The Earlier the Better? Cash Transfers for Drought Response in Niger

Climatic shocks exacerbate consumption volatility and seasonality. When facing fluctuations in labor needs and prices, low-income rural households may rationally increase their consumption during specific seasons rather than maintaining it constant throughout the year. This makes the optimal timing of policy responses to shocks ambiguous. This paper examines the impact of varying the timing of cash transfers in response to drought in Niger, leveraging satellite-based triggers for a faster response before the lean season. A randomized controlled trial compares large early transfers delivered before the lean season, a traditional humanitarian response during the lean season, and smaller regular transfers throughout the year. The results show that large early transfers yield greater net benefits on economic welfare and psychological well-being before and during the lean season compared to a traditional humanitarian lean season response. The large early transfers also tend to have larger effects than the year-long transfers. These welfare differences do not persist after the lean season and nine months later. The early timing of transfers shifts borrowing behavior but has no discernible impact on livelihoods. The findings demonstrate the value of sufficiently large early transfers in mitigating the effects of a severe drought in presence of seasonal fluctuations in labor needs and prices.