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This paper used original survey data in Shandong province of China to depict local farmers' perceptions of combined climatic and market risks, and their adaptive behaviors. Two Logit models were developed to capture the empirical relationship between farmers' risk perception of the combined risks and adaptive behaviors. Results show that farmer's risk perception of climate change and market significantly affected their adoption behavior of adaptive measures, including perception of rainfall decrease, gale decrease, drought increase, and price fall of agricultural products. Moreover farmers' adaptive behaviors are more sensitive to their perceptions of extreme climatic events. Addition of demographic factors can improve the explanatory capacity of the Logit model. As illustrated by the models, male and better educated farmers have greater willingness to take actions for averting risks, while household heads with bigger farm are more reluctant. A majority of respondents chose to construct farm structure for irrigation and water conservation to avert climatic risks. Insurance, which is regarded as an effective tool to help farmers mitigate risks and avoid losses, has not been sufficiently accepted by farmers in rural areas in Shandong province. This underscores the need of effective communication of knowledge to enhance farmers' coping capacity and to encourage their active response to risk. [ABSTRACT FROM AUTHOR]

Unanticipated environmental shocks impact the livelihoods of many resource users around the world. These shocks are likely to be more unpredictable as the effects of climate change continue to mount. Yet how households adapt to these changing climatic conditions especially in the context of rapidly changing market conditions in most areas of the world, is poorly understood. These interactions have wide implications for both smallholder livelihoods and sustainable use of natural resources. In this paper, we examine the relationship between environmental shocks and stocking rates in livestock herds in the Inner Mongolian grasslands of northern China. We uniquely examine three types of shocks and how households adapt livestock production strategies in response to each. Separately and in aggregate, we look at three common shocks in Inner Mongolia: droughts, snowstorms, and locust outbreaks. We use a difference-in-differences approach to estimate changes in stocking rates among households that experience shocks versus those that do not with a panel dataset from 2009 to 2014 of 597 households. While we find no clear impact from locusts, our results suggest droughts and snowstorms have opposite effects: droughts are associated with increases in herd sizes, but snowstorms result in decreased herds. We suggest these differences are due to interactions between shocks, emerging options to borrow on credit, and livestock markets. Household adaptation to climate change will be strategic and take advantage of both available resources as well as market conditions. • Climate change is causing stronger and more unpredictable environmental shocks. • We use a difference-in-differences model to estimate the impact of shocks on stocking rate. • Drought relates to bigger herds; snowstorms relate to smaller herds. • Households adapt to shocks taking advantage of both available resources and market conditions. • Shaping well-functioning market may reduce opportunistic resource exploitation. [ABSTRACT FROM AUTHOR]