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Transfers, diversification and household risk strategies : experimental evidence with lessons for climate change adaptation

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  • Macours, Karen
  • Premand, Patrick
  • Vakis, Renos

Abstract

While climate change is likely to increase weather risks in many developing countries, there is little evidence on effective policies to facilitate adaptation. This paper presents experimental evidence on a program in rural Nicaragua aimed at improving households'risk-management through income diversification. The intervention targeted agricultural households exposed to weather shocks related to changes in rainfall and temperature patterns. It combined a conditional cash transfer with vocational training or a productive investment grant. The authors identify the relative impact of each complementary package based on randomized assignment, and analyze how impacts vary by exposure to exogenous drought shocks. The results show that both complementary interventions provide full protection against drought shocks two years after the end of the intervention. Households that received the productive investment grant also had higher average consumption levels. The complementary interventions led to diversification of economic activities and better protection from shocks compared to beneficiaries of the basic conditional cash transfer and control households. These results show that combining safety nets with productive interventions can help households manage future weather risks and promote longer-term program impacts.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 6053.

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Date of creation: 01 Apr 2012
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Handle: RePEc:wbk:wbrwps:6053

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Keywords: Safety Nets and Transfers; Regional Economic Development; Rural Poverty Reduction; Housing&Human Habitats;

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  1. Wolfram Schlenker & W. Michael Hanemann & Anthony C. Fisher, 2006. "The Impact of Global Warming on U.S. Agriculture: An Econometric Analysis of Optimal Growing Conditions," The Review of Economics and Statistics, MIT Press, vol. 88(1), pages 113-125, February.
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  6. Paul J. Gertler & Sebastian W. Martinez & Marta Rubio-Codina, 2012. "Investing Cash Transfers to Raise Long-Term Living Standards," American Economic Journal: Applied Economics, American Economic Association, vol. 4(1), pages 164-92, January.
  7. Chris Elbers & Jan Willem Gunning & Bill Kinsey, 2003. "Growth and Risk: Methodology and Micro Evidence," Tinbergen Institute Discussion Papers 03-068/2, Tinbergen Institute, revised 19 Sep 2006.
  8. Orazio Attanasio & Adriana Kugler & Costas Meghir, 2011. "Subsidizing Vocational Training for Disadvantaged Youth in Colombia: Evidence from a Randomized Trial," American Economic Journal: Applied Economics, American Economic Association, vol. 3(3), pages 188-220, July.
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  13. de Janvry, Alain & Finan, Frederico & Sadoulet, Elisabeth & Vakis, Renos, 2006. "Can conditional cash transfer programs serve as safety nets in keeping children at school and from working when exposed to shocks?," Journal of Development Economics, Elsevier, vol. 79(2), pages 349-373, April.
  14. Hoddinott, John & Kinsey, Bill, 2001. " Child Growth in the Time of Drought," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(4), pages 409-36, September.
  15. Yamano, Takashi & Alderman, Harold & Christiaensen, Luc J.M., 2003. "Child Growth, Shocks, And Food Aid In Rural Ethiopia," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa 25838, International Association of Agricultural Economists.
  16. Skoufias, Emmanuel, 2007. "Poverty alleviation and consumption insurance: Evidence from PROGRESA in Mexico," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 36(4), pages 630-649, August.
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Cited by:
  1. Pushkar Maitra & Subha Mani, 2013. "Learning and Earning: Evidence from a Randomized Evaluation in India," Fordham Economics Discussion Paper Series dp2013-02, Fordham University, Department of Economics.
  2. World Bank, . "Latin America and the Caribbean Poverty and Labor Brief, June 2013 : Shifting Gears to Accelerate Shared Prosperity in Latin America and the Caribbean," World Bank Other Operational Studies 15265, The World Bank.
  3. Cho, Yoonyoung & Honorati, Maddalena, 2014. "Entrepreneurship programs in developing countries: A meta regression analysis," Labour Economics, Elsevier, vol. 28(C), pages 110-130.
  4. Jonathan Colmer, 2013. "Climate Variability, Child Labour and Schooling: Evidence on the Intensive and Extensive Margin," Working Papers 2013.81, Fondazione Eni Enrico Mattei.
  5. Macours, Karen, 2012. "Volatility, Risk and Household Poverty: Micro-evidence from Randomized Control Trials," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 128293, International Association of Agricultural Economists.
  6. Jonathan Colmer, 2013. "Climate Variability, Child Labour and Schooling: Evidence on the Intensive and Extensive Margin," Grantham Research Institute on Climate Change and the Environment Working Papers 132, Grantham Research Institute on Climate Change and the Environment.

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