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Rainfall Shocks, Markets, and Food Crises: Evidence from the Sahel

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  • Jenny Aker

Abstract

How do markets respond to extreme rainfall in West Africa? This paper examines the effect of weather on grain market performance in Niger, a country increasingly affected by drought and severe food crises over the past two decades. Using a dataset that combines information on rainfall, agricultural production, prices and transaction costs, I exploit rainfall variation to estimate the impact of drought on grain market performance between 1997 and 2006. Time series tests suggest that grain markets in Niger respond to supply shocks and that markets are more integrated during drought years. Exploiting the exogeneity of extreme rainfall in a difference-in-differences framework supports these findings: drought reduces grain price dispersion across markets. This impact is stronger as a higher percentage of markets are affected by drought, as was the case in 2004/2005, the year of a severe food crisis. The results suggest that early warning systems in West Africa should focus on the spatial impact of drought at the sub-regional level, as well as monitor prices in key forecasting markets during the harvest period.

Suggested Citation

  • Jenny Aker, 2008. "Rainfall Shocks, Markets, and Food Crises: Evidence from the Sahel," Working Papers 157, Center for Global Development.
    • Handle: RePEc:cgd:wpaper:157
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    File URL: http://www.cgdev.org/content/publications/detail/1417887
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    Cited by:

    1. Hill,Ruth & Fuje,Habtamu Neda, 2020. "What is the Impact of Weather Shocks on Prices? : Evidence from Ethiopia," Policy Research Working Paper Series 9389, The World Bank.
    2. Maria Sassi, 2013. "Impact of Climate Change and International Prices Uncertainty on the Sudanese Sorghum Market: A Stochastic Approach," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 19(1), pages 19-32, February.
    3. Elham Jafarzadeh & He Shuquan, 2021. "The Effect of Internal and External Conflicts on the Country Trade and Economic Growth: Case from Emerging and Developed Countries," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 13(9), pages 134-134, August.
    4. Tristan Le Cotty & Elodie Maître d’Hôtel & Raphaël Soubeyran & Julie Subervie, 2014. "Wait and Sell: Farmer Preferences and Grain Storage in Burkina Faso," Working Papers 14-07, LAMETA, Universtiy of Montpellier, revised May 2015.

    More about this item

    Keywords

    Markets; food crisis; Africa; climate change; vector autoregressive model;
    All these keywords.

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