Lake Chad Regional Economic Memorandum Development for Peace © 2021 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is subject to copyright. 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Lake Chad Regional Economic Memorandum Development for Peace Lake Chad Regional Economic Memorandum  |  Development for Peace Contents Acknowledgmentsxvi Executive Summary xvii Part I: Overview of the Lake Chad Regional Economic Memorandum 1 Rogelio Granguillhome (World Bank), Marco Hernandez (World Bank), Samantha Lach (World Bank), Takaaki Masaki (World Bank), and Carlos Rodríguez-Castelán (World Bank) 1.1 Introduction 2 1.1.1 Rationale 2 1.1.2 Road Map of the Report 5 1.2 Analytical Framework 7 1.3 Recent Socioeconomic Trends in the Lake Chad Region 10 1.3.1 Long-Term Demographics 10 1.3.2 Trends in Poverty Reduction 13 1.3.3 Local Economic Dynamics 15 1.3.4 Human Capital Outcomes and Access to Basic Services 15 1.3.5 Trends in Agriculture 18 1.3.6 Jobs and Labor Market Composition 22 1.4 Territorial Development within the Lake Chad Region 26 1.4.1 Density 26 1.4.1.1 Economic Density 26 1.4.1.2 Urbanization 26 1.4.1.3 Regional Convergence (Conditional Convergence) 29 1.4.2 Distance (Lack of Connectivity) 31 1.4.2.1 Market Accessibility 31 1.4.2.2 Poor Road Infrastructure 32 1.4.2.3 Digital Connectivity 33 1.4.2.4 Reducing Distance to Markets Matters for Local Economic Development 34 1.4.3 Division 37 1.4.3.1 Boko Haram 37 1.4.3.2 Crossborder Trade Barriers 38 1.5 Climate Change and FCV challenges 42 1.5.1 Climate Change and Harsh Environmental Conditions 42 1.5.2 Links between Climate Variability and Conflict 44 1.5.3 The Social and Economic Effects of Conflict 46 1.6 Policy Options 52 1.6.1 Connective Infrastructure 54 1.6.2 Trade Facilitation 58 1.6.3 Governance 59 1.6.4 Natural Resource Management 64 References68 Appendix 1.A: Supplementary Figures and Tables 77 iv Table of Contents Infrastructure Investment Scenarios Explored in the Technical Paper “Infrastructure and Appendix 1.B:  Structural Change in the Lake Chad Region” 79 Appendix 1.C: List of Technical Papers 80 Part II: Technical Papers 83 Technical Paper 1. Socioeconomic Trends in the Lake Chad Region 83 Takaaki Masaki (World Bank) and Carlos Rodríguez-Castelán (World Bank) 2.1 Introduction 84 2.2 Recent Socio-economic Trends in the Lake Chad 87 2.2.1 Trends in poverty reduction 88 2.2.2 Local economic dynamics 90 2.2.3 Human capital outcomes and access to basic services 90 2.3 Spatial Dynamics of Economic Development within the Lake Chad Region 93 2.3.1 Density 93 2.3.2 Distance 93 2.3.2.1 Physical Infrastructure 94 2.3.2.2 Digital Infrastructure 95 2.3.3 Division 97 2.3.3.1 Ethnolinguistic and religious divisions 97 2.3.3.2 Boko Haram Conflicts 98 2.3.3.3 Cross-border trade 99 2.4 Determinants of regional growth 100 2.4.1 Data 100 2.4.2 Results 102 2.5 Conclusion 104 References107 Appendix 2.A: Supplementary Information 110 Appendix 2.B: Descriptive Statistics and Sources of Data Used in the Multivariate Regression 111 Appendix 2.C: Market Access Index 112 Appendix 2.D: Rural Access Index 113 Technical Paper 2. Climate Change, Rural Livelihoods, and Urbanization: Evidence from the Permanent Shrinking of Lake Chad 114 Remi Jedwab (George Washington University), Federico Haslop (George Washington University), Takaaki Masaki (World Bank), and Carlos Rodríguez-Castelán (World Bank) 3.1 Introduction 115 3.2 Background: The Lake Chad and Its Tributaries 119 3.3 Data for the Reduced-Form Analyses 121 3.3.1 Total Population Levels for the Subdistrict Samples 121 3.3.2 District Samples 122 3.3.3 City Population Sizes 122 3.3.4 Geographical Proximity to Lake Chad 123 Table of Contents v Lake Chad Regional Economic Memorandum  |  Development for Peace 3.4 Main Hypothesis and Specification 125 3.4.1 Main Hypothesis 125 3.4.2. Baseline Specification 125 3.5 Reduced-Form Effects on Total Population 127 3.5.1 Effects on Total Population for Niger, 1951–2017 127 3.5.2 Effects on Total Population for Cameroon, 1963–2005 129 3.5.3 Effects on Total Population for Chad, 1948-2009 130 3.5.4 Alternative Analysis Using Distance Bins and Population Reallocation 132 3.6 Effects