Climate adaptation policies and rural income: Evidence from social technologies in Brazil

Several developing countries have implemented programs to support rural families, but there is still a lack of evidence on their effectiveness. This paper seeks to address the existing gap by analyzing the impact of the Second Water Cisterns Program (SWCP) on the income of Brazilian family farmers. The policy intervention consists of a social technology that harvests rainwater for use in agriculture. We combined data from family farmers with administrative data from the program, identifying the participation status of each farmer. Using the Differences in Differences strategy and exploring the time when the farms received the cistern over the period from 2007 to 2016, our results show that the SWCP has a positive impact on the income of rural farms, causing an increase of 5.9%. Heterogeneous effects indicate a greater magnitude of impact among low-income and smaller family farmers. Moreover, the effect is more pronounced for farmers in municipalities with a lower share of agriculture in the total economy as well as for farmers in municipalities with lower rainfall. Our findings highlight the importance of production and productivity as a potential mechanism for raising the income level of rural farmers, with the impact concentrating on low-income family farmers. Based on the cost-benefit analysis, each Brazilian Real invested in SWCP generates an average return of approximately BRL 0.11. These findings suggest that the provision of low-cost social technologies to families in rural areas may be an important mechanism for local economic development.