Efforts to slow down and eventually reverse the trend of climate change will take time, and in some cases, its negative impacts will be felt long before long-term solutions to this problem can bear fruit. Adaptation and mitigation strategies constitute the front line of attack for rural households in low-income countries that rely on agricultural production and natural resource use as their main sources of income and growth, and whose livelihoods are threatened by climate change. Coffee in Nicaragua is the main source of income for thousands of smallholder producers, and is the country's primary agricultural export. Given the vulnerability of coffee to the impacts of climate change there is a growing consensus among development practitioners and policy makers that adaptation strategies are necessary and in some cases urgent for those producers who depend on coffee production as their main source of income. In this dissertation, comprised of three empirical papers, I study the coffee sector in the Matagalpa region of Nicaragua and explore potential pathways for climate change adaptation among its coffee producers by studying their options for building adaptive capacity and the necessary conditions to help them adopt technologies and practices that promote successful adaptation. The focus of the first paper is on the characteristics of coffee producers in northern Nicaragua and their capacities for climate change adaptation and vulnerabilities its shocks, including an exploration of their attitudes towards risk through the use of experimental risk games. An important finding from this study is that household food insecurity is a key determinant of risk aversion, and that income is relevant insofar as it results in greater food security. In the second paper, I use choice experiments to elicit farmers' preferences for shade incorporation into coffee farms. Shade is an important farm management practice in coffee production because it helps to protect soils, promote biodiversity, and helps to mitigate the impacts of higher temperatures induced by climate change. I find that for a small premium farmers are willing to incorporate additional shade into their farms. An unexpected finding from this study is that farmers are not willing to give up any coffee income to have access to pesticides for their farms, a likely reflection of the recent leaf rust outbreak in the country and the poor institutional response to the outbreak. Finally, I analyze the degree to which cooperatives can help farmers adopt a set of ten production practices that can help farmers build adaptive capacity to climate change. Results show that coffee farmers who belong to cooperatives have already adopted these practices at higher rates than non-members, and econometric analyses confirm this result. A factor analysis is also conducted to determine the underlying structural differences among the ten practices, and from this analysis three factors emerged and are modeled. Cooperative membership emerges as a significant determinant of adoption of practices that promote water conservation.
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