on Cities and “Refugee” Urbanization 135 3.6.1 Effects on City Population Sizes for Niger 1951–2012 137 3.6.2 Effects on City Population Sizes for Cameroon 1951–2012 138 3.6.3 Effects on City Population Sizes for Chad 1950–2009 139 3.7 Governmental Responses to the Crisis 141 3.8 Conclusion and Policy Discussion 144 References145 Technical Paper 3. Estimating the Spillover Economic Effects of Foreign Conflict: Evidence from Boko Haram 150 Remi Jedwab (George Washington University), Brian Blankespoor (World Bank), Takaaki Masaki (World Bank), and Carlos Rodríguez-Castelán (World Bank) 4.1 Introduction 151 4.2 Background: Studying Boko Haram as a Foreign Conflict 155 4.3 Sample and Main Data for Cameroon, Chad and Niger 158 4.4 Econometric Specification and Issues 160 4.5 Average Effects in Cameroon, Chad and Niger 162 4.5.1. Baseline Results 162 4.5.2 Foreign Conflict as a Trade Shock Disproportionately Impacting Cities? 163 4.5.2.1 Other Results on Night Lights and Rural Economic Outcomes 163 4.5.2.2 Income Shocks, Migration, and Urban Land Expansion 166 4.5.2.3 Foreign Conflict, Local Conflict, and Local Economic Development 169 4.6 Heterogeneous Effects for Cameroon, Chad and Niger 172 4.6.1 Heterogeneity with Respect to Initial Economic Conditions 172 4.6.2 Factors of Resilience to Foreign Conflict Shocks 173 4.7 Robustness and Other Considerations 179 4.8 Conclusion 180 References181 Appendix189 Technical Paper 4. Infrastructure and Structural Change in the Lake Chad Region 192 Mathilde Lebrand (World Bank) 5.1 Introduction 193 5.2 Data 196 5.2.1 Sources of data 196 5.2.2 Access to infrastructure 199 vi Table of Contents 5.3 Empirical Strategy and Results 202 5.3.1 Ordinary Least Squares 202 5.3.1.1 OLS Results 203 5.3.1.2 Average Effects 203 5.3.2 Instrumental Variables 206 5.3.2.1 IV strategy 206 5.3.2.2 IV Results 208 5.4 Welfare Impacts of Infrastructure 209 5.4.1 The Model 209 5.4.1.1 Setup 209 5.4.2 Calibration of the Model 211 5.4.3 Counterfactuals 211 5.4.3.1 New transport infrastructure in Cameroon and Chad 212 5.4.3.2 Calibration of the new counterfactual 214 5.4.3.3 Welfare impacts 214 5.4.3.4 Spatial impacts of the road and rail corridors 215 5.5 Conclusion 218 References219 Appendix221 A5.1 Employment 221 A5.2 Mapping Infrastructure in the Lake Chad 222 A5.2.1 Measuring electricity access based on Night-Time Lights (2016) 222 A5.2.2 Nigeria 223 A5.3 Cameroon 227 A5.4 Chad 232 A5.5 Additional Data 234 A5.6 Regression tables 235 A5.7 Regression tables: heterogenous impacts 239 A5.8 Regression tables: IV strategy 240 A5.9 Calibration of the Model: Parameters 242 Technical Paper 5. Conflict and Climate Change in the Lake Chad Region 243 Peter Fisker (University of Copenhagen) 6.1 Introduction 244 6.2 Data 245 6.2.1 Conflict 246 6.2.2 Climate 246 6.2.3 Other explanatory factors 248 6.2.4 Correlations 249 6.3 Empirical strategy 250 6.4 Results 252 6.4.1 Baseline results 252 6.4.2 Exploring heterogeneous effects 253 6.5 Conclusion 255 References256 Appendix257 Table of Contents vii Lake Chad Regional Economic Memorandum  |  Development for Peace Technical Paper 6. Building Rural Development in the Lake Chad Region 260 Brian Blankespoor (World Bank) 7.1 Introduction 261 7.2 Data and Sample 264 7.2.1 Local conditions 264 7.2.2 Land cover and agricultural activity 264 7.2.3 Market Access 266 7.2.4 Economic activity 267 7.2.5 Conflict data 269 7.3 Empirical Framework 271 7.3.1 Cropland expansion across the region 271 7.3.2 Local agricultural activity across the region 271 7.3.3 Agriculture amidst conflict nearby Lake Chad 272 7.3.3.1 Cropland expansion amidst conflict 272 7.3.3.2 Operational status of markets amidst conflict 272 7.4 Results 273 7.4.1 Trends in Agriculture 273 7.4.2 Market Access 277 7.4.3 Market status and conflict nearby Lake Chad 278 7.4.3.1 Cropland amidst conflict 278 7.4.3.2 Markets amidst conflict 281 7.5 Conclusion 284 References285 Technical Paper 7. Trade Patterns and Trade Networks in the Lake Chad Region 290 Peter Walkenhorst (American University of Paris) 8.1 Introduction 291 8.1.1 Trade policies and institutions 292 8.1.2 International connectivity 293 8.2 Violent conflict