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Paper short abstract:

This paper examines how farmers respond to extreme temperature by altering land allocation decisons as possible adaptive strategy to mitigate the negative effects of etreme events.

Paper long abstract:

This paper examines how farmers respond to extreme temperature in Khyber Pakhtunkhwa province of Pakistan. We focus on productive adjustments i.e., change in land use, both in terms of total agricultural land and land under wheat, in two sample periods– pre and post support price. We use panel data from 1981 to 2019 to examine the effect of high temperature in the previous year on land allocation decisions. To study this response, we estimated unconditional factor-demand function linking land use with extreme temperature using two sets of log-linear regression model. First set of estimates show how high temperature affect the land use decisions at district-level. Whereas second set of findings consider the four agroecological zones in the province. We find that farmers are responsive to extreme temperature in the previous year at both district and zone level in case of total agriculture land. While land under wheat shows no effect at district level. However, at zone level, farmer do respond to high temperature as coping strategy to attenuate the effect of extreme heat by reducing land allocation when there is low support (pre-support period) for the wheat growers. We find no Significant effect on land use when there is high support for the farmers. This suggests that when farmers are exposed to high temperature coupled with no/limited support, they tend to reduce land allocation as possible adaptive response in agriculture sector. Using our estimates, we show that accounting for land adjustments is important to quantify damages associated with weather shocks if appropriate public polices are adopted.