Publication

As growing attention is paid to climate change as an actual policy issue, the significance of climate variability in adaptation decisions is beginning to be recognized. By using a real option framework, the authors of this paper shed light on how climate change and climate variability affect individuals' (farmers') investment decisions with regard to adaptation. The results show that uncoordinated farmers with a high risk aversion may under-adapt while farmers with a low risk aversion would over-adapt under the same conditions.