Weather shocks and cropland decisions in rural Mozambique

AbstractEconomic development in low income settings is often associated with an expansion of higher-value agricultural activities. Since these activities often bring new risks, an understanding of cropland decisions and how these interact with shocks is valuable. This paper uses data from Mozambique to examine the effect of weather shocks on cropland decisions. We account for the bounded nature of land shares and estimate a Pooled Fractional Probit model for panel data. Our results show that crop choice is sensitive to past weather shocks. Farmers shift land use away from cash and permanent crops one year after a drought and from horticulture and permanent crop after a flood. However, this reallocation seems temporary as farmers devote less land to staples after two periods. This is consistent with the aim of maintaining a buffer stock of staples for home consumption