Slow to Respond: Lagged Adjustments to Moisture Conditions in Small Ruminant Markets

This study examines how rural households in Ethiopia adjust their livestock market participation in response to moisture conditions. Using contemporaneous and lagged measures of hydrological stress, the analysis distinguishes between sheep and goat markets to capture species‐specific responses. The results show that adjustment is driven primarily by lagged moisture conditions, although some contemporaneous effects are also evident. Favorable past moisture significantly increases participation in sheep markets, while responses in goat markets are smaller and less consistent. Transaction volumes respond only weakly, indicating that hydrological stress affects primarily the extensive margin of market participation. Responses also vary across agroecological zones. The findings suggest that livestock adjustment to hydrological stress is gradual and species‐specific, reflecting ecological dynamics and differences in resilience across livestock species.