@TechReport{dp-423,
  author        = {Witt, Rudolf and Waibel, Hermann},
  astring       = {Rudolf Witt and Hermann Waibel},
  title         = {CLIMATE RISK AND FARMING SYSTEMS IN RURAL CAMEROON},
  month         = {July},
  year          = {2009},
  pages         = {28},
  size          = {335},
  number        = {423},
  language      = {en},
  keywords      = {Climate risk, agricultural diversification, portfolio
                  theory, Sub Saharan Africa},
  jelclass      = {G11, Q12, Q54},
  abstract      = {Climate risk is particularly burdensome to small-scale
                  farmers in developing countries due to heavy dependence on
                  natural resources, limited and erratic rainfall with high
                  inter- and intra-annual variability, and other natural
                  calamities. Numerous studies on climate change suggest that
                  climate variability is expected to increase in the next few
                  decades, and that it is likely to be severe for tropical
                  areas. For the design of better intervention strategies
                  that are capable to stabilize the incomes of the poor and
                  decrease vulnerability, it is mandatory to have a good
                  understanding of the livelihoods of rural populations, and
                  the risks they are facing.
                  
                  This paper presents an approach to measuring climate risk
                  and its impact on livelihood outcomes in fishery-dependent
                  communities in the ya{\'e}res floodplain (Far North
                  Province of Cameroon) by applying portfolio theory and
                  stochastic dominance rules. The focus of the analysis is
                  put on the question, how portfolio decisions of households
                  affect income and risk in different production systems.
                  Assuming possible future scenarios we can derive
                  approximate predictions of the effects of climate change
                  and rural development interventions on income and the
                  "riskiness" of different activity portfolios. The results
                  suggest that the diversification effect in the study area
                  is limited due to high correlation of income flows from
                  different activities. However, we show that development
                  intervention strategies, which particularly aim at changing
                  the covariation structure of income flows, are most
                  successful in reducing risk, and potentially increasing
                  income.}
}