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BOX 5-1 The ICRISAT Village Studies

A remarkable example of a long-term survey that provided rich and important information on the consequences of seasonal and interannual climate variation in low-income rural settings was the Village Studies survey of the International Crop Research Institute for the Semi-Arid Tropics (ICRISAT), Hyderabad, India. The survey was initiated in 1975 in 6 villages located in three distinct agroclimatic areas of the semiarid tropics of India and was extended to 10 villages in 5 agroclimatic zones by the time the project ended in 1984. The design of the study was predicated on the notion that to translate efficiently the theoretical advantages of new technologies (in this case, new seed varieties developed at ICRISAT) into realized gains for farmers and rural inhabitants, a better understanding was needed of household behavior and the constraints facing actual decision makers. Over a period of up to 10 years the same 40 households in each of the sampled villages were visited on average every 3 weeks by project investigators, who obtained information on household assets, wages, agricultural inputs and commodity prices, consumption, production, and all household transactions. Information on daily precipitation was also obtained for each village. By having data over time for the same households over an extended period, researchers could observe and quantify how the existence and degree of climate variation and the risk of climate variation affected institutional and household arrangements, as well as the daily lives of the rural inhabitants and quantify the consequences of the newly introduced seed technologies. The data from the project, widely disseminated among researchers, produced influential studies that provided for the first time rigorous evidence on which characteristics of climate variation were most important to farmers, that quantified the extent to which households in a village were able to buffer themselves against climate-induced income variability using risk-sharing arrangements, that identified the key mechanisms by which households and farmers coped with realized fluctuations in climate, that assessed the costs to farmers by wealth levels of unforecastable climate risk, that quantified the role of schooling in augmenting the returns to new technologies, and that measured the degree to which climate variation created a barrier to rapid adoption of new technologies (Rosenzweig and Stark, 1989; Walker and Ryan, 1990; Rosenzweig and Binswanger, 1993; Rosenzweig and Wolpin, 1993; Besley and Case, 1994; Townsend, 1994; Skoufias and Jacoby, 1998).

variations. Liverman (1992) showed that land reform in Mexico—specifically, the creation of the ejido land tenure system characterized by communal land holding—led to higher agricultural losses from drought compared with privately held land.

Simulations of Decision Making

Firm-level economic decision models have been used to track the effects of climatic variability on economic agents' expectations of climate risk. Such models use discrete stochastic sequential programming, a

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