Household's vulnerability to shocks in Zambia

Zambia is a county characterized by a high incidence of poverty and exposure to several types of shocks like HIV/AIDS, macroeconomic instability and periodic droughts. In this paper the authors conduct an in depth analysis of the incidence and impact of those shocks on poverty. The analysis of the HIV/AIDS epidemic, carried out using the data on the occurrence of the death of an adult in the previous 12 months and the existence of foster children, shows the existence of a generaldecrease in consumption with the exception of non poor rural families. The deterioration of the economic situation and the related high level of unemployment resulted in a lower level of economic wellbeing. Finally, the analysis of the impact of the drought shows that while a significant percentage (17 percent) of the poorest households in rural areas would experience significant losses in maize production (covering 8 percent of all the households), they are concentrated in a few communities in Southern, Central and Western provinces. In order to identify those households that might suffer more from the negative impact of the shocks and/or have a low level of human capital the authors defined"vulnerable households", those that are likely to be poor and exposed to shocks, and"chronically poor households", those that are likely to be poor and have low levels of human capital outcomes. According to this definition, about 20 percent of the households are vulnerable whilst almost 40 percent are chronically poor and 10 percent are at the same time both vulnerable and chronically poor and therefore at most risk. Private coping mechanisms and private transfers are very common, but they do not seem to be effective in helping households to deal with the adverse impact of shocks. On the other hand, household participation in food for work programs increase after the death of a household member. Therefore there is a need for long term household human capital investments, programs to alleviate the burden of HIV/AIDS, and targeted programs for the alleviating weather related shocks like the drought.