2. Literature on policies and strategies for resilience

The previous chapter defined resilience and explored what it means for agriculture and for agricultural policy makers. In particular, it identified three capacities that are key to resilience – the capacity to absorb the impact of an adverse event, the capacity to adapt in response to risk, and the capacity to transform with the intent of eliminating the risk altogether. This chapter reviews the literature to identify the attributes, strategies and policy instruments (collectively referred to as “resilience measures”) that make farms more resilient by building these capacities.

The work covered here comes largely from the development field, the disaster risk management (DRM) sphere, and the climate change adaptation literature. Each of these fields is relevant to a broad review of agricultural resilience because resilience is highly contextual. For that reason, instruments identified in one of these settings could increase agricultural resilience more generally. Some perspective on each of these bodies of work is provided below.

  • The development literature is drawn mostly from ex post evaluations of programme interventions that directly targeted farmers and rural residents in lower-income countries. Consequently, while this literature can be a source of information on farm-level resilience, its emphasis on poverty and food security might make its findings less relevant in the context of developed country agriculture.

  • In contrast, the DRM literature covers all countries, but from a predominantly macro viewpoint related mostly to actions governments can take to be proactive in planning for and mitigating the impacts of disasters. Nevertheless, this body of work does provide some insights specific to agriculture.

  • The literature on climate change adaptation focuses on mitigating the impacts of catastrophic events, incremental adaptations in response to slow variables (such as rising temperatures or erratic rainfall), and transformative adaptations that may be necessary as agricultural systems approach critical thresholds beyond which they may no longer be able to function. Much of this work comes from OECD countries.

This review sets aside the literature on both resilience theory and resilience measurement frameworks, and instead strives to provide an evidence base of the different measures that have been associated with improved resilience so that countries can consider which interventions might be relevant to their own policy contexts.1 This review does not purport to be a comprehensive list of resilience measures, but rather seeks to highlight those that are frequently mentioned by a variety of sources. This work also draws heavily on previous OECD work in the context of risk management (OECD, 2009[1]), climate change adaptation (Ignaciuk, 2015[2]), and economic resilience (OECD, 2014[3]), uniting these concepts for a more holistic view of how resilience can be operationalised in the agricultural sector.

After reviewing the literature on resilience measures relevant to each of the capacities, the chapter closes by offering some policy implications of the literature review.

This section describes the resilience measures that the literature suggests contribute to improved resilience by strengthening the core responsive capacities of stakeholders – absorptive, adaptive and transformative. It describes the core attributes needed to build each capacity, and how the resilience measures highlighted by the literature contribute to those attributes. In line with the risk management framework’s optimal governance structure, the reviewed measures are grouped by actors. This construction emphasises the holistic and multi-dimensional nature of resilience – achieving improved resilience requires building multiple capacities to respond to risks in the short-, medium-, and long-run, with specific complementary measures relevant to the different actors.

The capacity to absorb the impact of a shock, hazard, or adverse event (absorptive capacity) is characterised by the ability to prepare for, mitigate or prevent the event’s attendant negative impacts, while also ensuring that essential system functions are re-established quickly in the aftermath. Improvements in absorptive capacity can be realised through measures that either reduce the initial impact of a shock or else shorten the amount of time it takes to recover from a shock. Broad categories of measures identified in the literature that reduce the initial impact of a shock include the following.

  • Providing information, including detailed risk assessments and real-time information on potential risks, so that stakeholders can prepare appropriate responses.

  • Improving planning processes – specifically, the collaborative drafting of contingency plans – to ensure that farms, private actors, and governments have a collective understanding of their responsibilities for managing risk and determine their optimal responses before shocks occur.

  • Investing in risk-mitigating technologies and risk reduction infrastructure, including systems implemented at the farm level or on a regional/national basis.

  • Providing a risk minimising environment to ensure that services are reliable and markets are functional, even in times of crisis.

Broad categories of measures identified in the literature that shorten the amount of time it takes to recover from a shock include the following.

  • Improving planning processes (echoing reasoning from above).

  • Providing financial resources to replace damaged assets and ensure that normal farm operations can be resumed as quickly as possible in order to minimise indirect impacts from adverse events, with relevant financial measures for farms, the private sector, and governments depending upon the impact of the event.

  • Social capital at the household level to access resources and information in a timely manner.

Measures highlighted in the resilience literature for improving absorptive capacity are closely aligned with good risk management practices, with two additional caveats. First, for catastrophic events, the OECD has previously emphasised that governments have a role in responding to risks in this layer (OECD, 2011[4]). While recognising the role of government in catastrophes, the resilience literature puts greater emphasises on strategies that can be employed by all actors that will either mitigate impacts or facilitate a faster recovery. Second, the resilience perspective places greater emphasis on the role of government in facilitating risk reduction for potential future hazards rather than focusing solely on current risks (more in line with the climate change risk management literature). Keeping these caveats in mind, the following sections consider relevant measures for each of the different actors.

Beginning at the farm level, a key finding from the literature is that several strategies for managing normal risks (that is, adverse events that are frequent, but that impart small damage) also improve farmers’ resilience to catastrophic shocks by building their absorptive capacity. This is because risk management strategies such as diversification and savings accounts either reduce the financial impact of shocks, or else provide liquidity to help farmers to recover faster.

Regarding diversification, the literature highlighted this measure as a tool that helped households cope with adverse events in the short-term by ensuring that they have access to different income streams in the face of shocks (regardless of their magnitude). Various forms of diversification were found to positively affect resilience, including genetic diversity of a particular crop (Bullock et al., 2017[5]), overall crop mix (Darnhofer, 2010[6]; Gaudin et al., 2015[7]; Hansen et al., 2018[8]), the presence of multiple on-farm income-generating activities (Darnhofer, 2010[6]; Hansen et al., 2018[8]), or a mix of on- and off-farm income sources (Nelson et al., 2016[9]; Smith and Frankenberger, 2018[10]; Darnhofer, 2010[6]; Jetté-Nantel et al., 2011[11]). For example, researchers in Canada found that by combining income from farm and off-farm activities, producers could improve their overall resilience (Jetté-Nantel et al., 2011[11]), while producers in Austria felt that diversifying their product offerings (growing niche crops such as herbs with predictable prices alongside more volatile crops like grains), expanding into other on-farm activities (engaging in tourism, composting, or on-farm processing along with crop production), and smoothing income through off-farm employment, were effective resilience-enhancing strategies (Darnhofer, 2010[6]).

The other most commonly-highlighted on-farm strategy found to improve absorptive capacity was more explicit access to financial resources – including assets, savings, or safety nets – that either allowed households to make repairs, or helped households to smooth consumption when productive assets were damaged. Previous OECD work has highlighted the potential role of savings as an effective agricultural risk management strategy (OECD, 2009[1]). Within the context of resilience, however, much of the evidence on the effectiveness of these tools comes from the development literature, so the evidence was based on the possession of assets such as livestock or land that can be liquidated as an emergency coping strategy (Smith and Frankenberger, 2018[10]). Safety net programmes were also found to be effective resilience-improving strategies, as they allowed households to bridge times of crisis without resorting to negative coping strategies. For example, both direct cash transfers and cash-for-work programmes were found to substantially reduce reliance on negative coping strategies in developing country settings (World Bank, 2016[12]; Bastagli et al., 2016[13]; Asian Development Bank, 2018[14]). Informal safety nets – social groups, savings groups, or other social support that can be accessed for financial needs – were also found to be associated with improved resilience (Smith and Frankenberger, 2018[10]). With respect to developed countries, the same type of income smoothing is commonly incorporated into the tax code (Antón et al., 2012[15]; OECD, 2020[16]). OECD’s 2020 review of taxation in agriculture reported that income averaging measures for farmers were available in ten OECD countries,2 while further tax deferral measures for exceptional circumstances were available in Australia, Canada, Ireland, Japan and the United Kingdom (OECD, 2020[16]). In one example, under Canada’s “Livestock Tax Deferral” programme, livestock producers can defer proceeds from the sale of animals in stressed years to the following tax year in order to be able to better cover the costs of replacing livestock (Campbell et al., 2014[17]).

Aside from income and consumption smoothing strategies, the literature noted that ex ante investments in technologies at the farm level to monitor either climate or market conditions could help farms to avert or mitigate the effects of disasters by alerting them to the need to take preventative measures (OECD, 2014[18]; OECD, 2016[19]). An array of digital technologies can contributed to improved absorptive capacity in a variety of ways (Box 2.1).

