Climate change adaptation and productive efficiency of subsistence farming: A bias‐corrected panel data stochastic frontier approach

Abstract We explore the impact of climate change adaptation on the technical efficiency of Ethiopian farmers using panel data collected from 6820 farm plots. We employ Green's (2010) stochastic frontier approach and propensity score matching to address selection bias. Our results reveal that climate change adaptation improves the efficiency of maize, wheat and barley production. We also show that failure to account for selection bias underestimates the average efficiency level. Our findings imply that the expansion of climate change adaptation at larger scales will provide a double benefit by curbing climate‐related risks and increasing the efficiency of farmers. Moreover, increasing credit access and introducing mechanisms that allow farmers to get enough water during the main growing season will enhance the efficiency of subsistence farmers.