Abstract

Surviving prolonged water scarcity in agriculture requires farmers to be resilient along multiple dimensions. Farmers may aim to attain resilience from financial as well as natural capital perspectives. In this paper, a model of multi-dimensional resilience is developed which incorporates risk reduction and wealth accumulation as farmers' key survival strategies. Findings indicate that the relative choice over risk reduction and wealth accumulation strategies varies depending upon whether the farmer is groundwater resilience seeking type or financial resilience seeking type. Also, as the level of risks increases, the financial resilience seeking type farmer may exhibit a non-linear pattern of tradeoff between risk reduction and wealth accumulation behavior. At lower levels of risks, the farmer's optimal response is to reduce risk further with a marginal increase in the exogenous component of the risk. However, at higher levels of risk, more wealth is accumulated as the exogenous component of the risk increases.

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