How do African households adapt to climate change? Evidence from Malawi

We use three waves of national representative household level panel data from Malawi to employ a structural model to estimate how households make land and labor allocation decisions in response to climate change. We first model the allocation of land to improved maize varieties as a function of precipitation history, input and output prices, household characteristics and extension advice and then estimate the welfare benefits associated with this decision in a household net income equation. This second stage also reveals the extent to which the household shift labor off-farm as total growing season precipitation fluctuates. We find that a 1% increase in intra-seasonal precipitation variability reduces household income by 1.5%. This effect falls to 1.3% after we account for the expected adjustment in improved maize adoption.