Finally, particularly in the face of catastrophic events, the literature noted the importance of social capital to the absorptive capacity – particularly with respect to a household’s ability to recover quickly from adverse events – because it allowed households to access either emergency financial resources or essential information necessary to coping with disaster (Woodson et al., 2016[20]; Smith and Frankenberger, 2018[10]), while tight-knit communities may also result in a more co-operative approach to hazard response that benefits affected parties (Murphy, 2007[21]). In fact, the literature even distinguished between several types of social capital that could be beneficial to resilience in these circumstances: bonding social capital (a sense of solidarity and trust amongst community or group members), bridging social capital (access to links outside of the immediate community or group), and linking social capital (vertical connections, typically to some form of authority). There are different reasons why these distinct types of capital could be important in times of crisis. For example, bridging capital allows communities to access new ideas or information, whereas bonding capital promotes co-operation in times of crisis (Newman and Dale, 2005[22]). Researchers noted that policy makers could consider using networks to strengthen implementation of resilience policy initiatives (Bernier and Meinzen-Dick, 2014[23]). For example, governments can utilise farmer groups, trade organisations or commodity organisations to leverage messaging targeting producers in the wake of a shock.

Market tools were found to improve absorptive capacity by providing financial liquidity in the wake of adverse events to help actors avoid or reduce both direct and indirect losses. While insurance is the most frequently-cited of these tools, the resilience literature increasingly highlights the potential of other alternative mechanisms that can be used to transfer risk to the market, and consequently provide actors with more predictable finances in response to adverse events. These tools are utilised in conjunction with on-farm strategies for both income and consumption-smoothing purposes.

The value of insurance as a tool for absorbing the negative effects of adverse events is well-established (OECD, 2009[1]; OECD, 2011[4]), and there has been a concerted international policymaking effort to increase insurance utilisation as a means to improve resilience (Surminski, Bouwer and Linnerooth-Bayer, 2016[26]).3 Despite rising interest in insurance for building resilience, there has been relatively little work devoted to the possible impacts of insurance on resilience objectives within OECD countries, with most of the work focused on the development of insurance products for farmers in low-income countries. Specifically, the literature largely examines the development of index insurance products for low-income countries, which have a mixed record of success in achieving resilience targets (Weingärtner, Simonet and Caravani, 2017[27]) (Box 2.2).

There are a few examples of index insurance being used to build resilience in OECD countries, including several programmes that insure grassland-based farming systems in Austria, Canada, France, Germany, Spain, Switzerland and the United States. In OECD countries, these types of programmes generally do not face the same constraints that have been found to undermine their development more generally (including the lack of information or data on which to base an index, limited opportunities for reinsurance, and uneducated client pool), but they still suffer from basis risk,4 which may limit widespread uptake. In grassland-based systems in particular, satellite-based index insurance products may become a more commonly available, cost-effective tool as data quality improves (Vroege, Dalhaus and Finger, 2019[35]). Two example programmes from OECD countries include:

  • The US Department of Agriculture’s Risk Management Agency offers an insurance product for pasture, rangeland and forage that uses a rainfall index for the indemnity payment trigger. In 2018, 98 million acres were insured under the programme (Belasco and Hungerford, 2018[36]).

  • Mexico has been running an index insurance programme (CADENA) to insure the state governments’ catastrophic insurance programmes since 2003. An independent analysis of the programme’s performance concluded that farmers that received payments through CADENA cultivated more land in the crop year subsequent to the weather shock, and that recipient households tended to have higher income in the subsequent year as well, indicating that the programme was effective at helping farm households absorb and bounce back from adverse events (De Janvry, Ritchie and Sadoulet, 2016[37]).

At the same time, some scholars have cautioned that insurance can also be counterproductive for resilience purposes – particularly in the case of subsidised insurance which does not accurately reflect the producer’s risk profile. For example, programmes have been found to crowd out both on-farm risk management strategies and private insurance options (Antón et al., 2012[15]; Ignaciuk, 2015[2]; van Asseldonk et al., 2018[38]); incentivise maladaptive outcomes (for instance, insurance can allow producers to remain viable while eschewing the adoption of other long-term risk management practices, perversely jeopardising long-term sustainability) (Collier, Skees and Barnett, 2009[28]; Müller, Johnson and Kreuer, 2017[39]; OECD, 2014[18]; Annan and Schlenker, 2015[40]); or act as a disincentive to additional risk reduction (Surminski, Bouwer and Linnerooth-Bayer, 2016[26]). The challenge to using insurance as an effective tool to enhance resilience lies in ensuring that premiums reflect the actual risk faced by actors so that they have an incentive to take other risk-reducing measures (Kunreuther, 2015[41]). The overall conclusion of the literature in this area is that insurance can be useful as a potential resilience-enhancing strategy, but only if it is treated as a tool in a wider overall resilience strategy rather than as an alternative to adaptation (Surminski, Bouwer and Linnerooth-Bayer, 2016[26]; Weingärtner, Simonet and Caravani, 2017[27]). While the primary role of insurance in the resilience context is to provide financial resources for income smoothing purposes, the literature also noted that insurance could play a role in transmitting more accurate information about risks to stakeholders, and could also supply a mechanism for incentivising investments in disaster risk reduction (Weingärtner, Simonet and Caravani, 2017[27]).

Aside from insurance, the literature identifies non-traditional financing as a means through which resilience can be improved, by providing predictable financial resources quickly in the event of a catastrophe to minimise indirect losses. This emphasis on non-traditional tools grows out of the literature’s finding that traditional risk financing mechanisms (including government reserve funds or ex post budget reallocations) have shortcomings in dealing with climate risks in the highest risk layer (Linnerooth-Bayer and Hochrainer-Stigler, 2015[42]). For example, funding disaster response through reserve funds has large opportunity costs, as governments must weigh the trade-offs between using funds for immediate purposes or for hypothetical future disasters (OECD, 2014[3]). Consequently, disaster funding tends not to be a budgetary priority (Kellett and Caravini, 2013[43]). In this context, non-traditional financing options are increasingly used to ensure that countries have an alternative mechanism in place prior to an event that allows for adequate financing for recovery. Among these instruments are catastrophe bonds (commonly referred to as “CAT bonds”), contingent financing, and catastrophic pooled insurance (Box 2.3).

The broader evidence base for these approaches remains thin since they are a relatively recent phenomenon (Kellett, Caravani and Pichon, 2014[44]; OECD, 2015[45]). However, a few OECD countries have long-running experience with these tools. Mexico has been using CAT bonds (in conjunction with their FONDEN disaster fund) since 2009 to insure against earthquakes and hurricanes (OECD, 2015[45]; Swiss Re, 2017[46]). Other OECD countries are also increasingly using these tools – as of 2018, the Artemis database for catastrophe bonds and insurance-linked securities had registered more than 280 CAT bond transactions, including for cyclones in Australia, earthquakes in Chile, floods in Europe, typhoons in Japan, and severe thunderstorms in Texas (Artemis, n.d.[47]).

Outside of insurance and non-traditional financing, the financial markets more generally contribute to improved resilience through the provision of access to normal banking services, such as credit and savings (Hallegatte, 2014[48]). Other market tools, such as futures markets, forward contracting, and value chain integration can also help farms to better absorb the impact of adverse events (OECD, 2011[4]), although these tools have not yet been widely considered in the resilience literature.

The literature on the role of government in improving the absorptive capacity is extensive, as it covers both policies that can either reduce the initial impact of a shock or shorten the amount of time it takes to recover from a shock. Identified measures focus heavily on information provision and planning – both to identify and carry out ex ante risk reduction policy efforts, as well as to ensure that disaster response can be as organised and swift as possible – but also include ex ante investments in technology or infrastructure, and financial measures for ex post recovery. Mirroring the roles outlined in the risk management framework, this section is divided into ex ante and ex post actions to highlight aspects important to each level of government involvement.

Ex ante government actions advocated by the resilience literature are largely planning and investment measures that address information asymmetries and risk reduction and mitigation (in line with traditional risk management strategies). At the same time, the increased awareness of the importance of disaster risk reduction has put the focus of ex ante policies on mitigating not only immediate risks, but also future, potentially unknown shocks. In the context of the absorptive capacity, the literature identifies four main areas for ex ante government action: providing information to enable on-farm and more general sectoral risk management; improved planning and co-ordination for more effective disaster response; investment in disaster risk reduction (including improving infrastructure); and the provision of an overall risk-minimising environment. A short overview of each of these areas is provided below.