and international trade 295 8.2.1 Border closures 295 8.2.2 Transport impediments 297 8.2.3 Restrictions on fertilizer use 298 8.2.4 Restrictions on access to farming and fishing locations 298 8.3 Trade relationships 300 8.3.1 Intraregional cereals trade 300 8.3.2 Traditional trade flows for fish 301 8.3.3 Smoked fish exports from Diffa 302 8.3.4 Dried red pepper exports from Diffa 303 8.3.5 Onion exports from Cameroon 305 8.3.6 Cattle exports from Chad 305 8.4 Market activity and food supplies 307 8.4.1 Market activity 307 8.4.2 World Food Programme operations 307 viii Table of Contents 8.5 Conclusions and recommendations 310 8.5.1 Information 310 8.5.2 Trade facilitation 310 8.5.3 Other policy issues 311 References313 Boxes Part I: Overview of the Lake Chad Regional Economic Memorandum Three institutional functions—commitment, coordination, and cooperation—to increase the Box 1.1:  effectiveness of public policies 55 Box 1.2: Alternative routing of the Douala-N’Djamena corridor 57 The importance of fiscal transfers for subnational governments in the Lake Chad region: the case Box 1.3:  of Nigeria 63 Box 1.4: Transboundary water management in Lake Chad 67 Figures Part I: Overview of the Lake Chad Regional Economic Memorandum  nalytical framework to identify opportunities to strengthen territorial development and Figure 1.1: A address fragility in the Lake Chad region 8  overty is more severe in the Lake Chad Basin than in other parts of the countries Figure 1.2: P 13  sset deprivation in the Lake Chad Basin versus other parts of the countries Figure 1.3: A 14 Figure 1.4: Literacy and primary school completion rates are lower in the Lake Chad region 17 Figure 1.5: Access to core public services in the Lake Chad region 17 Figure 1.6: Employment type across the Lake Chad region 22 Figure 1.7: Wage employment by gender across the Lake Chad region 23  istribution of employment by sector across the Lake Chad region (4-digit) Figure 1.8: D 24  istribution of employment by sector and age (youth versus adults) (4-digit) Figure 1.9: D 25 Figure 1.10: Total population effect of proximity to Lake Chad, 1940s–2010s 27 Figure 1.11: P opulation density is positively correlated with regional growth, 1990 29 Figure 1.12: Main correlates with local economic growth: Regression analysis 30 Figure 1.13: M arket accessibility index and regional growth 34 Figure 1.14: Trends in vegetation health (NDVI), temperature, and rainfall, 2001–18 43 Figure 1.15: Trends in the Standardized Precipitation-Evapotranspiration Index 43 Figure 1.16: The climate-conflict trap 45 Figure 1.17: Conflict events and fatalities over time across the Lake Chad region 47 Figure 1.18: B oko Haram effects by distance to the Boko Haram area post-2009 (Incl.) 48 Figure B1.3.1: N  igerian states in the Lake Chad region have lower revenues and expenditures per person than the average Nigeria state 63 Figure A1.1: Local markets in proximity to Lake Chad by type 77 Table of Contents ix Lake Chad Regional Economic Memorandum  |  Development for Peace Technical Paper 1. Socioeconomic Trends in the Lake Chad Region  onceptual Framework Highlighting Opportunities to Strengthen Territorial Development and Figure 2.1: C Addressing Fragility in the Lake Chad Region 85  overty is more severe in the Lake Chad basin vis-à-vis in the rest of the countries Figure 2.2: P 88  sset deprivation in the Lake Chad basin versus the rest of the countries Figure 2.3: A 89  e literacy and completion rates for primary education in the Lake Chad are significantly Figure 2.4: Th lower than in the rest of the countries 92 Figure 2.5: Access to core public services in the Lake Chad region across time 92 Technical Paper 2. Climate Change, Rural Livelihoods, and Urbanization: Evidence from the Permanent Shrinking of Lake Chad  volution of Lake Chad’s Total Surface Water Area (sq km), 1950–2020 Figure 3.1: E 116 Figure 3.2: Total Population Effect of Proximity to the Lake Chad, 1940s–2010s 129 Technical Paper 3. Estimating the Spillover Economic Effects of Foreign Conflict: Evidence from Boko Haram Figure 4.1: Number of Boko Haram Events, 2009–2018 157  ost-2009 (Incl.) Boko Haram Effect by Distance