Climate change vulnerability and adaptive capacity of smallholder farmers: A financing gap perspective

With climate change continuously threatening global food production, smallholder farmers are increasingly struggling to adapt to changing climatic conditions, decreasing productivity, and limited access to finance. To examine these challenges, this study used cross-sectional data collected through a multi-stage approach across three plantain-producing states in southwest Nigeria, with 100 farmers randomly selected in 5 local government areas per state to give a total of 300 farmers. A two-step Stochastic Frontier model is used to examine the relationship between climate adaptation strategies and plantain productivity while the Harold-Dorma growth equation and Multivariate Probit regression are used to assess the financing gap and its effect on adaptive capacity. Finally, the Foster Geer-Thorbecke (FGT) equation is used to measure the vulnerability of farmers to climate change. Findings show that as the financing gap of the farmers decreases, their ability to adopt climate adaptation strategies to enhance their productivity increases. However, 80% of the farmers are financially vulnerable to climate change, with 37% facing severe financial constraints. The vulnerability depth for the farmers is 56%, indicating that with 106. 55 (56% of the vulnerability line of 190. 26), many farmers' adaptive capacity could be enhanced to reduce their vulnerability below the vulnerability line. This study's approach provides a comprehensive approach for assessing smallholder farmers' ability to adopt adaptation strategies that increase productivity and enhance resilience. While other policy measures to enhance smallholder farmers' ability to address the challenges of climate change are important, it is crucial to prioritise actions that improve the financial status of smallholders. • A novel approach linking finance to productivity and climate change vulnerability. • Findings show adaptive capacity increases as the financing gap of farmers reduces. • Four out of every 5 smallholders are financially vulnerable to climate change risks. • Farmers' adaptive capacity could be improved with an average amount of 106. 55.