Assessing the impact of shocks on household vulnerability: evidence from rural areas in Vietnam

Vietnam is considered one of the most vulnerable countries since it is seriously affected by climate change and natural disaster-related shocks. This study applied the household vulnerability index (HVI), originally developed by the Food, Agriculture, and Natural Resources Policy Analysis Network (FANRPAN, 2011), to measure household vulnerability trends across five socio-economic regions and to assess the impact of shocks on household vulnerability in rural areas in Vietnam. This index is mainly based on the Vietnam Access to Resources Household Survey (VARHS) dataset from 2018, which included 2,974 households in 12 provinces of Vietnam. There are five components in the HVI, namely natural assets, physical assets, financial assets, human assets, and social assets. The feasible generalised least squares method (FGLS) was then used to assess the impact of natural, biological, and economic shocks on household vulnerability. The results showed that most rural households had moderate vulnerability, comprising 85% of observed households in the whole country and five regions. The North Central and South Central Coasts ranked first among the other regions in high vulnerability levels. Moreover, the research results indicated that natural and economic shocks increased household vulnerability HVI scores by 0.01 and 0.008, respectively. Specifically, natural shocks positively impacted household vulnerability in the Northern Midlands and Mountains, with an HVI score of 0.018, while economic shocks caused an increase in HVI scores of 0.026 in the North Central and South Central Coasts. In general, households must improve their ability to cope with shocks by, for example, improving educational attainment, increasing participation in non-agricultural activities and social activities, and diversifying their income.