The first mechanism through which governments can contribute to ex ante risk reduction is by providing information that helps farmers to implement their own strategies to better absorb shocks. In a general sense, governments can play a role in adequately communicating risks, strategies, and contingency plans to stakeholders well in advance of the onset of adverse events (Clarke and Dercon, 2016[52]). In the resilience literature, the most oft-cited example of how information contributes to absorptive capacity is through the use of early warning systems, because they allow farmers to reduce their exposure to adverse events. Both the Hyogo and the Sendai Frameworks stress the need for countries to set up early warning systems as part of their disaster risk management strategies (UNISDR, 2005[53]; UNISDR, 2015[54]), and experience on both the development front and in the DRM sphere provide support to this as a cost-effective action (Hallegatte, 2012[55]; Braimoh, Manyena and Obuya, 2018[56]). Monitoring of conditions is also necessary to inform stakeholders about when they should take mitigating actions (Fan et al., 2014[57]), but in addition to providing these early warning systems, there is a role for government in both providing the underpinning data and in devising new ways to use that data to improve early warning platforms. For example, researchers in the US state of Colorado have combined analysis of historical drought records and future climate predictions to inform their drought monitoring and scenario planning (Finnessey et al., 2016[58]).

In their detailed multi-country assessment of improving country response to natural disasters, Clarke and Dercon (2016[52]) argue that in order to ensure more resilient systems, the entire paradigm on disaster risk management needs to be reconceived with a decided emphasis on a co-ordinated pre-disaster action plan, an expedient and clear decision-making process during the onset of the disaster, and financing on standby to ensure the implementation of the pre-agreed plan. The planning phase is most effective if it brings together various stakeholders in a participatory approach (at a minimum, to include scientists to describe the scenarios, bureaucrats to plan the response, implementers to ensure the response is feasible, and financiers to offer estimates on how much the response will cost), and clearly delineates the responsibilities and actions of each, including who will be protected, under what conditions, and who will pay for said protection (Clarke and Dercon, 2016[52]). In this context, scenario planning – typically directed by the government, but involving actors from across the supply chain – has been shown to be a particularly useful exercise, as it encourages parties to think critically about different possible situations in a hypothetical, non-political setting. This process of brainstorming possible responses to the different scenarios leads to more flexible, better prepared systems (Finnessey et al., 2016[58]).

Aside from co-ordinated planning, the other key to ensuring the feasibility of ex ante planning is frontloading financing of disaster recovery. Particularly given evidence that the speed of recovery matters for improved resilience, this pre-planning of disaster funding can reduce post-disaster uncertainty and ensure that resources are available in a timely manner (Hallegatte, Rentschler and Walsh, 2018[59]). But governments – particularly in developing countries – typically do not keep access to sufficiently large disaster contingency funds to cover catastrophic events given the opportunity costs and implied trade-offs of holding such large amounts of money in reserve (Clarke and Dercon, 2016[52]). Furthermore, in the decade prior to 2015, only around 30% of catastrophe losses were covered by insurance, leaving individuals and governments extremely exposed (Swiss Re, 2015[50]). To avoid having to rely on ad hoc budgetary measures, governments have various ex ante options when it comes to financing disaster relief, including budgeting reserve funds or market-based tools like pre-approved contingent lines of credit, pooled insurance, and CAT bonds (detailed above) (OECD, 2015[45]). OECD countries have used these tools to ensure that recovery from adverse events is expedited and predictable. For example, Mexico established a designated Natural Disaster Fund (FONDEN) in 1996, which each year specifies that at least 0.4% of the federal budget should be available for rehabilitation of federal infrastructure in the wake of disasters (OECD, 2015[45]). Since that time, FONDEN funds have been used to cover millions of dollars’ worth of reconstruction. Researchers have estimated that FONDEN boosts economic activity in the areas that receive funds by 2-4% in the year following an adverse event, indicating that the funds are helping these areas weather shocks in support of improved resilience (World Bank, 2016[60]). Colombia has used instead a contingent line of credit, to be accessed only in the event of a natural disaster (World Bank, 2017[61]). In 2010, severe rains triggered the disbursement of the funds, which allowed the country to expedite its recovery (Hallegatte, Rentschler and Walsh, 2018[59]).

In conjunction with improved risk management plans and strategies, both researchers and the international community are increasingly advocating a larger role for government in investing in disaster risk reduction as a more cost-effective approach to disaster management (Shyam, 2013[62]; Mechler, 2016[63]; Multihazard Mitigation Council (MMC), 2005[64]). These kinds of investments include large infrastructure projects like flood control or irrigation infrastructure, but can also cover soft things like institutional capacity and monitoring (Tanner, Bahadur and Moench, 2017[65]). Yet stocktaking efforts in preparation for the 2015 Sendai Framework found that countries continue to underfund risk reduction projects, leaving them unprepared for risks and more likely to need ex post disaster funds (Kellett, Caravani and Pichon, 2014[44]). The literature provides several suggestions for how this gap can be addressed in order to improve absorptive capacity.

One of the primary means through which governments can increase funding for risk reduction projects is by considering the way they value resilience-enhancing improvements in project evaluation cost/benefit calculations (Shyam, 2013[62]). Many of these projects require large up-front costs, while the benefits are uncertain and accrue over the long-term. As such, these projects may be perceived as poor investments, since the net present value of potential long-term benefits is close to zero at higher discount rates. The literature argues that in order to more adequately account for the benefits of such long-term actions, a much lower discount rate is needed. For example, the Stern Review used a rate of 1.4% in their report to assess the benefits of climate change actions (Levy, 2018[66]).

Another constraint impeding risk-reducing investments is the probability that such investments will not pay off in the long run – particularly given the uncertainty surrounding future conditions with respect to climate change. But this viewpoint could be overly simplistic, as there are investments that could pay off for farmers and agricultural sectors regardless of future conditions. These “no regret” options can include development of new irrigation or water storage infrastructure, increasing water use efficiency, the development of new crop varieties that are more tolerant of extreme conditions, adjusting planting dates, or devoting increased funding to agricultural research (Hallegatte, 2009[67]; IPCC, 2012[68]; ECONADAPT, 2015[69]). In an analysis of case studies covering Europe, for example, Tröltzch (2013[70]) concluded that various measures related to agriculture, including the development of adapted crops and pastureland restoration, would have greater benefits than costs.

Even outside the realm of no regret options, producers and countries can follow other strategies to minimise the riskiness of DRM investments. First of all, they can prioritise flexible or easily reversible investments. These options do not require large initial outlays and do not preclude further or different future adaptations. Some possibilities in this area would include the introduction of new crop insurance programmes, the establishment of a crop monitoring and early warning system, or farmer capacity building (Hallegatte, 2009[67]; IPCC, 2012[68]; ECONADAPT, 2015[69]). If none of these options are feasible, governments can concentrate instead on investments with reduced lifetime horizons, or they can focus on investments that will be robust across a large variety of possible future scenarios (Leclère et al., 2014[71]). Some authors suggest that investments should be designed using “safety margin” approaches, where infrastructure or systems are designed not to function under most probable circumstances, but over a range of nearly all possible circumstances under current future climate projections (Hallegatte, 2009[67]).

Furthermore, the literature also notes that countries can consider investing in DRM as an opportunity that can unlock multiple layers of benefits for countries in terms of both avoided losses and wider economic gains and spillover effects. For example, Tanner et al. (2015[72]) argue that making investments in DRM can unlock three types of benefits for countries which they call a “triple dividend”. This triple dividend is composed of avoided losses, development related to stimulated innovation and entrepreneurship, and social/environmental co-benefits from DRM investments, with two of the three identified benefits realised regardless of whether or not a disaster strikes. As such, the authors contend that choosing not to invest in these strategies is very much a missed opportunity.

In addition to specific policy preparations targeting resilience, it’s worth noting that countries can improve their resilience generally by providing an enabling environment, ensuring that producers have functioning access to services, credit, and markets in order to have the ability to implement their own risk management strategies (OECD, 2009[1]). For example, research from the developing world highlights the fact that more resilient households tend to have better access to services – including healthcare, schools, and local government offices (Smith and Frankenberger, 2018[10]).5 Markets are another area in which governments can act to minimise the risks from adverse events. Research has indicated that open markets can play a role in stabilising food prices in times of crisis, ensuring that poor consumers continue to have economic access to food (Fan and Brzeska, 2014[73]; Dorosh, Kennedy and Torero, 2016[74]). Furthermore, the authors in these cases noted that distortionary trade policies in times of high food prices damage the resilience of the global food system.

While co-ordinated and well-planned pre-crisis government actions were found to be integral to resilience, the literature also noted that ex post disaster response could contribute to improved absorptive capacity through the provision of targeted financial resources that do not create disincentives to risk-reducing actions of other stakeholders. In this respect, several findings are relevant, including the importance of response speed, the necessity to consider incentives in the design of ex post assistance programmes, the opportunity to build back better, and the potential benefits of ex post analyses of disaster response.

