CLIMATE, WATER, AND CARBON: THREE ESSAYS
IN ENVIRONMENTAL AND
DEVELOPMENT ECONOMICS
DISSERTATION
Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy
in the Graduate School of The Ohio State University
By
Francis Muamba Mulangu, BS., MA
Graduate Program in Agricultural, Environmental and Development Economics
The Ohio State University
2011
Dissertation Committee:
Dr. David Kraybill, Advisor
Dr. Mario Miranda
Dr. Brent Sohngen
, Copyrighted by
Francis Muamba Mulangu
2011
, ABSTRACT
This dissertation is composed of three essays. The first essay seeks to estimate the impact
of climate change on households‟ welfare on Mt. Kilimanjaro. Unlike previous studies, the
approach used in this essay limits the bias from unobservables by applying the analysis in
a relatively small geographical area composed of homogeneous farmers with similar
cultures, agricultural systems, and market influence. However, these farmers inhabit places
that have relatively large differences in rainfall. The data for the analysis were gathered
from a random sample of over 200 households in 15 villages and the precipitation from
rainfall observation posts placed in each of the surveyed villages. Due to the prevalence of
intercropping among local farmers and the spatial distribution of home-plots within and
between villages, the study applies a spatial multivariate approach that assumes
endogeneity between crop revenues. Doing so allows the study to capture the adaptation
strategies that smallholders use by diversifying their farm portfolios. The results indicate
that Mt. Kilimanjaro‟s agriculture is vulnerable to precipitation variation, especially
November precipitations. Farm revenue vulnerability is heterogeneous across space, crops,
and monthly precipitation. The study finds some evidence about the ability of irrigation
usage to reduce revenue vulnerability to precipitation change. With regards to households‟
welfare, we simulated crop revenue response to a median of seven Global Climate Models
(GCMs), and found evidence that climate change will negatively affect household welfare
on Mt. Kilimanjaro.
The second essay analyzes the potential benefits of introducing improved irrigation
schemes on Mt. Kilimanjaro to help rain-dependent farmers cope with the risks of climate
ii
, change. The study uses the Contingent Valuation Method (CVM) to elicit farmers‟
willingness to pay (WTP) for eliminating the risks of crop loss associated with climate
change by accessing improved irrigation schemes. The data for the analysis were gathered
using a double bounded survey approach from over 200 randomly-sampled farmers in 15
villages. The study makes important contributions to both policies in Africa and the applied
welfare literature. The policy contribution consists of valuation of improved irrigation in
the presence of climate change risks. The applied welfare contribution consists of empirical
evidence about the impact of farmers‟ risk beliefs, subjective perceptions about rainfall
distribution; and farmer‟s self-protective actions on welfare valuation. On average, Mt.
Kilimanjaro farmers are willing to pay up to 10% of their income to have access to the
proposed improved irrigation schemes. Last, the study finds that farmers‟ expected
increase in revenues associated with the improved irrigation scheme will equal the cost of
building it after 8 to 10 years.
The purpose of the third essay is twofold. First, the essay seeks to determine the
potential for soil carbon sequestration on Mt. Kilimanjaro. Second, the essay aims at
estimating the marginal cost of sequestering soil carbon on Mt. Kilimanjaro. To answer
these questions, the essay develops a Markov decision model that maximizes the net
present value (NPV) of farm profit by allowing the farmer to choose optimal farm
management strategies subject to crop yield, soil carbon stock, and exogenous carbon price.
Unlike previous studies, this essay uses a dynamic optimization approach to find the
optimal combination of farm management strategies at various carbon prices in a
developing country. The essay concludes that there is potential for economically viable
carbon sequestration contracts on Mt. Kilimanjaro. At $20 per metric ton of carbon or $8.62
iii
IN ENVIRONMENTAL AND
DEVELOPMENT ECONOMICS
DISSERTATION
Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy
in the Graduate School of The Ohio State University
By
Francis Muamba Mulangu, BS., MA
Graduate Program in Agricultural, Environmental and Development Economics
The Ohio State University
2011
Dissertation Committee:
Dr. David Kraybill, Advisor
Dr. Mario Miranda
Dr. Brent Sohngen
, Copyrighted by
Francis Muamba Mulangu
2011
, ABSTRACT
This dissertation is composed of three essays. The first essay seeks to estimate the impact
of climate change on households‟ welfare on Mt. Kilimanjaro. Unlike previous studies, the
approach used in this essay limits the bias from unobservables by applying the analysis in
a relatively small geographical area composed of homogeneous farmers with similar
cultures, agricultural systems, and market influence. However, these farmers inhabit places
that have relatively large differences in rainfall. The data for the analysis were gathered
from a random sample of over 200 households in 15 villages and the precipitation from
rainfall observation posts placed in each of the surveyed villages. Due to the prevalence of
intercropping among local farmers and the spatial distribution of home-plots within and
between villages, the study applies a spatial multivariate approach that assumes
endogeneity between crop revenues. Doing so allows the study to capture the adaptation
strategies that smallholders use by diversifying their farm portfolios. The results indicate
that Mt. Kilimanjaro‟s agriculture is vulnerable to precipitation variation, especially
November precipitations. Farm revenue vulnerability is heterogeneous across space, crops,
and monthly precipitation. The study finds some evidence about the ability of irrigation
usage to reduce revenue vulnerability to precipitation change. With regards to households‟
welfare, we simulated crop revenue response to a median of seven Global Climate Models
(GCMs), and found evidence that climate change will negatively affect household welfare
on Mt. Kilimanjaro.
The second essay analyzes the potential benefits of introducing improved irrigation
schemes on Mt. Kilimanjaro to help rain-dependent farmers cope with the risks of climate
ii
, change. The study uses the Contingent Valuation Method (CVM) to elicit farmers‟
willingness to pay (WTP) for eliminating the risks of crop loss associated with climate
change by accessing improved irrigation schemes. The data for the analysis were gathered
using a double bounded survey approach from over 200 randomly-sampled farmers in 15
villages. The study makes important contributions to both policies in Africa and the applied
welfare literature. The policy contribution consists of valuation of improved irrigation in
the presence of climate change risks. The applied welfare contribution consists of empirical
evidence about the impact of farmers‟ risk beliefs, subjective perceptions about rainfall
distribution; and farmer‟s self-protective actions on welfare valuation. On average, Mt.
Kilimanjaro farmers are willing to pay up to 10% of their income to have access to the
proposed improved irrigation schemes. Last, the study finds that farmers‟ expected
increase in revenues associated with the improved irrigation scheme will equal the cost of
building it after 8 to 10 years.
The purpose of the third essay is twofold. First, the essay seeks to determine the
potential for soil carbon sequestration on Mt. Kilimanjaro. Second, the essay aims at
estimating the marginal cost of sequestering soil carbon on Mt. Kilimanjaro. To answer
these questions, the essay develops a Markov decision model that maximizes the net
present value (NPV) of farm profit by allowing the farmer to choose optimal farm
management strategies subject to crop yield, soil carbon stock, and exogenous carbon price.
Unlike previous studies, this essay uses a dynamic optimization approach to find the
optimal combination of farm management strategies at various carbon prices in a
developing country. The essay concludes that there is potential for economically viable
carbon sequestration contracts on Mt. Kilimanjaro. At $20 per metric ton of carbon or $8.62
iii
