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Shocks, Consumption and Income Diversification in Rural Ethiopia

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  • Catherine Porter

Abstract

We present new evidence that households are unable to protect themselves from rainfall failure that occurs on average every five years in rural Ethiopia. However, other less extreme rainfall variation and idiosyncratic shocks such as illness and crop pests do not impact significantly on consumption. Agricultural shocks impact negatively on farm income as expected, however they also stimulate non-agricultural earnings by an equivalent amount. In the case of a covariate shock such as severe rainfall failure, this smoothing mechanism may be ineffective and rainfall insurance or drought-triggered safety nets could provide further protection.

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  • Catherine Porter, 2012. "Shocks, Consumption and Income Diversification in Rural Ethiopia," Journal of Development Studies, Taylor & Francis Journals, vol. 48(9), pages 1209-1222, September.
    • Handle: RePEc:taf:jdevst:v:48:y:2012:i:9:p:1209-1222
    DOI: 10.1080/00220388.2011.646990
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