Is investment in Climate-Smart-agricultural practices the option for the future? Cost and benefit analysis evidence from Ghana

Abstract

A majority of smallholder farmers in sub-Saharan Africa (SSA) countries depend to a large extent on agriculture for food security and income. Efforts aimed at improving farm-related profitability are therefore important to improving livelihoods among smallholder farmers. In Ghana, for example, smallholder farmers that depend on agriculture face serious risks especially those related to climate change and variability and soil degradation. Notwithstanding these dangers, evidence of the published literature on how best to tackle these challenges is limited. Over the recent decades, however, there has been advancement by programs channelling resources into Climate-Smart Agricultural (CSA) practices to improving smallholder livelihoods and food security. The interest in advancing investment in CSA practices is a key pathway that has the potential to significantly reduce the negative effect of climate change and variability risks on smallholder farmers livelihoods. Investing in CSA practices is also a key pathway to improving farm yield per unit area. Consequently, smallholder farmers are adopting and implementing CSA practices. Despite that, a gap still exists on the profitability of undertaking such an investment, as this is key in determining the sustainability of CSA practices. On this basis, the present study undertook a detailed cost-benefit analysis (CBA) of seven CSA practices identified with smallholder farmers in the coastal savannah agro-ecological zone of Ghana. A total of 48 smallholder farmers that had adopted these practices were studied. Three CBA indicators namely the net present value (NPV), internal rate of return (IRR) and payback period (PP) were assessed for each of the seven CSA practices. The results showed that out of the seven CSA practices examined, six of them were profitably suitable for adoption and scaling up from the perspective of smallholder farmers as well as the public perspective. The finding from this study, therefore, fill the current information gap in the literature on the costs and benefits of adopting CSA practices on household livelihoods in Ghana. Such a finding is critical to the promotion and scaling up the adoption of CSA practices by smallholder farmers and serve as a basis of formulating appropriate guidelines and policies for supporting CSA practices.

Abstract

Climate-Smart, Practice, Livelihoods, Smallholders, Yield, Externalities, Decision.