How Will Kenya's Farmers Adapt to Climate Change in the Medium Term?
Urbanization and the Two Sector General Equilibrium Model
The new President of the World Bank asks some excellent questions about how Kenyan farmers will adapt to the worse weather they now face. This weather threatens their earnings and poses consumption and survival risk for their families.
I agree with Ajay Banga that this is a crucial adaptation issue. An ongoing research agenda is surveying farmers who live there to learn about their coping strategies and to measure who is adopting these strategies and how effective are these strategies in maintaining a farmer’s standard of living. For example, one indicator of well being is the farmer’s family average consumption level and the variation in consumption across Kenya’s farmers at a point in time. Here are some papers that Google Scholar pointed me to;
paper #1 , paper #2 , paper #3 , paper #4
My own research interest here relates to urbanization. Here is a list of Kenya’s cities.
Every farmer can consider migrating to a nearby city or sending a child to work in that city. Of course, there are fixed costs that one faces in making this move. One must physically move to the city and find housing and find work.
These new urban workers will likely end of up working in physical labor in the city. A for profit firm will hire them. Such firms seek out high quality workers who they do not have to pay too much money to hire. The hunger and desperation in the rural countryside actually creates a potential labor pool seeking low risk opportunities. This increases the incentive of the urban firms to recruit in the rural countryside to find workers, transport them to the city and find them housing so they can work for urban firms. These labor market “middlemen” play a key role in the United States labor markets where online webpages play this role. My point is that African farmer adaptation to climate shocks will be furthered if similar labor recruiters emerge in Kenya and other nations.
A critic can rightfully ask whether the “rural to urban migrants will be exploited by the recruiters”? This can of course occur in a one shot game but suppose that job recruiters want to develop trust with rural areas and play a repeated game recruiting more people to move to the cities. In this case, they have stronger profit incentives to make sure that the rural to urban migrants do not regret their choice.
My point here is to nudge you to think through what institutions and markets (transportation to the city, job searching) are needed to accelerate rural to urban migration. Such migration helps poor people in Africa to adapt to climate change because urban jobs feature an earnings stream that is less sensitive to weather shocks. Such earnings can then be sent to the countryside to allow one’s family to enjoy consumption even when local farming earnings decline. Migration is a type of spatial diversification as a family diversifies its income sources.
A well known Journal of Development Economics paper argued that too many African Cities are not engaging in manufacturing and this is slowing down climate change adaptation. This paper argues that 75% of African cities are agricultural middlemen and this is a problem because such cities offer fewer economic opportunities when the rural areas have bad harvests because the cities have nothing to sell. This “positive correlation” in income between the countryside and city would not occur if the cities engaged in more manufacturing production.
The World Bank can thus play a positive role in African nation climate change adaptation if it encourages the development of manufacturing industries in African Cities. As the upper-middle class grows in Africa’s cities, there will be a regional “home market” effect increasing demand for such goods and as this occurs, Africa’s cities will literally be well positioned to supply such goods while reducing transportation costs.
Finally, let’s return to the Kenyan farmers. The World Bank President focuses on the short run strategy set for the farmer facing drought. In the medium term, as such farmers recognize that the nearby cities offer economic opportunity such farmers with young children will have an incentive to educate these children to help them to flourish as urbanites. Educated people earn more in cities. Note the key point here. The expectation of rising urban opportunities for young people creates an incentive for farmers to invest in their children so that they can flourish in cities. Journalists ignore this point. We are not passive victims here. Urbanization plays an essential role in helping us to adapt to climate change. Competition in labor markets, output markets and capital markets help this process to move along and this reduces death risk and improves the quality of life of those who face significant physical climate risks.
As Kenyans urbanize, there are fewer people in the countryside. This raises real wages there and comparative advantage will arise as those who are relatively good at farming will be more likely to remain. The Roy Model’s predictions will be tested.
Urbanization also has a causal role in slowing down a nation’s population growth and this often reduces environmental pressures.