Vulnerability to drought and food price shocks : evidence from Ethiopia
Although the measurement and determinants of poverty have been widely studied, vulnerability, or the threat of future poverty, has been more difficult to investigate due to data paucity. This paper combines nationally representative household data with objective drought and price information to quantify the causes of vulnerability to poverty in Ethiopia. Previous estimates have relied on self-reported shocks and variation in outcomes within a survey, which is inadequate for shocks such as weather and prices that vary more across time than space. Historical distributions of climate and price shocks in each district were used to simulate the probable distribution of future consumption for individual households; these were then used to quantify vulnerability to poverty. The analysis shows that many Ethiopians are unable to protect their consumption against lack of rainfall and sudden increases in food prices. A moderate drought causes a 9 percent reduction in consumption for many rural households, and high inflation causes a 14 percent reduction in the consumption of uneducated households in urban areas. Vulnerability of rural households is considerably higher than that of urban households, despite realized poverty rates being fairly similar. This finding reflects that the household survey in 2011 was conducted during a year of good rainfall but rapid food price inflation. The results highlight the need for caution in using a snapshot of poverty to target programs, as underlying rates of vulnerability can be quite different from the poverty rate captured at one point in time. The results also suggest that significant welfare gains can be made from risk management in both rural and urban areas.
|Date of creation:||19 Dec 2016|
|Contact details of provider:|| Postal: 1818 H Street, N.W., Washington, DC 20433|
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Cesar Calvo & Stefan Dercon, 2013. "Vulnerability to individual and aggregate poverty," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 41(4), pages 721-740, October.
- Luc J. Christiaensen & Kalanidhi Subbarao, 2005.
"Towards an Understanding of Household Vulnerability in Rural Kenya,"
Journal of African Economies,
Centre for the Study of African Economies (CSAE), vol. 14(4), pages 520-558, December.
- Christiaensen, Luc. J. & Subbarao, Kalanidhi, 2004. "Toward an understanding of household vulnerability in rural Kenya," Policy Research Working Paper Series 3326, The World Bank.
- Dercon, Stefan, 2004. "Growth and shocks: evidence from rural Ethiopia," Journal of Development Economics, Elsevier, vol. 74(2), pages 309-329, August.
- Stefan Dercon, 2003. "Growth and Shocks: evidence from rural Ethiopia," CSAE Working Paper Series 2003-12, Centre for the Study of African Economies, University of Oxford.
- Stefan Dercon, 2004. "Growth and Shocks: evidence from rural Ethiopia," Development and Comp Systems 0409036, EconWPA.
- Devarajan, Shantayanan & Go, Delfin S. & Maliszewska, Maryla & Osorio-Rodarte, Israel & Timmer, Hans, 2015. "Stress-testing Africa's recent growth and poverty performance," Journal of Policy Modeling, Elsevier, vol. 37(4), pages 521-547.
- Devarajan, Shantayanan & Go, Delfin S. & Maliszewska, Maryla & Osorio-Rodarte, Israel & Timmer, Hans, 2013. "Stress-testing Africa's recent growth and poverty performance," Policy Research Working Paper Series 6517, The World Bank.
- Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-766, May.
- Hoddinott, John & Quisumbing, Agnes, 2003. "Methods for microeconometric risk and vulnerability assessments," Social Protection and Labor Policy and Technical Notes 29138, The World Bank.
- Isabel Günther & Johannes K. Maier, 2014. "Poverty, Vulnerability, and Reference-Dependent Utility," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(1), pages 155-181, March.
- Günther, Isabel & Maier, Johannes, 2013. "Poverty, Vulnerability, and Reference Dependent Utility," WIDER Working Paper Series 140, World Institute for Development Economic Research (UNU-WIDER).
- Headey, Derek D. & Bachewe, Fantu Nisrane & Worku, Ibrahim & Dereje, Mekdim & Taffesse, Alemayehu Seyoum, 2012. "Urban wage behavior and food price inflation: the case of Ethiopia [Research Note]:," ESSP research note 15, International Food Policy Research Institute (IFPRI).
