Lessons from the past : how experience reduces the impact of weather shocks on Ugandan smallholders

Abstract

Do people learn from experience how to cope with weather shocks? We use a unique four-wave panel household dataset from Uganda, merged with granular historical weather records, to understand the nexus between experience, weather shocks, and agricultural performances. Our identification strategy exploits cross-sectional variation in the climate experience of immigrant members of the households and the temporal variation in the realization of the weather shocks during the survey years. We show that, although temperature shocks may be detrimental to agricultural performance, households with more experience perform differentially better. An additional 10 days of temperature shocks reduce the income of households with little experience by 11 percent, while the effects are negligible for those with higher-than-average experience. Our findings are robust to placebo tests on the timing of shocks and to falsification tests. We further document that the differential effect on performance is independent of an unrelated experience variable capturing households’ familiarity with soil characteristics. Suggestive evidence points towards adopting risk-reducing technologies as the driving factor behind the gains of the more experienced households. These findings highlight the relevance of initiatives promoting experiential learning.