Climate‐Smart Agricultural Assets and Household Coping Strategies in Times of Upheaval

ABSTRACT Transferring agricultural assets can be welfare‐improving for smallholders. Can agricultural assets also improve smallholders' ability to cope with unprecedented exogenous shocks? We investigate this question using the case of subsidized solar‐powered irrigation pumps (SIP) during the time of upheaval (COVID‐19 pandemic) in Nepal. Data come from a primary survey of 656 households in southern Nepal. Using matching methods and ordinary least squares, we find that small‐scale producers who received SIPs are more able to cope with COVID‐19 restrictions than producers who did not receive SIPs. Selection into the subsidized SIP program is non‐random, and the estimated relationship is not causal, but the findings alert policymakers and researchers to a positive unintended consequence of climate‐smart agricultural assets. Our results contribute to building evidence on whether and how programs transferring climate‐smart agricultural assets can improve smallholders' ability to cope with exogenous economic shocks and highlight the need for producing rigorous causal evidence.