Does climate change perception make livelihood diversification more effective? Evidence from the consumption mobility study of rural households

Poor households engage in multiple activities to maintain their consumption in face of economic hardships or exogenous shocks. In this paper, we try to examine the effectiveness of such livelihood diversification to increase or maintain the inter-temporal consumption level conditional to the climate change knowledge of the households. We use a cross sectional survey data of 1200 households from central and western parts of Odisha and estimate multiple regression models with and without the assumption of endogeneity of occupational diversification index. Results clearly establish that households perceiving climate change significantly are able to benefit from diversification and maintain or improve their consumption intake over time, whereas those with no significant climate knowledge, are not able to benefit from diversification. In India, offering avenues for diversification has been a prime government policy with a view to augmenting farmers’ income; however, such policies will have limited effects unless farmers are given the correct climate education to be able to choose the right activities which can increase their income and stabilise consumption.

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