Rural entrepreneurship is often promoted as an effective tool with which to confront developmental challenges in rural communities. An important question that has not been considered thus far is how climate change-induced water scarcity in agriculture may promote or hinder rural entrepreneurship. In this paper, a model is developed to explore the conditions under which rural enterprise may or may not be undertaken by farmers struggling to adapt to climate change-related water scarcity. The results derived here highlight the potential inter-generational trade-offs climate change could create in the pathways towards promoting developmental goals through rural enterprise. When farmers take on entrepreneurial activity, it also affects the human capital accumulation capability of their future generations through affecting their educational efforts. The risk of future reduction in rainfall availability makes the decision over whether or not to avail of the entrepreneurial opportunity challenging. Such risks may force less efficient farmers into taking to enterprise early on, thereby leading to suboptimal outcomes. However, several situations emerge under which, despite the lure of higher expected profits, farmers may not avail of an entrepreneurial opportunity or may delay it.
Ranjan, R
Rural entrepreneurism and developmental outcomes under climate change threats
Climate And Development