With respect to the actual disaster response, the resilience literature from both the development and disaster spheres conclude that reaction time matters [see, for example, (Hallegatte, Rentschler and Walsh, 2018[59])]. Interventions and assistance that are delivered to producers immediately in the wake of a crisis (or even before a full-blown crisis develops) help households to better absorb shocks through the avoidance of negative coping strategies and the ability to resume productive, income-generating activities again sooner in order to reduce indirect adverse economic effects. One model from the World Bank stressed that indirect output losses would always be greater than a direct loss of productive assets, such that delayed reconstruction magnifies total disaster losses (Hallegatte, 2014[48]). Data from the 2005 Mumbai floods underscored this point – the authors estimated that if reconstruction time in the wake of the floods would have been cut by one-third, total welfare losses would have fallen by nearly 4% (Hallegatte, Bangalore and Vogt-Schilb, 2016[75]). The value of a quick response has also been noted elsewhere in the development literature. In their 2018 analysis of resilience in the face of drought in Ethiopia, Kenya, and Somalia, USAID used household data to estimate that an early response would save USD 1.6 billion in humanitarian response, and nearly USD 2.5 billion in additional avoided losses. Putting a similar plan into action, in 2017, FAO and partner organisations mobilised resources from their Special Fund for Emergency and Rehabilitation Activities (SFERA) in the Horn of Africa when monitoring systems indicated that a severe drought was occurring. Livestock feed and other assistance was disbursed, leading to more productive herds, reduced livestock mortality, and improved household welfare (FAO, 2018[76]).

But the way in which support is provided may also affect farmers’ resilience to risk in the long term. Farmers will decide on their risk management strategies based, in part, on how they expect governments to respond to ‘catastrophes’ in the sector (OECD, 2009[1]; European Commission, 2017[77]). For example, farmers in OECD countries may expect governments to provide relief after a disaster, potentially to support farm incomes and restore agricultural production and assets. Yet such assistance can reduce farmers’ incentives to take responsibility for managing risks, which has the snowball effect of increasing their exposure to shocks, increasing losses, and necessitating further assistance (Barnett, 2014[78]; Clarke and Dercon, 2016[52]). Similarly, disaster relief that takes the form of tied grants – such as subsidies for freight or fodder, and support tied to the restoration of particular assets – can distort farmers’ behaviour and favour some activities over others (Productivity Commission, 2014[79]).

In order to provide a foundation for improved resilience, disaster assistance should be structured in such a way that farmers and local authorities are incentivised to take mitigating actions. This may include cost-sharing between local and national governments, for example (Clarke and Dercon, 2016[52]). Another option in this space could be to shift from a paradigm of unlimited disaster assistance to a framework based instead on lifetime limits (Rogers, Bardenhagen and Lorente, 2016[80]). The idea behind such an approach is that central governments would set limits on federal disaster aid disbursed to local actors over a given period of time. As such, local actors would still have access to recovery funds, but they would in the meantime be incentivised to make investments to reduce their long-term vulnerability to adverse events. Such a system would not completely absolve the national government of responsibility for disasters, but it does allow for local control in deciding how best to allocate limited funds. This approach could be combined with additional actions, such as additional funding incentives for mitigating activities, requirements that actors carry insurance to privatise losses, or the establishment of endowment funds. Overall, governments should strive to ensure that this assistance is disciplined, rules-based, and predictable.

The final financial element of ex post disaster response relevant to governments is the idea of using disaster recovery as an opportunity to leverage improved system resilience through a structured programme to “Build Back Better”: that is, stronger, faster, and more inclusively. The World Bank estimates that if countries were to build new infrastructure designed to withstand more powerful shocks, reduce post-disaster reconstruction time from five years to one year, and more effectively target the poor and vulnerable in crisis recovery, they could substantially reduce their losses to both assets and to post-disaster consumption and income, with significant implications for long-term resilience (Hallegatte, Rentschler and Walsh, 2018[59]). Although the model’s estimated avoided losses tend to be highest in terms of percentage of GDP for poorer countries, the benefits to OECD countries of such an approach can also be substantial. For example, the authors estimated that reducing rebuilding time from natural disasters in the United States could reduce well-being losses by 24% (Hallegatte, Rentschler and Walsh, 2018[59]). Moreover, additional work from the group noted that the “productivity effect” of reconstructing in such a way that overall economic productivity is higher than prior to the crisis can more than compensate for disaster losses in the long-run (Hallegatte and Dumas, 2009[81]). In agriculture, farmers (and other actors in the value chain), can leverage disasters as opportunities to invest in new technologies, shift into production of different commodities, or improve the long-term sustainability of their operations.

Once the event has run its course, the literature suggested that policy makers engage in a an ex post analysis and learning process to identify lessons from the response to an individual disaster, learn from it, and evolve in such a way that the system is better prepared for future disasters (Munich Re, 2017[82]). Moreover, authors emphasised that planning, response, and learning should be an iterative process that incorporates new information after every disaster (Keating et al., 2014[83]). In one recent example, an ex post analysis of the drought experienced by the US state of New York in 2016 (in conjunction with modelling of future water use scenarios) revealed that the region does not have sufficient irrigation infrastructure to deal with increased agricultural water supply demands if climate change increases the frequency of future droughts (Sweet et al., 2017[84]). Authors reported that this finding can inform the decision-making process for future regional investments, and can also be useful to producers in their farm management decisions.

Although farmers routinely adapt their operations to changing circumstances, there has been an increased focus from the policy perspective on the importance of adaptation for the agricultural sector. Having the capacity to adapt means being able to either alter operations in response to an evolving risk landscape in the medium- to long-term, or to make adjustments in anticipation of future conditions. The resilience literature indicates that adaptive capacity can be improved through measures that:

  • Address information gaps to ensure that farmers have both the background information needed to make farm management decisions to adapt to new risk environments (including adequately communicating risk probabilities and incentives), as well as to information detailing new strategies and farm management options appropriate to the circumstances.

  • Cultivate intangible human capital to ensure that farmers are capable of and incentivised to implement new practices.

  • Recognise the contribution of social capital as a means of enhancing knowledge exchange and creating new opportunities.

  • Increase investments that permit the adoption of adaptation strategies.

Similar to absorptive strategies, the complementary actions of different actors act in concert to improve overall adaptive capacity. As such, this section is broken down into on-farm, private sector, and government measures.

Much of the resilience literature related to adaptation focuses on the specific on-farm measures that producers can take to adapt to changing conditions, including the adoption of new seed varieties and technologies, adjustments in farm management strategies, or diversification – many of which build flexibility or contingencies into farm operations, and consequently mirror those measures that are important for absorptive capacity. While relevant adaptation strategies are very grounded in situational context (Box 2.4), building the capacity for on-farm adaptation relies on much more universal attributes, including human capital, social capital and networks.

On-farm human capital – resourcefulness, self-initiated problem solving, and flexibility – was found to be a critical component of adaptive capacity. Different authors noted that farmers that successfully adapted to changing risk environments manifested this human capital in various ways, including as a capacity to learn from past events to adjust future operations (Adger et al., 2011[92]), as a paradigm shift from managing their operations for efficiency to managing them for flexibility (Carlisle, 2014[93]), through a process of continuous learning (Tendall et al., 2015[94]), or through adaptive management approaches that take into account new information to inform further decisions in an iterative cycle (Nelson, Adger and Brown, 2007[95]).

Building this human capital is a multifaceted process that may require addressing cultural and social barriers, confronting entrenched attitudes and belief systems, and ensuring that farmers are incentivised to develop these capacities (OECD, 2012[96]). Many of these mechanisms are external to the farm and will require some action on the part of governments, and as such are addressed in the following section.

The literature did point to at least one means through which farmers could improve their own human capital stock, while simultaneously devising useful adaptations for their own farm contexts – on-farm innovation and experimentation. This measure encourages problem-solving and discovery, while also building a site-specific knowledge base that will help farmers to adapt new outside technologies or methods to their own farm circumstances. Numerous instances of how on-farm innovation can contribute to improved resilience have also been documented:

  • An analysis of climate change adaptation in New Zealand emphasised that on-farm research was a critical laboratory for early climate adaptation innovations, and should be supported (Kenny, 2011[97]).

  • A qualitative analysis from Austria found that farmers’ experiments in the region arguably enhanced resilience for both the target farms and the region as a whole (Kummer et al., 2012[98]).

  • Also in Austria, on-farm experimentation with new crops was held up as a resilience strategy, as it allowed farmers to test potential new marketing opportunities that could prove to be more lucrative, or sustainable, in the future (Darnhofer, 2010[6]).

