Market Integration and Uncertainty: The Impact of Domestic and International Commodity Price Variability on Rural Household Income and Welfare in Ghana and Peru

We estimate rural household income uncertainties and welfare changes due to commodity price and production variability in Ghana and Peru under different scenarios for international and domestic market shocks. Uncertainties significantly affect the variability of household income, especially for households that are specialised in the production of few commodities. Wider exposure to international markets would increase the income variability for producers of commodities that are subjected to stabilisation policies in Ghana but would reduce the variability that rural households in Peru face. In terms of welfare, rural households in both countries are expected to gain if fully exposed to international markets.