This study focused on two central themes. The first addressed the vulnerability of farmers to climate change at household and regional levels. The second theme analysed determinants of adaptation measures and factors influencing the perceptions of climate change in the Nile Basin of Ethiopia. Three approaches are employed to address the above themes. The first approach is the vulnerability to expected poverty approach. It is based on estimating the probability that a given shock or set of shocks moves consumption by households below a given minimum level (such as a consumption poverty line) or forces the consumption level to stay below the given minimum requirement if it is already below this level. This is adopted to assess vulnerability at household level. Secondly, the method of principal component analysis (PCA) is employed to create vulnerability indices to conduct a comparative analysis of the vulnerability across regional states. Lastly, the Heckman selection probit model is used to analyse the two-step process of adaptation, which consists of perceiving a change in climate followed by taking appropriate adaptation measures in response. Results indicate that vulnerability is highly sensitive to a minimum income requirement (poverty line) that farm households require to survive on a daily basis. For example, when the daily minimum income is fixed at US$0.3 per day, only 7 percent of farmers are vulnerable to future climate change, whereas at a minimum income level of US$2 per day, 93 percent of the farmers are vulnerable to climate extremes. Therefore, policies should encourage income generation and asset holding, both of which will enable consumption smoothing during and immediately after harsh climatic events. Results further show that the relatively least-developed, semi-arid and arid regions namely, Afar and Somali, are highly vulnerable to climate change. The large Oromia region, which is characterised both by areas of good agricultural production in the highlands and midlands and by recurrent droughts, especially in the lowlands, is also vulnerable. Furthermore, the Tigray region, which experiences recurring droughts, is also vulnerable to the negative impacts of climate change in comparison with the other regions. Integrated rural development policies, aimed at alleviating poverty with special emphasis on the relatively less-developed regions of the country (i.e., Afar and Somali), can play a double role in reducing poverty and in increasing adaptive capacity to climate change. The study also reveals that experienced farmers, more educated farmers, better-off farmers, better-informed farmers, farmers who access extension and credit services and those with stronger social networks are more likely to perceive climate change and adapt. Government policies and investment strategies that support the provision of and access to education; credit; extension services on crop and livestock production; information on climate and adaptation measures across different agro-ecologies and encourage informal social networks are necessary to better adapt to climate change in Ethiopia. / Thesis (PhD)--University of Pretoria, 2010. / Agricultural Economics, Extension and Rural Development / unrestricted