  • Knowledge generation through farmer field schools was promoted as an effective way to co-ordinate between producers and researchers, with examples cited in Denmark, France, Italy and the United Kingdom (MacMillan and Benton, 2014[99]).

  • Researchers found that farmer-initiated innovation in Ghana was correlated with improved resilience (Tambo and Wünscher, 2017[100]). In this instance, when researchers compared farmers who adopted any of a basket of innovations (developing new techniques, adding value to traditional practices, modifying or adapting existing techniques to local conditions, or conducting their own on-farm experiments) to farmers who did not, they found that the “innovators” scored higher on a calculated resilience index.

All of these examples indicate that resilient agricultural systems are characterised by experimentation, and embrace disturbances by innovating and approaching problems through novel approaches. In this way, new opportunities can arise, and new resources can be directed toward system development.

In conjunction with human capital development, the literature concluded that social capital (in the form of networks) can make an important contribution to a farmer’s adaptive capacity (Wreford, Ignaciuk and Gruère, 2017[101]). Social networks were found to foster farmer-to-farmer knowledge exchange and innovation (Tompkins and Adger, 2004[102]), and were also found to play a role in the pooling of common resources for the development of new business opportunities. In one example from Austria, a group of producers was able to diversify their income-generating opportunities by co-operatively financing and operating a vegetable packing plant (Darnhofer, 2010[6]). Extended networks outside of the local social group were also found to be important, as they allow farmers to access external resources, opportunities, and information, which are all important for adaptation purposes (Newman and Dale, 2005[22]). In this area, stakeholders should be aware of and take steps to avoid relying too heavily on one type of social capital. For example, communities with strong linkages to others in their community (linking capital) tend to have poor external linkages (bridging capital), with the consequence that social networks may be highly entrenched and resistant to new ideas and exchanges (Harrison, Montgomery and Bliss, 2016[103]). Given these dynamics, commodity organisations or producer federations could have an important role in this process – for example, by linking producers to researchers, or identifying the most pressing issues facing their industry and advocating for solutions.

The literature notes that the private sector can play a role in supporting adaptive capacity in several ways, including by addressing information gaps through insurance, by investing in larger infrastructure projects or technologies that allow farmers to adapt their operations, by promoting more sustainable practices throughout the value chain. With respect to insurance, numerous authors noted that the price of insurance signals the actual extent of a producer’s risk exposure, and as such incentivises actions that help the farm better adapt to current circumstances (Collier, Skees and Barnett, 2009[28]; OECD, 2014[18]). Furthermore, insurance can also be leveraged to incentivise adaptation through premium reductions for the implementation of certain good agricultural practices (GIZ, 2015[104]; Linnerooth-Bayer and Hochrainer-Stigler, 2015[42]).

The literature also theorised that there could be a substantial market role in funding of both new technologies to facilitate farm-level adaptations, as well as larger-scale adaptation projects. With respect to larger-scale adaptation projects, there is presently a large investment gap in agricultural resilience due to various factors, including the difficulty in valuing an investment in agricultural adaptation by financial markets (because the benefits are not necessarily accruing to the investor), the investment horizons in resilience are typically longer-term while financial markets tend to prefer short-term gains, and the returns from such investments are unpredictable due to the uncertainty surrounding climate change (World Bank, 2017[87]). Many of these issues can be overcome through the use of better data, reframing of the proposals, and the selection of projects that can produce returns over a wide range of potential future climates. In spite of the identified obstacles, the World Bank has already identified dozens of potential projects that could be attractive to commercial investors while also providing long-term resilience benefits in the agricultural sector. These include water treatment and reuse facilities in Australia, irrigation public-private-partnerships in Mexico, rainwater collection in Israel, and agroforestry opportunities in Colombia (World Bank, 2017[87]).

Outside of an informational and financial role, the private sector can contribute to improved adaptive capacity through global value chains and certifications (OECD, 2013[105]; OECD, 2017[106]). Value chains can incentivise farmers to implement adaptive measures and improve their overall adaptive capacity by either encouraging or requiring the utilisation of certain practices. In one example, Starbucks’ Coffee and Farmer Equity Practices initiative sets standards for participating coffee growers on conserving water resources, soil quality, and biological diversity, leading to more stable natural habitats and higher overall incomes (Amado and Adams, 2012[107]). In the same vein, private certification schemes (such as Rainforest Alliance or 4 R’s Nutrient Stewardship) are an additional market mechanism that can link consumer willingness to pay with producer willingness to adopt more sustainable production practices (Khanna, Swinton and Messer, 2018[108]).

As emphasised previously, building adaptive capacity above all requires flexibility in farm-level decision-making so that producers can shift their operations to respond to changing circumstances. There are numerous obstacles that prevent such shifts from occurring, including information or awareness gaps, lack of alternatives, or lack of infrastructure to support adaptive responses (Wreford, Ignaciuk and Gruère, 2017[101]). The literature identifies a clear role for government in addressing these obstacles, particularly in the areas of providing information and research, offering extension and capacity building to improve human capital, providing infrastructure that allows farmers to undertake adaptive actions, and ensuring that market signals incentivising adaptive measures are not distorted by policy frameworks that lock producers into maladaptive production systems.

First, the literature emphasises that one of the primary roles of the public sector in adaptation is the provision of information (Wreford, Ignaciuk and Gruère, 2017[101]). Researchers and policy makers need access to past and present information for analysis and policy-informing purposes, and producers need access to information about projected future conditions for planning and investment purposes (Ignaciuk, 2015[2]). Moreover, information flows and feedbacks are valuable in developing strategies and ensuring that all relevant stakeholders can contribute to the process (Howden et al., 2007[86]). The 2015 review of OECD member country adaptation activities found that most have already recognised that good information underpins national adaptation strategies, with a majority of countries reporting planned knowledge and information awareness activities (Ignaciuk, 2015[2]). One example of how improved access to information can further resilience objectives is the US Climate Resilience Toolkit online platform. Through the platform, users can access historical and projected climate data for all counties in the contiguous United States, learn about tools relevant to their particular region or sector, consult case studies on communities confronting climate challenges, locate regional experts who can advise them on their particular circumstances, identify potential resources to help fund climate adaptation efforts, and provide feedback to overseeing agencies (U.S. National Oceanic and Atmospheric Administration, n.d.[109]). Researchers analysing the effectiveness of the platform have found that the bi-directional flow of information has both improved the trust of users, as well as led to the co-production of knowledge (Gardiner, Herring and Fox, 2018[110]).

The literature also highlights the importance of information for guiding adaptive investments in the sector. For example, Antle and Capalbo (2010[111]) used a stylised agricultural sector model to show the importance of information on investment decisions in adaptation. They emphasised that both public and private actors need better information in order to support medium- and long-term investments in adaptation – private actors need information that helps them reduce the uncertainty around climate change and its impacts, while public actors need information to help them adequately assess the benefits of uncertainty-reducing investments (Antle and Capalbo, 2010[111]). With respect to catastrophes in particular, governments can use advanced modelling techniques to analyse large-scale investments in infrastructure projects that will allow producers to implement adaptive actions (Re:Focus Partners, 2015[51]).

With respect to knowledge systems in general, the literature indicated that farm-level adaptive capacity was somewhat constrained by the availability of feasible technologies or management strategies. To address this gap, the literature highlighted the potential role of publicly funded research. While authors noted that investments in agricultural research can pay large dividends and enhance livelihood resiliency (Dorosh, Kennedy and Torero, 2016[74]), there is particularly a role for government in ensuring that research is downscaled to local conditions (Ignaciuk, 2015[2]). In this space, there is an increasing emphasis on the potential for integrated participatory research approaches, where the research community collaborates with farmers, industry, and local stakeholders to both ensure that solutions are feasible in the real-world context, and to facilitate the uptake of promising practices (Vogel et al., 2007[112]; Nettle et al., 2015[113]). One particular area of research that is relevant to adaptation is the development of more drought and flood tolerant crop varieties (Howden et al., 2007[86]), which will often have to be further tailored to local environments (Collier, Skees and Barnett, 2009[28]). Researchers from Australia, for example, found that the development of an ultra-early variety of peanuts that required fewer growing days helped the industry there to adapt to increasingly dry conditions (Jakku et al., 2016[114]).

