Seminario CEDE - Juliana Helo

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This paper analyzes the environmental effects of an adaptation policy intended to protect farmers from extreme weather events. We use the case of the Colombian coffee sector, which was severely affected by ENSO-La Niña extreme rainfall events and subsequent pest-proliferation during 2010 - 2011. In response, the National Federation of Coffee Growers (NFCG) changed its policy to protect farmers from future weather shocks by conditioning renewal credits to the use of pest-resistant seeds. We exploit the timing of the policy, and a novel dataset that includes the census of coffee plots, their characteristics, production systems, seed variety, among others, from 2006-2014, matched with satellite tree cover data to analyze its environmental effect. We find that conditioning renewal credits on a change in seeds diminishes tree cover on treated coffee growers by 370 squared metes, equivalent to 2% of the average farm size in our sample. Tree cover is not only important to protect crops from rising temperatures, but also to maintain soil fertility, and control erosion. We calculate that this average loss in tree coverage on treated farms translates to a release of 2,000 tons of carbon.