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Gone with the storm: rainfall shocks and household well-being in Guatemala

Author

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  • Baez, Javier E.
  • Lucchetti, Leonardo
  • Genoni, Maria E.
  • Salazar, Mateo

Abstract

This paper investigates the causal consequences of Tropical Storm Agatha (2010) -- the strongest tropical storm ever to strike Guatemala since rainfall records have been kept -- on household welfare. The analysis reveals substantial negative effects, particularly among urban households. Per capita consumption fell by 12.6 percent, raising poverty by 5.5 percentage points (an increase of 18 percent). The negative effects of the shock span other areas of human welfare. Households cut back on food consumption (10 percent or 43 to 108 fewer calories per person per day) and reduced expenditures on basic durables. These effects are related to a drop in income per capita (10 percent), mostly among salaried workers. Adults coped with the shock by increasing their labor supply (on the intensive margin) and simultaneously relying on the labor supply of their children and withdrawing them from school. Impact heterogeneity is associated with the intensity of the shock, food price inflation, and the timing of Agatha with respect to the harvest cycle of the main crops. The results are robust to placebo treatments, household migration, issues of measurement error, and different samples. The negative effects of the storm partly explain the increase in poverty seen in urban Guatemala between 2006 and 2011, which national authorities and analysts previously attributed solely to the collateral effects of the global financial crisis.

Suggested Citation

  • Baez, Javier E. & Lucchetti, Leonardo & Genoni, Maria E. & Salazar, Mateo, 2015. "Gone with the storm: rainfall shocks and household well-being in Guatemala," Policy Research Working Paper Series 7177, The World Bank.
  • Handle: RePEc:wbk:wbrwps:7177
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    6. Wineman, A. & Ochieng, J. & Mason, N. & Kirimi, L., 2015. "Let it rain: Weather extremes and household welfare in rural Kenya," Food Security Collaborative Policy Briefs 230982, Michigan State University, Department of Agricultural, Food, and Resource Economics.
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    10. Camille Saint-Macary & Claire Zanuso, 2015. "Build back better? Long-lasting impact of the 2010 Earthquake in Haiti," Working Papers DT/2015/15, DIAL (Développement, Institutions et Mondialisation).
    11. Oscar A. Ishizawa & Juan Jose Miranda, 2019. "Weathering Storms: Understanding the Impact of Natural Disasters in Central America," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(1), pages 181-211, May.
    12. Arslan, A., 2018. "Climate resilience in rural Zambia: Evaluating farmers’ response to El Niño-induced drought," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 275905, International Association of Agricultural Economists.
    13. Connie Bayudan-Dacuycuy & Lora Kryz Baje, 2019. "When It Rains, It Pours? Analyzing the Rainfall Shocks-Poverty Nexus in the Philippines," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 145(1), pages 67-93, August.
    14. Zimmermann, Laura, 2020. "Remember when it rained – Schooling responses to shocks in India," World Development, Elsevier, vol. 126(C).
    15. Nancy McCarthy & Talip Kilic & Alejandro de la Fuente & Joshua M. Brubaker, 2018. "Shelter from the Storm? Household-Level Impacts of, and Responses to, the 2015 Floods in Malawi," Economics of Disasters and Climate Change, Springer, vol. 2(3), pages 237-258, October.
    16. Patnaik, Ila & Sane, Renuka & Shah, Ajay, 2019. "Chennai 2015: A novel approach to measuring the impact of a natural disaster," Working Papers 19/285, National Institute of Public Finance and Policy.
    17. Juliana Yael Milovich Finkelstein, 2019. "The Impact of the Expansion of African Palm Crop on Child Undernutrition in South-West Guatemala," EconomiX Working Papers 2019-22, University of Paris Nanterre, EconomiX.
    18. Eva O. Arceo-Gómez & Danae Hernández-Cortés & Alejandro López-Feldman, 2020. "Droughts and rural households’ wellbeing: evidence from Mexico," Climatic Change, Springer, vol. 162(3), pages 1197-1212, October.
    19. Caruso, Germán Daniel, 2017. "The legacy of natural disasters: The intergenerational impact of 100 years of disasters in Latin America," Journal of Development Economics, Elsevier, vol. 127(C), pages 209-233.
    20. Mamoudou Ba & Mazhar Mughal, 2020. "Weather shocks, coping strategies and household well-being: Evidence from rural Mauritania [Chocs climatiques, stratégies d'adaptation et bien-être des ménages : Cas de la Mauritanie rurale]," Working Papers hal-02946273, HAL.
    21. Adelman,Melissa Ann & Szekely,Miguel, 2016. "School dropout in Central America : an overview of trends, causes, consequences, and promising interventions," Policy Research Working Paper Series 7561, The World Bank.
    22. Wondimagegn Tesfaye & Gebrelibanos Gebremariam, 2020. "Consumption smoothing and price enhancement motives for grain storage: empirical perspectives from rural Ethiopia," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 8(1), pages 1-19, December.

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    More about this item

    Keywords

    Rural Poverty Reduction; Regional Economic Development; Consumption; Climate Change Economics;
    All these keywords.

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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