Integral to this process of improving awareness to improve adaptive capacity is the diffusion of information and strategies through extension efforts. Particularly as climates change, the literature noted that extension and technology diffusion will become increasingly important to ensure that farmers have information about effective local adaptation options (Collier, Skees and Barnett, 2009[28]). Moreover, extension services can affect resilience through multiple pathways, including through the provision of information and decision-making tools, via the introduction of new packages of technological and management advice, or by acting as conduits of information to cultivate on-farm human capital (Davis, Babu and Blom, 2014[115]). For example, researchers from Australia noted that extension could contribute to improved farm resilience by informing producers about adaptation strategies, learning from farmers about their adaptation decisions, and acting as a broker between policy makers and producers striving to improve farm resilience (Nettle and Paine, 2009[116]).

The literature also noted that the government could contribute to improved adaptive capacity by developing infrastructure for shifting climate scenarios (Nelson, Adger and Brown, 2007[95]; Ignaciuk, 2015[2]; Mathijs, 2017[117]). Although interventions in this area are context-specific, particularly in the area of water and irrigation management, the scale of projects may be such that government investment is needed (Howden et al., 2007[86]; Ignaciuk, 2015[2]).

The final role of government in improving adaptive capacity noted in the literature is ensuring that producers are properly incentivised to improve their own individual adaptive capacities. Farmers generally have been observed to adopt resilience-enhancing behaviours if there is an economic incentive to do so (Wreford, Moran and Adger, 2010[118]; Ignaciuk, 2015[2]; Wreford, Ignaciuk and Gruère, 2017[101]). For many farmers, then, incentivising action may just be a matter of communicating the concept to producers in such a way that they are more likely to take actions. Above all, farmers need to be aware of changing risk profiles and the probability of permanently altered climate circumstances (Howden et al., 2007[86]). For example, in an analysis of groundwater use, Li et al. (2014[119]) analysed whether or not giving information about groundwater resource quality influenced individual withdrawals. They found that communicating information about the threat of groundwater contamination was sufficient to incentivise reduced usage, even in the absence of any other regulatory framework or economic incentives (Li et al., 2014[119]).

However, even if there are economic incentives in favour of adaptation, governments may have a role in addressing other barriers that can prevent adaptation from taking place, including policy barriers, hidden costs, and access to credit (Wreford, Ignaciuk and Gruère, 2017[101]). For example, subsidisation of crop insurance programmes disconnect farmers from the actual risk profile of their operations, incentivising risky behaviour and reducing the likelihood of investments in long-term adaptive measures (Ignaciuk, 2015[2]). As such, governments could support adaptive capacity by phasing out insurance subsidies to ensure that farmers make production decisions in response to market incentives.

The resilience literature increasingly notes that in some cases, incremental adaptations in agriculture may not be enough to confront the realities of a changing climate or increasing natural resource constraints (Kates, Travis and Wilbanks, 2012[120]; Mushtaq, 2018[121]). The potential for reaching critical thresholds beyond which recovery is not possible and the evolving risk environment suggest that critical thinking about possible new opportunities may be the key to the continuity of the sector. In these cases, transformation may be the optimal strategy. Transformation can be a difficult and politically fraught process because it challenges producers, governments and other actors to confront difficult questions about the trade-offs of agricultural activities, and can even require that actors reconcile a need to relocate activities against a strong place attachment (Fleming, Park and Marshall, 2015[122]). But looked at through the lens of possibility for the future, transformation can instead be framed as an opportunity for reinvention.

Unfortunately, there is little empirical work that can contribute to the evidence base to guide the successful development of the transformative capacity, since policy frameworks to date tend to avoid transformative approaches and instead focus on adaptation for reasons of cost, uncertainty, and even political sensitivity (Jakku et al., 2016[114]; Panda, 2018[123]). However, historical examples can offer some useful insights, and modelling work and the growing theoretical literature on the topic provides both guidance and cautionary advice that can inform policy makers in this regard. In these reflections, it is important to distinguish between proactive, directed transformations in response to current conditions and in anticipation of the future, and forced transformations resulting from the crossing of biophysical thresholds, because the policy responses are different. In order to inform future transformations, this section focuses on proactive transformation strategies, which require deliberate choices and purposeful decision-making (Park et al., 2012[90]).

Because the transformative capacity is related to the adaptive capacity, the literature identifies many of the same factors as relevant to transformation at the farm level, including human capital and social capital. The role for government in transformation, however, is much more focused on not only providing information, but in driving the collaborative planning processes necessary for successful transformation. The literature indicates that transformative capacity can be enhanced through measures that:

  • Provide or improve information to assist actors in their long-term decision-making processes.

  • Develop human capital so that producers have a forward-looking decision-making outlook and the capabilities necessary to carry out transformative changes.

  • Leverage social capital as a means to generate new ideas and ensure farmers are supported in their transformations.

  • Establish deliberate collaborative planning processes to ensure that all stakeholders are both aware of likely changes in the risk landscape, and can contribute to the planning of the sector’s future.

  • Provide financial resources to support transformative actions.

How these measures are relevant to the different actors is detailed below.

As with adaptive capacity, one of the factors for success highlighted by the literature on transformation is intangible human capital – farmers need to employ a forward-looking decision-making process that incorporates management flexibility and on-farm experimentation. This is partly because the process of transformation is not a one-off type of occurrence. Rather, transformation is typically accompanied by many smaller accommodations and adaptations, as general strategies must be customised to local conditions. A recent example from the Australian dairy industry illustrates this point. When the sector deregulated in 2000, although farmers were fully aware that this specific shock would be occurring well in advance, the initial actions taken by producers led to negative unanticipated consequences that required further management decisions (Sinclair et al., 2014[124]). Similarly, in their ex post analysis of the Peanut Company of Australia’s attempt to relocate a large portion of their production to a new area, researchers stressed that there was definitely a need for a good business plan, and sufficient time and resources to implement and adjust it as needed (Jakku et al., 2016[114]).

Various authors noted that the attitudes and beliefs regarding long-term agroecosystem health was also an important human capital dimension that was necessary for improved transformative capacity (Carlisle, 2014[93]; Rickards and Howden, 2012[125]; Sinclair et al., 2014[124]; Walker et al., 2004[126]). For example, interviews with farmers in Finland and Sweden revealed that although they acknowledged climate change was occurring, capitalising on it as an opportunity through transformative change was not a priority, since their decision-making processes were more focused on short-term risk coping (Juhola et al., 2017[127]). Similarly, in their analysis comparing adaptive and transformative tendencies amongst Australian wine grape producers, Park et al. (2012[90]) noted that the main difference between transformers and adapters seemed to be psychological, in that the two groups approached the problem of climate change differently. Transformative producers tended to absorb and analyse a large quantity of data and information in order to drive their proactive management approach, whereas adapters tended to consume less data and confront problems in a more reactive manner (Park et al., 2012[90]).

As with both the absorptive and adaptive capacities, social capital in the form of networks was found to be important for transformative producers as well. However, the focus was found to be different. For example, in their analysis of Australian producers, Dowd et al. (2014[128]) found that transformative producers tended to have extensive knowledge and information networks but smaller social networks of family, friends, and colleagues. In this way, transformers were receiving outside information and knowledge of new practices without being constrained by existing social norms of peer groups, freeing them to experiment and move into new directions (Dowd et al., 2014[128]).

There is potentially a substantial role for the private sector in transformation, as this capacity relates to creating or taking advantage of new opportunities in the course of altering the production system. In this context, agribusiness firms can provide the vision and leadership to harness these new market opportunities, including by mobilising financial resources, organising adjustments throughout the value chain, and ensuring that products meet evolving consumer demands (Amado and Adams, 2012[107]). Some authors note that the interruptive nature of transformational change implies that greater co-ordination along the entire value chain is necessary as compared to incremental adaptations, putting private sector firms in a position to orchestrate industry transformations. For example, they can incentivise farmers to relocate or otherwise transform their operations by offering higher prices or more lucrative contracts (Fleming, Park and Marshall, 2015[122]). The private sector can also play a role in funding new initiatives, or can collaborate with other actors in public-private partnerships to develop new technologies or seed varieties (Kates, Travis and Wilbanks, 2012[120]).

With respect to improving transformative capacity, the overarching role of government is to ameliorate the primary obstacles to transformation: uncertainty about future climate conditions, institutional or behavioural barriers that impede change, and high costs associated with transformative actions (Kates, Travis and Wilbanks, 2012[120]; Jakku et al., 2016[114]). In order to confront these barriers, the literature suggests that governments should increase efforts to provide or improve data to inform decision-making efforts, engage in collaborative planning processes with the intent of identifying barriers and facilitating transformative actions, and potentially provide financial resources to allow producers to make transformative changes.

