Profitability Effects of Climate-smart Agriculture Practices on Smallholder Dairy Farms in Kenya: A Comparative Analysis of Kisii and Uasin Gishu Counties

Abstract

Climate-smart agriculture (CSA) is widely promoted to enhance productivity, resilience, and mitigation in livestock systems, yet robust evidence on its profitability impacts remains limited, particularly for smallholder dairy farmers in Sub-Saharan Africa. This study evaluates the profitability effects of adopting dairy CSA practices in Kisii and Uasin Gishu Counties, Kenya, representing contrasting agroecological and market contexts. The analysis focuses on five CSA practices: feed management, manure management, improved breeding, animal health management, and milk value addition. Dairy profitability is measured using gross margin percentage, a simple and operational indicator of farm-level economic performance. Using cross-sectional household survey data, the study applies a Multinomial Endogenous Switching Regression Model (MESRM) to estimate the causal effects of adopting single and combined CSA practices while accounting for observable and unobservable selection bias. Results are validated using a Multivalued Inverse Probability Weighted Regression Adjustment (MIPWRA) estimator. The findings show that adoption of CSA practices significantly increases dairy profitability in both counties, with substantially larger gains associated with bundled adoption compared with single practices. The full CSA package yields the highest profitability effects, although impact magnitudes vary across regions due to differences in farm size, production systems, and institutional support. Counterfactual estimates indicate that non-adopters would realise considerable profitability gains if they adopted CSA practices, highlighting substantial unrealised economic potential. The results therefore confirm that CSA adoption can deliver economic benefits alongside climate resilience in smallholder dairy systems. Policy efforts should therefore prioritise scaling integrated CSA packages while addressing region-specific constraints to improve adoption and profitability outcomes.