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Paper short abstract

Can access to cash transfers enable the adoption of climate-resilient adaptation practices in agriculture? Our paper answers this question by exploiting a spatial regression discontinuity in the Terai region in South Asia(India and Nepal), showing a significant difference in adoption and yield.

Paper long abstract

An International border across Nepal and India splits an otherwise similar agroclimatic area. Nepal promotes climate-resilient practices similar to India. However, farmers in India are eligible to receive a cash transfer under a national policy aimed at purchasing agricultural inputs and promoting crop health. Both these regions, which have the same agro-climatic zones (Terrai region), are exposed to frequent climatic risks like floods, droughts, and unseasonal rainfall. In our sample of 1003 farmers, affected by floods, droughts, and unseasonal rainfall, these factors negatively affect their agricultural yield. Additionally, these farmers lack access to formal risk mitigation programs and mechanisms that can help them smooth their consumption and minimize the shock from climatic and non-climatic events that negatively impact their livelihoods and income. Our spatial RD estimates reveal a substantial difference in rice yields as well as a gendered pattern of adoption. We show that this is on account of investments in water efficiency practices that are capital-intensive. However, we find that women are less likely to receive the cash transfer, adopt water- efficiency practices, and have a lower relative yield, making them less likely to adopt as well as build more resilience towards adverse climatic events. The strong causal evidence suggests that cash transfers can facilitate the adoption of climate-resilient agricultural practices and improve the yields of crops. Women might need to be targeted as they do not avail of policy-delivered cash transfers as much, drawing light on the importance of women-centric policy design for better uptake of climate-resilient practices.