characteristics (e.g. risk perception) (Dercon 2007, Sivakumar and Motha 2007) Objective vs. subjective risk 4

5 Introduction Research questions: 1. What is the current status of climate shock experience, risk perception and ex-ante risk management of rural households in the study areas? 2. What determinants shape climate risk perception? 3. How does climate risk perception affect the households decision to apply any ex-ante risk management actions? 5

6 Study site and data source Study area: 6 provinces in Thailand and Vietnam Data source: 2-year panel survey (2007 and 2008) 4400 households + Village head survey (2007) 6

7 Methodology Identification of climate-related shock experiences of rural households in Vietnam and Thailand Elicitation of their subjective risk perceptions of future climate risks Model risk perceptions: OLS-model: Ri = λs ic + ΦX iy + ϫp p R i = ordinal risk score; S ic = vector of climate shock incidents , X i y = respondent characteristics; P p = province dummy Model ex-ante risk management strategies: Probit model: Yi Yi Y i * h ψr φx γp i i * 1 if Y 0 i 0 otherwise p u i 7

8 % of Households Results Shock experience between 2002 and 2008 and risk expectations in 2008 among rural households in Vietnam and Thailand, by type of events (n= 4330) Shock experience ( ) and risk expectations in VN Shock VN Risk TH Shock TH Risk 10 0 Climatic Biological Socio-demographic Economic Type of events Source: own calculations based on DFG database 8

9 Results Explaining Climate Risk Perceptions OLS climate risk perception Vietnam Thailand Coef. t-value Coef. t-value Respondent characteristics Agricultural occupation (1=Yes) *** *** Member in socio-political organization (1=Yes) *** Age (Years) ** Age squared (Years) ** Ethnicity (1=Kinh) a - a Education (Years) Gender (1=Male) Province dummies Buriram (TH) / Ha Tinh (VN) (1=Yes) *** Nakhon Panom (TH) / Dak Lak (VN) (1=Yes) *** ** Climate shock incidents Climate shocks of high severity (Number) *** *** Climate shocks of medium severity (Number) *** Interaction terms Dak Lak * Climate shocks of high severity *** - a Constant * P > F (joint significance) R² N Note: a Variables omitted. *P<0.1, **P<0.05, ***P< a 9

10 Results Use of ex-ante climate risk management strategies Vietnam (n = ) Thailand (n= ) Type of risk management strategy Households Households % % Any strategy Collective action Investment activites Income portfolio adjustment Savings Others Note: ¹Households which perceived climate risk. 10

11 Results Risk perceptions and ex-ante mitigation Probit: Ex-ante climate risk mitigation Vietnam Thailand (1=Yes) Coef. df/dx Coef. df/dx Household characteristics 2007/2008 Maxiumum education (Years) Wealth per capita (PPP$) - a - a Tangible assets (PPP$) a - a Number of household members Average monthly per capita income (PPP$) * Engagement in off-farm employment (Months) * Age of household head (Years) Age of household head squared (Years) Engagement in agriculture (%) - a - a Land size (ha) a - a Ethnicity of household head (1=Kinh) * a - a Climate risk score * ** Village/province characteristics Time to district town (Minutes) Time to market (Minutes) * Off-farm employment as main option (1=Yes) a - a Buriram (TH) / Ha Tinh (VN) (1 = Yes) Nakhon panom (TH) / Dak Lak (VN) (1 = Yes) *** *** Constant P > F (Wald test) N Note: a Country-specific omitted variable. *P<0.1, **P<0.05, ***P<0.01. df/dx indicates the marginal effect of a one-unit change in the explanatory variable on the probability to use any ex-ante climate risk management strategies. 11

12 Conclusions and recommendations Climate shocks are the most prevalent calamity of rural households in Vietnam and Thailand since Households expect more climate risks in the future with flood, drought and storms as the major fears. Climate shock experience affects risk perception, but other factors also matter. Climate risk perception influences adoption of ex-ante risk management, but not for all households. Again other factors also matter. 12

13 Conclusions and recommendations Incorporate experience and perceptions of people affected by climate change in public information systems and in planning public programs. Make use of people's awareness about climate change to strengthen ex-ante risk management. Establish better enabling conditions to facilitate individual investments for ex-ante risk management against climate risks. Support research to advance climate models for agriculture in Asia to combine subjective assessments and historical information. 13

14 Thank you for your attention! 14

Völker, Marc; Tongruksawattana, Songporne; Hardeweg, Bernd; Waibel, Hermann

Völker, Marc; Tongruksawattana, Songporne; Hardeweg, Bernd; Waibel, Hermann econstor www.econstor.eu Der Open-Access-Publikationsserver der ZBW Leibniz-Informationszentrum Wirtschaft The Open Access Publication Server of the ZBW Leibniz Information Centre for Economics Völker,

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