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Fissha Asmare.Pdf SCHOOL OF GRADUATE STUDIES SCHOOL OF ECONOMICS THE EFFECT OF CLIMATE CHANGE ADAPTATION STRATEGY ON FARM HOUSEHOLD’S WELFARE IN NILE BASIN OF ETHIOPIA: IS THERE SYNERGY OR TRADEOFF? BY FISSHA ASMARE MARYE ADDIS ABABA, ETHIOPIA JUNE, 2016 ADDIS ABABA UNIVERSITY SCHOOL OF GRADUATE STUDIES SCHOOL OF ECONOMICS The Effect of Climate Change Adaptation Strategy on Farm Household’s Welfare in Nile Basin of Ethiopia: Is There Synergy or Tradeoff? A Thesis Submitted To the School Of Graduate Studies of Addis Ababa University in Partial Fulfillment of the Requirements for the Degree Of Master of Science in Economics (Resource and Environmental Economics Stream) By Fissha Asmare Marye Addis Ababa, Ethiopia June, 2016 Addis Ababa University School of Graduate Studies This is to certify that the thesis prepared by Fissha Asmare, entitled: the effect of climate change adaptation strategy on farm household’s welfare in Nile basin of Ethiopia: is there synergy or trade off?; and submitted in partial fulfillment of the requirement for the degree of Masters of Science in Economics (Resource and Environmental Economics) complies with the regulations of the university and meets the accepted standards with respect to originality and quality. Signed by the examining committee: Chairman: Kebede Bekele signature_______________ Date: ____________________________ External Examiner: Abebe Damte (PhD) signature_____________ Date: ____________________________ Internal Examiner: Adane Tuffa (PhD) signature______________ Date: ____________________________ Advisor: Hailemariam Teklewold (PhD) signature______________ Date: ____________________________ Graduate programs coordinator, Department of Economics Kebede Bekele: signature ____ Date: ____________________________ i ACKNOWLEDGEMENTS First I would like to thank God Almighty; it is not exaggeration to say that without insisting the Almighty God would not have been in a place to complete successfully this thesis paper. I would like to offer my heartfelt thanks to my supervisor Dr. Hailemariam Teklewold for his guidance, patience, and constructive criticisms throughout the accomplishment of this thesis. Doctor, no words can explain my gratitude to your friendly supervision and without your guidance, it would have been impossible for me to overcome all the difficulties I faced for a year. I was not expected to meet such like personality. Besides, I am grateful to Dr. Alemu Mekonnen, for initiating my interest towards such striking subject and the support for getting resources from IDRC through EDRI. My special thanks also go to ECRC (Environment and climate research Centre) for its invaluable contribution to get farm household data used in this work and financial support through EDRI(Ethiopian development research institute) and IDRC(International development research Centre of Canada). And also I am grateful to ECRC staffs particularly Smueal Abera, Sahile sillassie and Zelalem G/medihn for their welcoming approach when I was in need of their assistance. I am also indebted to my friends, Workisha, Yechalle, Tsegish, for their constructive comments I also wish to thank my supporting friends especially Denekew and Tewodros for their advice and encouragement with any aspect. Last but not least my immense gratitude and appreciation goes to my family and Selamye for everything what they do in my critical time. ii Table of content Contents Page Table of content ..................................................................................................................................................... iii ACRONYMS ......................................................................................................................................................... vi LIST OF TABLES ................................................................................................................................................ vii CHAPTER ONE: INTRODUCTION .................................................................................................................... 1 1.1. Background of the Study ............................................................................................................................. 1 1.2. Statement of the Problem ............................................................................................................................ 3 1.3. Objectives of the Study ................................................................................................................................ 6 1.4. Significance of the Study ............................................................................................................................. 7 1.5. Scope and Limitation of study ..................................................................................................................... 7 1.6. Organization of the Study ........................................................................................................................... 7 CHAPTER TWO: REVIEW OF RELATED LITERATURES ............................................................................ 8 2.1. Theoretical review ....................................................................................................................................... 8 2.1.1. Agriculture, Climate Change and Farm Household Welfare .............................................................. 8 2.1.2. The idea of climate change adaptation and adaptation strategies ..................................................... 10 2.2. Empirical Literature Review ..................................................................................................................... 14 2.2.1. Determinants of practicing climate change adaptation strategies ..................................................... 14 2.2.2. The Effect of Climate Change Adaptation Strategies on Household’s Welfare ................................ 19 CHAPTER THREE: METHODOLOGY ............................................................................................................ 22 3.1. Description of the study area ..................................................................................................................... 22 3.2. Nature and Sources of data ....................................................................................................................... 24 3.3. Sampling Frame and Techniques .............................................................................................................. 24 3.4. Model Specification and Statistical Analysis ............................................................................................. 24 3.4.1. Conceptual Framework ....................................................................................................................... 24 3.4.2. The empirical model ............................................................................................................................ 26 3.4.2.1. Endogenous switching regression model (ESRM) ...................................................................... 27 3.4.2.2. Counterfactual analysis and treatment effects ............................................................................ 30 iii 3.4.3. Variable description and priori expectation ....................................................................................... 31 CHAPTER FOUR: RESULTS AND DISCUSSIONS ......................................................................................... 34 4.1. Descriptive Statistics .................................................................................................................................. 34 4.1.1. Crop diversification and family labour ............................................................................................... 40 4.2. Empirical Results ....................................................................................................................................... 42 4.2.1. Parameter estimates of crop diversification and farm income ........................................................... 42 4.2.1.1. Determinants of adopting crop diversification ........................................................................... 42 4.2.1.2. Determinants of net farm household’s income ........................................................................... 50 4.2.1.3. Average Expected Net farm income ............................................................................................ 54 4.3. Parameter estimates of crop diversification and farm household Labor ................................................. 55 4.3.1. Determinants of Farm Household Labor ............................................................................................ 55 4.3.2. Average Expected Farm Household’s Labor ...................................................................................... 59 4.4. Is There Synergy Or Tradeoff? ................................................................................................................. 60 CHAPTER FIVE: CONCLUSION AND RECOMMENDATIONS ................................................................... 62 5.1. Conclusion .................................................................................................................................................. 62 5.2. Recommendations ...................................................................................................................................... 64 REFERENCES ....................................................................................................................................................
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