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Transfers, Diversification and Household Risk Strategies: Can Productive Safety Nets Help Households Manage Climatic Variability?

Author

Listed:
  • Karen Macours

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Patrick Premand

    (BM = WB - La Banque Mondiale = The World Bank - WBG = GBM - World Bank Group = Groupe Banque Mondiale)

  • Renos Vakis

    (BM = WB - La Banque Mondiale = The World Bank - WBG = GBM - World Bank Group = Groupe Banque Mondiale)

Abstract

We present experimental evidence on a programme aimed at improving households' risk management through income diversification. The intervention targeted rural Nicaraguan households exposed to weather variability and combined a one-year conditional cash transfer with vocational training or a productive investment grant. Both complementary interventions provided protection against weather shocks two years after the programme ended. Households that received the productive investment grant also had higher average consumption levels. The complementary interventions facilitated income smoothing and diversification of economic activities. Relaxing capital constraints induced investments in non-agricultural businesses, while relaxing skills constraints increased wage work and migration in response to shocks.

Suggested Citation

  • Karen Macours & Patrick Premand & Renos Vakis, 2022. "Transfers, Diversification and Household Risk Strategies: Can Productive Safety Nets Help Households Manage Climatic Variability?," PSE-Ecole d'économie de Paris (Postprint) halshs-03672313, HAL.
    • Handle: RePEc:hal:pseptp:halshs-03672313
    DOI: 10.1093/ej/ueac018
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    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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