The challenge of making climate adaptation profitable for farmers: evidence from Sri Lanka's rice sector

Abstract Adapting agricultural systems to changes in seasonal precipitation is critical for the agricultural sector in Sri Lanka. This paper presents evidence on the adoption drivers and the welfare impacts of agricultural strategies adopted by Sri Lankan rice farmers to adapt to low rainfall conditions. We estimate the causal impact of adopting different adaptive strategies across three different dimensions: (a) sensitivity to water stress, (b) household productivity, and (c) household livelihood conditions. The results highlight important trade-offs faced by farmers between reducing vulnerability to water stress and maximizing profitability and welfare outcomes. These findings are important for informing policies to support climate adaptation among smallholders, and to build and improve the climate resilience of Sri Lanka's rice sector.