to the Boko Haram Area Figure 4.2: P 162 Yearly Effect of Proximity to the Boko Haram Area (0–200 km) Figure 4.3:  162  eterogeneous Resilience Effects Depending on Initial Local Conditions Figure 4.4: H 174 Figure A4.1: B oko Haram Area Effect in Nigeria, 2000–2013 189 Figure A4.2: B oko Haram Area Effect in Nigeria, 2000–2018 189 Figure A4.3: B oko Haram Area Effect in Cameroon, Chad and Tchad, 50 Km Bins, 2000–2013 189 Figure A4.4: B oko Haram Area Effect in Cameroon, Chad and Niger, 2000–2018 189 Technical Paper 4. Infrastructure and Structural Change in the Lake Chad Region Figure 5.1: Route-Kilometers of Terrestrial Transmission Network, Africa 2009–2019 197 Figure 5.2: Access to infrastructure in Nigeria 200 Figure 5.3: Access to infrastructure in Cameroon 200 Figure 5.4: Access to infrastructure in Chad (2014) 200 Figure 5.5: Access to infrastructure in the Lake Chad region 201  mployment in agriculture in the Lake Chad countries Figure A5.1: E 221  ercentage of population with access to electricity (2016) Figure A5.2: P 222 Figure A5.3: Access to paved roads 223 Figure A5.4: Access to electricity 223 Figure A5.5: Access to internet fibre network 224  ercentage of districts and population with access to a paved road Figure A5.6: P 224  ercentage of districts and population with access to electricity for different thresholds Figure A5.7: P 225 Figure A5.8: Access to internet broadband 225  ercentage of districts and population with access to combined infrastructures Figure A5.9: P 226 Figure A5.10: Access to paved roads 227 Figure A5.11: Access to electricity 228 Figure A5.12: Access to internet fibre network 229 Figure A5.13: Percentage of districts and population with access to a paved road 230 Figure A5.14: Percentage of districts and population with access to electricity for different thresholds 230 Figure A5.15: Access to internet 231 Figure A5.16: Percentage of districts and population with access to combined infrastructures 231 x Table of Contents Figure A5.17: Access to paved roads and electricity 232 Figure A5.18: Access to internet fibre network 233  ercentage of districts and population with access to infrastructure (2014) Figure A5.19: P 234 Figure A5.20: Regions around the Lake Chad 234 Figure A5.21: Electricity grid 235 Figure A5.22: Rail and road investments in Cameroon (left) and Chad (right) 242 Technical Paper 5. Conflict and Climate Change in the Lake Chad Region Figure 6.1: Conflict events and fatalities over time 246 Figure 6.2: NDVI, rainfall, and temperature anomalies over time 247  istribution of weather stations in the Lake Chad region Figure A6.1: D 259 Technical Paper 6. Building Rural Development in the Lake Chad Region  is graph shows the share of area considered a drought identified from the Standardized Figure 7.1: Th Precipitation Evapotranspiration Index (SPEI) at an 18 month time lag (with a value less than or equal to -1.5). This is the result of the algorithm provided by Beguería et al. (2014) using the monthly precipitation and evapotranspiration data version 4 from the Climate Research Unit (Harris et al., 2020) 274 Two figures illustrating the seasonality of the number of conflict events with NDVI (a) and Figure 7.2:  NPP (b) 280 Technical Paper 7. Trade Patterns and Trade Networks in the Lake Chad Region Figure 8.1: Principal Constraints Faced by Transporters in the LCR 297 Figure 8.2: The Smoked Fish Market Chain in the Diffa Region 303  onstraints to Onion Marketing in Borno State Figure 8.3: C 305  ncrease in Food Prices in Maiduguri Markets, Pre–Boko Haram Uprising to December 2013 Figure 8.4: I 307 Maps Part I: Overview of the Lake Chad Regional Economic Memorandum Map 1.1: Lake Chad area 3 Map 1.2: Administrative definition of the Lake Chad region 3 Map 1.3: The evolution of Lake Chad 11 Map 1.4: Historical map of population growth, Lake Chad Basin countries, 1950s–2010s 12 Map 1.5: Poverty in the Lake Chad region 14 Map 1.6: Growing economic gap, Lake Chad region and rest of the countries, 1992–2013 16 Map 1.7: Trends in cropland area: 1992–2000, 2000–09, and 2009–18 19 Map 1.8: Agricultural activities in the countries of the Lake Chad Basin 20 Map 1.9: Economic activity in the Lake Chad region, 2010 27 Map 1.10: Trends in city population around Lake Chad, circa 1965–2010 28 Map 1.11: Market and rural access in and around the Lake Chad region 32 Map 1.12: Digital connectivity in and around the Lake Chad region (2018–2019) 34 Map 1.13: Regional welfare impacts from transport corridor investments (left) with additional border reduction (right) - percentage change in regional welfare. 