The literature notes that one of the primary means of improving transformative capacity is by resolving information gaps through research, on several fronts. First, more research is necessary to improve and refine climate models in order to better inform transformative decision-making (Leclère et al., 2014[71]). Currently, climate models estimate a wide range of potential effects, such that there could be considerable risk in investing in a transformative strategy now since there is little certainty on what the actual effects may be in a given area. In fact, several examples are noted in the literature where although producers acknowledge that climate change is occurring and affecting their operations, it is not yet considered sufficiently severe for them to entertain the notion of transforming their operations – other problems such as market prices and policy changes are, as yet, of greater concern (Fleming, Park and Marshall, 2015[122]; Juhola et al., 2017[127]).

Indeed, scholars from the theoretical literature argue that more research considering transformation in the context of resilience is useful to help policy makers and producers take critical decisions about where resources should be invested (Park et al., 2012[90]; Anderies et al., 2013[129]; Wolfe et al., 2018[24]). This should include not only work on refining modelling approaches, but also investigating the historical record for examples of cost-effective transformation strategies. Second, there is a need to direct further resources toward research into more interdisciplinary strategies to confront long-term resource constraint issues (Rickards and Howden, 2012[125]).

Researchers noted that it may be necessary for knowledge systems themselves to reorganise in order to better contribute to transformative capacity. Cornell et al. (2013[130]), Rickards and Howden (2012[125]), Park et al. (2012[90]) and others argue that a radical change in knowledge systems is needed, emphasising the necessity of more participatory approaches, transdisciplinary interactions, and bridging the gap between knowledge and action though capacity building and extension. They noted that knowledge systems should function from the premise that the system may not be able to retain its current form if solutions cannot be found for more systemic underlying problems or drivers (Colloff et al., 2017[131]). In these cases, technological solutions only serve to entrench an already unsustainable pathway (e.g. path dependency). Indeed, various scholars expressed concern that necessary systems transformations are being sidelined in favour of promoting adaptation of entrenched interests, distorting the intention of resilience thinking and frameworks (Tanner et al., 2014[132]). In fact, one of the reasons transformation is so difficult is that it may require changing some existing power structures in order to succeed (Bahadur et al., 2015[133]).

An additional role for government in the realm of transformation noted in the literature is the need to act as a facilitator for deliberate, collaborative scenario planning. Such an exercise would consist of the government convening a body of all affected actors in a given area and setting out contingency plans for various hypothetical scenarios. Various sources reported that interactions of these types could help actors to confront possible future circumstances without the pressure of actually having crossed the critical thresholds necessitating change, permitting them to begin a process of planning how to move toward – or away from – those “worse-case” scenarios and possibly undergo transformative change (Walker et al., 2004[126]; Colloff et al., 2017[131]). In their ex post analysis of the Australian dairy sector deregulation, for example, Sinclair et al. (2014[124]) note that such an action was missing from the transformation planning process, and while it is impossible to know for certain, just such an initiative may have helped to predict some of the outcomes that the individual actors failed to anticipate. Planning processes could also help identify institutional barriers impeding wider system transformations. For example, in a case involving the relocation of the Peanut Company of Australia’s production to another part of the country, participatory planning between stakeholders and local government officials could have identified a regulatory barrier preventing firms from acquiring water rights for more than one year at a time one, which acted as a disincentive to the company for making long-term investments (Jakku et al., 2016[114]).

Beyond supporting research and acting as a facilitator for scenario planning, governments may also have a role in providing financial resources to support transformation – either in the form of grants or loans, or even buyouts if the chosen transformative action is relocation. As noted above, cost was one of the primary barriers the literature identified with respect to transformation. At the farm level, transformations may be very costly, and may not be reversible, resulting in a conundrum for individual farm decision makers – on the one hand, farmers run the risk of foregoing transformative action and staying in a production system that ultimately may become unsustainable, while on the other hand they risk transforming and locking themselves into a new production system that could turn out to be maladaptive to future conditions. Moreover, the costs involved may be multi-dimensional. Not only are there the direct transaction costs of the particular transformation, but also opportunity costs, costs of unintended consequences of the transformation, and residual losses costs arising from incomplete adaptation (Rickards and Howden, 2012[125]). In these cases, there may be some scope for government involvement in the form of credit support or other funding, but efforts must be carefully considered in their particular context in order to avoid crowding out of private sector financing (Ignaciuk, 2015[2]).

Governments may also need to consider providing transitional financial support in areas where existing agricultural systems may no longer be viable, or where certain activities can be targeted for phasing out based on potential benefits to the greater public good (Sesmero, Ricker-Gilbert and Cook, 2018[134]). The North Carolina Swine Floodplain Buyout Program provides one example in this respect. The programme was created in 1999 as a way to provide financial support to pork producers in the 100-year floodplain in the US state of North Carolina, to allow them to close down their hog operations and transition the land to conservation easements. An analysis by the state’s Department of Agriculture indicated that, had the farms not been bought out, many would have flooded during subsequent hurricanes (National Pork Council, 2018[135]).

This review has identified several gaps in the literature that, if addressed, would better inform future agricultural policymaking for improved resilience. First, the literature is overwhelmingly composed of case studies, which provide some useful experience, but little empirical evidence on the impact of resilience.6 Although cases can be useful as far as generating ideas, the contextual nature of resilience means that certain measures and predicted outcomes may not be applicable to all countries (Keating et al., 2014[83]; Hansen et al., 2018[8]; Hallegatte, Bangalore and Vogt-Schilb, 2016[75]). Additionally, because the concept of resilience has been in use in the development community for a longer period of time, some of the evidence accumulated in that context and covered in this review may be less relevant for OECD countries. This review has attempted to examine a large swath of the literature for common themes and strategies that are highlighted in multiple instances in order to minimise this possibility, but additional strategies may be useful in other contexts.

The second limiting factor is that most analyses focus on a single intervention, with few attempts to consider those effects in a more holistic context. The risk management literature, however, emphasises that there are typically interactions between different instruments and strategies, such that it may not be appropriate to attribute improved resilience outcomes solely to the stated resilience measure (OECD, 2009[1]). Some work reviewed here was able to measure the relative contributions of different interventions in a development context, while others pointed to the importance of a risk layering approach (for example, adopting stress-tolerant germplasm to guard against moderate fluctuation in conditions, while also purchasing insurance to cover cases of more severe climate stress) (Hansen et al., 2018[8]). More evidence that takes into account these interactions is needed to better inform resilience policymaking efforts.

Thirdly, only a small number of studies evaluated the impact of policy interventions in the medium- to long-term. This is because the focus on resilience as a policy objective is relatively recent, so there have been few opportunities for countries to take action in an attempt to improve resilience and subsequently analyse the effectiveness of the measure in the medium- to long-term. Even in the agricultural development sphere (where donors require evaluations and impact assessments on project interventions), the literature covering measurement frameworks concludes that no tool has a sufficiently robust history to demonstrate that a given approach has positively influenced outcomes over time (Douxchamps et al., 2017[136]). There remain either recent cases highlighting mostly policies that target short-term absorptive capacity improvement, or else a reliance on historical examples that may hold limited relevance for today’s agricultural sector. The current moment, then, is characterised by experimentation on strategies that can be helpful in the medium- to long-term, but widely applicable results and conclusions to inform policymaking may not be available for some time.

Finally, there is no set of generally agreed measures of good resilience outcomes. As such, it is difficult to compare the assessment of the different policy instruments with respect to the three resilience capacities. Further investment on methods to characterise and quantify resilience would help to have more comparable results and prioritise resilience areas, levels and policy responses.

In spite of these limitations, the literature consistently emphasises common themes that can guide policy makers as they further develop their resilience policy frameworks. Moreover, most of the strategies, approaches, or instruments identified in the review have previously been identified as best practice for risk management, or as actions that are likely to lead to improved sustainability in a climate change context. The contribution of this review, then, is to raise awareness of how strategies for improved risk management or sustainability have been found to also contribute to improved sector resilience.

The literature review has provided evidence that there is room for resilience-enhancing tools and strategies from the farm sector, the private sector, and government. Although the review focused on identifying factors essential to improving resilience capacities, several overarching themes emerged that are relevant to how policy makers can integrate resilience into policy frameworks:

  • Taking ex ante measures against possible shocks over a long-term time frame is key to improved resilience: Applying a resilience lens means making decisions and policies with a long-term focus in mind. In terms of the absorptive capacity, this means planning for a range of possible scenarios and a variety of adverse events under long-term time horizons, and investing in infrastructure that will continue to function under a range of shocks. By planning for adverse events, farmers are better positioned to either mitigate or absorb their impacts, and recover more quickly. With respect to adaptive and transformative capacity, decision makers need to be aware of possible future scenarios and take those potential conditions into account in their decision-making processes, supporting measures to reduce the risk.

