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Here comes the rain: Precipitation shocks and economic outcomes in Ecuador

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  • Canavire-Bacarreza, Gustavo
  • Puerta-Cuartas, Alejandro
  • Ramos, Andrey

Abstract

This paper examines how precipitation shocks affect poverty in Ecuador. Using gridded monthly precipitation data for 2007-2024, we construct parish-level measures of excess and deficit precipitation and link them to household socioeconomic data from the National Survey of Employment, Unemployment, and Underemployment (ENEMDU). Our empirical estimates show that both excess and deficit precipitation increase the likelihood of poverty among workers in the primary sector (agriculture and mining), consistent with disruptions to agricultural production and local infrastructure. By contrast, in the tertiary sector (commerce and services), precipitation shocks lower the probability of poverty, plausibly reflecting heightened demand for health and social assistance, transportation, logistics, and related services during emergency response and recovery phases. We identify per-capita labor income and per-capita final household income as primary transmission channels, with magnitudes conditioned by formality status, location (urban versus rural), self-employment, and the recurrence of shocks. These findings underscore the potential of targeted sector-specific policies to mitigate the poverty impacts of weather shocks.

Suggested Citation

  • Canavire-Bacarreza, Gustavo & Puerta-Cuartas, Alejandro & Ramos, Andrey, 2026. "Here comes the rain: Precipitation shocks and economic outcomes in Ecuador," World Development, Elsevier, vol. 206(C).
    • Handle: RePEc:eee:wdevel:v:206:y:2026:i:c:s0305750x26001579
    DOI: 10.1016/j.worlddev.2026.107468
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    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets

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