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This paper explores the factors that influence farmers' decision-making in adopting climate change adaptation strategies and how these adaptations impact on farm yields. We employ a simultaneous equations model to investigate the differential effects of adaptation on adapters and non-adapters. An endogenous switching mechanism is employed to account for selectivity bias. Based on a survey of 422 rice farmers in Nepal, our results show that farmers' education, access to credit and extension services, experience with climate change impacts such as drought and flood, information on climate change issues, belief in climate change and the need to adapt all variously determine their decision-making. We find that the adaptation strategies employed by farmers significantly increase rice yields. Furthermore, results indicate that both adapters and non-adapters would benefit from the adaptation of the identified strategies. This study, therefore, provides supportive evidence for policy makers to take into consideration farmers' existing knowledge and skills in adapting to climate change. The findings show that it is imperative to involve farmers in climate change adaptation planning processes if the full benefits of such policy action are to be realized. [ABSTRACT FROM AUTHOR]