- Gamanou, Gisele & Morduch, Jonathan, 2002. "Measuring Vulnerability to Poverty," WIDER Working Paper Series 058, World Institute for Development Economic Research (UNU-WIDER).
- Dercon, Stefan & Hill, Ruth Vargas & Clarke, Daniel & Outes-Leon, Ingo & Seyoum Taffesse, Alemayehu, 2014. "Offering rainfall insurance to informal insurance groups: Evidence from a field experiment in Ethiopia," Journal of Development Economics, Elsevier, vol. 106(C), pages 132-143.
- Robinson, Sherman & Strzepek, Kenneth M. & Cervigni, Raffaello, 2013. "The cost of adapting to climate change in Ethiopia: Sector-wise and macro-economic estimates:," ESSP working papers 53, International Food Policy Research Institute (IFPRI).
- Indranil Dutta & James Foster & Ajit Mishra, 2011. "On measuring vulnerability to poverty," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 37(4), pages 743-761, October.
- James E. Foster & Indranil Dutta & Ajit Mishra, 2010. "On Measuring Vulnerability to Poverty," Working Papers 2010-13, The George Washington University, Institute for International Economic Policy.
- 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.
- Ravallion, Martin, 1988. "Expected Poverty under Risk-Induced Welfare Variability," Economic Journal, Royal Economic Society, vol. 98(393), pages 1171-1182, December.
- Michael Carter & Christopher Barrett, 2006. "The economics of poverty traps and persistent poverty: An asset-based approach," Journal of Development Studies, Taylor & Francis Journals, vol. 42(2), pages 178-199.
- Stefan Dercon & John Hoddinott & Tassew Woldehanna, 2005. "Shocks and Consumption in 15 Ethiopian Villages, 1999--2004," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 14(4), pages 559-585, December.
- Ethan Ligon & Laura Schechter, 2003. "Measuring Vulnerability," Economic Journal, Royal Economic Society, vol. 113(486), pages 95-102, March.
- Ligon, Ethan & Schechter, Laura, 2002. "Measuring Vulnerability," 2002 Annual meeting, July 28-31, Long Beach, CA 19899, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Ligon, Ethan & Laura Schechter, 2002. "Measuring Vulnerability," Royal Economic Society Annual Conference 2002 128, Royal Economic Society.
- Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2014. "What Do We Learn from the Weather? The New Climate-Economy Literature," Journal of Economic Literature, American Economic Association, vol. 52(3), pages 740-798, September.
- Thomas, Timothy & Christiaensen, Luc & Do, Quy Toan & Trung, Le Dang, 2010. "Natural disasters and household welfare : evidence from Vietnam," Policy Research Working Paper Series 5491, The World Bank.
- Pritchett, Lant & Suryahadi, Asep & Sumarto, Sudarno, 2000. "Quantifying vulnerability to poverty - a proposed measure, applied to Indonesia," Policy Research Working Paper Series 2437, The World Bank.
- Stefan Dercon & Pramila Krishnan, 2000. "Vulnerability, seasonality and poverty in Ethiopia," Journal of Development Studies, Taylor & Francis Journals, vol. 36(6), pages 25-53.
- Alwang, Jeffrey & Siegel, Paul B. & Jorgensen, Steen L., 2001. "Vulnerability : a view from different disciplines," Social Protection and Labor Policy and Technical Notes 23304, The World Bank.
- Klasen, Stephan & Lechtenfeld, Tobias & Povel, Felix, 2015. "A Feminization of Vulnerability? Female Headship, Poverty, and Vulnerability in Thailand and Vietnam," World Development, Elsevier, vol. 71(C), pages 36-53.
- Alem, Yonas & Söderbom, Måns, 2012. "Household-Level Consumption in Urban Ethiopia: The Effects of a Large Food Price Shock," World Development, Elsevier, vol. 40(1), pages 146-162.
- Headey, Derek D. & Bachewe, Fantu Nisrane & Worku, Ibrahim & Dereje, Mekdim & Taffesse, Alemayehu Seyoum, 2012. "Urban wage behavior and food price inflation: the case of Ethiopia [Working Paper]:," ESSP working papers 41, International Food Policy Research Institute (IFPRI). Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:7920. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi)
If references are entirely missing, you can add them using this form.