Role of Livelihood Capital in Reducing Climatic Vulnerability: Insights of Australian Wheat from 1990–2010

In many agricultural countries, development of rural livelihood through increasing capital is a major regional policy to adapt to climate change. However, the role of livelihood capital in reducing climatic vulnerability is uncertain. This study assesses vulnerability and identifies the effects of common capital indicators on it, using Australian wheat as an example. We calculate exposure (a climate index) and sensitivity (a wheat failure index) to measure vulnerability and classify the resilient and sensitive cases, and express adaptive capacity through financial, human, natural, physical, and social capital indicators for 12 regions in the Australian wheat–sheep production zone from 1991–2010. We identify relationships between 12 indicators of five types of capital and vulnerability with t-tests and six logistic models considering the capital indicator itself, its first-order lag and its square as dependent variables to test the hypothesis that a high level of each capital metric results in low vulnerability. Through differing adaptive capacities between resilient and sensitive groups, we found that only four of the 12 (e.g., the access to finance, cash income level, total crop gross revenues, and family share of farm income) relate to vulnerability, which challenges the hypothesis that increasing capital reduces vulnerability. We conclude that further empirical reexaminations are required to test the relationships between capital measures and vulnerability under the sustainable livelihood framework (SLF).