Adapting to catastrophic water scarcity in agriculture through social networking and inter-generational occupational transitioning

Abstract

Increasing frequency of drought threatens the long-term viability of agriculture in many regions of the world. Some farmers will exit the agricultural industry abruptly, but for many, the path out of agriculture is prolonged and involves several generations within a household. This paper presents a model of dynamic inter-generational preferences and occupational choices to explore possible transition paths out of agriculture. Differing preferences across generations within a farming household are incorporated through a dynamically-evolving utility function, which influences the time paths of optimal investments in human, social and natural capital. A dwindling natural resource base, such as groundwater, requires increasing reliance on urban livelihoods. However, inter-generational differences in preferences for rural versus urban lifestyles, modelled as different weights in the household’s utility function, may determine whether this occupational transition can be attained.

Keywords:

• social capital
• human capital
• groundwater risk
• dynamic preferences
• inter-generational preferences
• farmer exit

Acknowledgements

This paper was completed while the author was a visiting scholar at the Yale School of Forestry and Environmental Studies. The author would like to thank the hosts for their generous hospitality. The author would like to thank two anonymous reviewers for their helpful comments and the Associate Editor, Dannele Peck for providing valuable suggestions and extensive editing of the paper.