  • There are trade-offs and interactions between the different risk management tools and policies: Because resilience implies a holistic systems focus, there will necessarily be trade-offs and interactions between certain policies or actions. The combined effect of individual farms’ actions to improve resilience could be to the detriment of the sector as a whole. Conversely, actions to improve the resilience of the sector as a whole could make some farming operations unviable. Policymakers must consider these trade-offs and interactions in their decision-making processes, and set clear, transparent objectives for what resilience objectives they intend to achieve.

  • Participatory processes involving a wide range of stakeholders are key to the development of new policy approaches and frameworks: Setting the policy agenda in a collaborative participatory setting will allow all actors to consider relevant information on risks and evaluate the trade-offs in the various approaches. The process also helps stakeholders to better define the boundaries between the risk layers. With this improved understanding of risk ownership, individual actors are better positioned to make appropriate adjustments in their own behaviour. Furthermore, a periodic re-assessment allows stakeholders to evaluate the effectiveness of their approach and redirect resources if necessary.

  • On-farm strategies, and the individual farmer’s overall capacity to manage risk, can play a critical role in reducing risk exposure to catastrophic events, particularly over the long-term: Farmers are better able to confront and cope with risks in all of the layers if they make proactive investments in resilience capacity. This may require the utilisation of specific tools or measures, but also involves the development of human capital and entrepreneurial thinking to be prepared to confront changing circumstances with a creative, problem-solving approach.

  • Public goods and no-regret policies are integral to agricultural risk management: The role of government in improving sector resilience is not limited to providing financial assistance in the wake of adverse events. Rather, even in cases where the relevant actor is the farm or the private sector, there is a “behind-the-scenes” role for government in providing information, supporting knowledge systems, and engendering an overall enabling environment to support informed on-farm decision-making.

  • The concept of general resilience emphasises a system’s ability to respond to any risk, which translates to a capacity to be flexible in the face of uncertainty: By ensuring that production systems and supply chains have in place contingencies (potentially including diversified production strategies, alternative suppliers, and diversified sales outlets), they will be better positioned to respond to all types of adverse events, including unknown risks.

Given these broad themes, several specific roles for government can be identified with a view toward enhancing sector resilience. First, governments have a role to play in planning and co-ordination processes. In part due to international processes such as the Hyogo and Sendai Frameworks or the UN Framework Convention on Climate Change, there is already increasing awareness on the necessity of planning and preparing for catastrophic events, general downturns, and medium- to longer-term shifts in climatic conditions (OECD, 2014[3]). In most countries, policy makers are already well-advanced in their planning processes for disasters and climate change adaptation. At the same time, these issues continue to be dealt with under different mechanisms. If countries are to truly improve resilience to adverse events, greater policy coherence on these topics is needed, with a view toward the effectiveness of policies in the long-term (FAO et al., 2018[137]). In particular, disaster risk reduction plans need to be mainstreamed into agricultural policy, where they can be combined with climate change adaptation plans to form the basis for a more holistic resilience policy framework (Trujillo and Baas, 2014[138]). This will likely necessitate the evaluation of the trade-offs and interaction effects of any given policy with respect to the different scales, the time frame, and the ability to confront specific or general risks. As a result of this planning and co-ordination role, a well-accepted ex ante plan of action is required that defines the risk and resilience framework, incentives and responsibilities, and the process to be followed when adverse events occur.

Second, because the resilience literature stresses that the most effective research and policy frameworks are likely to emerge from collaborative processes and participatory approaches (Tompkins and Adger, 2004[102]; Ignaciuk, 2015[2]; Bizikova, Waldick and Larkin, 2017[139]; Averyt et al., 2018[140]; Steiner et al., 2014[141]; Colloff et al., 2017[131]), there is a key role for the government to act as the facilitator, to both seek out and manage these collaborations (Webb and Beh, 2013[142]; Eyzaguirre and Warren, 2014[143]). Efforts of these types are already underway in multiple OECD countries (including Canada and the United States), and the outcomes of these processes could provide valuable guidance for other countries as they seek to implement similar systems. Moreover, these collaborations can best be leveraged for purposes of resilience if they are iterative processes (Bahadur, Ibrahim and Tanner, 2013[144]; Darnhofer, 2010[6]; Engle et al., 2014[145]; Keating et al., 2014[83]; Tendall et al., 2015[94]). That is, in contrast to one-off events, they will be most effective if the groups meet periodically to consider new information, evaluate the effectiveness of ongoing initiatives, and make adjustments as necessary.

Third, particularly with respect to the absorptive capacity and disaster risk reduction, there may be a need for countries to re-examine their disaster response systems with respect to agriculture. It has long been reported that investment in risk reduction is typically more cost-effective than ex post assistance, suggesting that there are other cognitive or institutional barriers that are preventing countries from making these investments now (Mochizuki et al., 2016[146]). In cases where traditional cost/benefit assessments have not seemed to be effective in drawing attention to the problem, participatory “serious gaming” (where different stakeholders collaboratively brainstorm potential solutions for risk management issues in a virtual setting) can be one approach to discussing potential disasters and elucidating potential solutions. This approach has been used in various developing countries, and was found to help stakeholders identify stumbling blocks, propose innovative solutions for the local context, and design risk management plans for future events instead of repeating the mistakes of past ones (Mochizuki et al., 2016[146]). The concept of “stress testing”, as commonly applied to the financial sector, could also provide useful insights to the system’s ability to withstand certain shocks. These approaches could be integrated with the more long-term participatory planning processes outlined above.

Fourth, governments should make a critical holistic assessment of their current risk management and climate change adaptation policy structure to ensure that there are no misaligned incentives or policies that run counter to resilience objectives (Wreford, Ignaciuk and Gruère, 2017[101]). This should include consideration of available market instruments to deal with medium-impact adverse events, and if there is a role for government in increasing access to or uptake of these tools.

Finally, perhaps the most challenging role for government is in assisting farmers in developing the necessary human capital to autonomously integrate resilience thinking into their individual farm management approaches. Specifically, more emphasis should be placed on the cultivation of entrepreneurship and holistic risk assessment, combined with improved access to data and technologies that allow farmers to better absorb the impacts of adverse events and make informed decisions about the future of their farm. Despite the rising policy focus on farm resilience (particularly with respect to climate change adaptation), change has in many cases been hampered by a multitude of factors, including lack of awareness, lack of motivation to act, general uncertainty, or institutional problems like crowdedness (too many institutions have overlapping authority, hindering policy development) or fragmentation (relevant institutions don’t communicate, so policy response is incomplete) (Eisenack et al., 2014[147]).

This chapter has reviewed the literature on the resilience measures that are most relevant for the agricultural sectors of OECD countries, focusing on measures that can improve the ability and capacity of farmers (and the sector more broadly) to respond to shocks and stresses via three key capacities – absorption, adaptation, and transformation. Despite this section’s focus on how single measures contribute to improving these capacities, the optimal resilience framework will be composed of a combination of strategies (OECD, 2014[3]). A holistic approach is necessary for the success of the resilience perspective, because it forces actors and policy makers to consider that their actions may have trade-offs, interaction effects, and unintended consequences.

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Notes

← 1. While both of these bodies of work may be relevant to policymakers depending upon their given interests, each addresses the topic in a level of detail that is considered beyond the scope of the current review. For stakeholders seeking more information on measurement in particular, there is ongoing OECD work in this area [see, for example, (Figueiredo, Honiden and Schumann, 2018[148])], and there is also a wider “Resilience Measurement Evidence & Learning Community of Practice” run by the Rockefeller Foundation. This initiative, launched in 2016, brings together more than 200 researchers with the goal of advancing the resilience research agenda. For further information, see (Measuringresilience.org, n.d.[149]).

← 2. These were Australia, Canada, France, Germany, Ireland, the Netherlands, New Zealand, Norway, the United Kingdom, and the United States. In the Netherlands, the provision is not specific to agriculture, and is instead available for all sectors. In Norway, the provision is available only for furskin production, which will be banned from 2025.

← 3. See, for example, the InsuResilience Global Partnership for Climate and Disaster Risk Finance and Insurance Solutions, launched at the 2017 UN Climate Conference, https://www.insuresilience.org/.

← 4. Basis risk is the risk that the individual farmer will suffer a loss but the overall weather index threshold will not be triggered, such that the farmer will not receive a payout (OECD, 2016[19]).

← 5. The causal factor behind this finding is perhaps a bit more difficult to interpret, as it may indicate a higher base level of well-being, or location in an area that is better connected and thus more likely to offer households access to wider resources.

← 6. As noted earlier in this review, this lack of empirical evaluation is partly due to the fact that there is as yet no agreed-upon method of measuring resilience.

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