Agriculture is the mainstay of the Kenyan economy with an estimated GDP share of 26 percent in 2012, and thus remains an important contributor to employment and food security of rural populations. Climate variability and change have adversely affected this sector. This situation is expected to worsen in the future if the latest findings of Intergovernmental Panel on Climate Change (IPCC) are anything to go by. We estimate the effect of climate variability and change on crop revenue and on maize and tea revenue separately using household panel data collected between 2000 and 2010 in rural Kenya. Effect of climate variability and change is estimated using a fixed effects estimator. Findings show that climate variability and change affect agricultural production but differs across different crops. Temperature has negative effect on crop and maize revenues but positive one on tea while rainfall has negative effect on tea incomes. Long-term effects of climate change on crop production are larger than short-term effects, requiring farmers to adapt effectively and build their resilience. We find that tea relies on stable temperatures and consistent rainfall patterns and any excess would negatively affect the production. Climate change will adversely affect agriculture in 2020, 2030 and 2040 with greater effects in tea sector if nothing is done. Therefore, rethinking about the likely harmful effects of rising temperature and increasing rainfall uncertainty should be a priority in Kenya. It is important to invest in adaptation measures at national, county and farm level as well as implementing policies that prevent destruction of the natural environment in order to address the challenges posed by climate variability and change.


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