36 Table of Contents xi Lake Chad Regional Economic Memorandum  |  Development for Peace The evolution of the number of Boko Haram violent events from 2009–2020 Map 1.14:  37 Average rainfall, temperatures, and greenness (normalized difference vegetation index) Map 1.15:  44 Map 1.16: Boko Haram Conflict in the Lake Chad region 48 Map 1.17: The evolution of market status in the Lake Chad region, 2014–20 50 Map 1.18: Restrictions on crossborder movement and trade 51 Technical Paper 1. Socioeconomic Trends in the Lake Chad Region Map 2.1: Map of the Lake Chad 87 Administrative definition of the Lake Chad region Map 2.2:  87 Map 2.3: Poverty in the Lake Chad region 89 Widening gap in economic dynamics between the Lake Chad region and other parts of the Map 2.4:  countries, 1992–2013 91 Map 2.5: Economic activity in the Lake Chad region, 2006 94 Map 2.6: Market and rural access in and around the Lake Chad region 95 Digital connectivity in and around the Lake Chad region (2018–2019) Map 2.7:  97 Map 2.8: Ethnolinguistic and Religious Groups in the Lake Chad region 98 The evolution of the number of Boko Haram violent events from 2009–2020 Map 2.9:  99 Technical Paper 2. Climate Change, Rural Livelihoods, and Urbanization: Evidence from the Permanent Shrinking of Lake Chad Map 3.1: Location of Lake Chad and Subdistrict Boundaries for the Three Countries of Study 116 Map 3.2: Major and Minor Rivers of the Chari-Logone River System Feeding Lake Chad 119 Map 3.3: Location of the Selected Country-Specific Centroids of Lake Chad 123 Map 3.4: Evolution of City Population Sizes around Lake Chad, ca. 1965–ca. 2010 138 Map 3.5: Road Networks in the Lake Chad Area, ca. 2015 143 Technical Paper 3. Estimating the Spillover Economic Effects of Foreign Conflict: Evidence from Boko Haram Boko Haram Area and the Three Countries of Study Map 4.1:  155 Technical Paper 4. Infrastructure and Structural Change in the Lake Chad Region Map 5.1: Descriptive statistics for the 24 regions in the Lake Chad 211 Map 5.2: World Bank investments in rail and road projects in Cameroon and Chad 212 Change in share of employment in non-agricultural sectors from transport corridor investments Map 5.3:  (left) with additional border reduction (right) compared to baseline - in percentage points 216 Change in the share of employment in manufacturing sectors from transport corridor Map 5.4:  investments (left) with additional border reduction (right) compared to baseline - change in percentage points 216 Regional welfare impacts from transport corridor investments (left) with additional border Map 5.5:  reduction (right) - percentage change in regional welfare 217 Technical Paper 5. Conflict and Climate Change in the Lake Chad Region Map 6.1: Extent and units of analysis 245 Average rainfall, temperatures, and NDVI Map 6.2:  247 Conflict intensity, population density and travel time Map 6.3:  248 xii Table of Contents Technical Paper 6. Building Rural Development in the Lake Chad Region This map illustrates the distribution and type of waterbodies from Lehner and Döll (2004) and Map 7.1:  the Lake Chad area within the solid black line 265 Map illustrating highway (red), paved (black) and improved (pink) roads from (Jedwab and Map 7.2:  Storeygard, 2020) 267 This map illustrates main roads along with the distribution of Agricultural GDP (2010) from Map 7.3:  (Blankespoor et al., forthcomingc), where darker red represents relatively higher agricultural GDP and light blue or transparent has little estimated value 268 This map illustrates the livelihoods of the four countries, which clusters similar livelihood Map 7.4:  patterns into a zone 269 These maps in the panel show the evolution of the number of events from 2009–2020 defined as Map 7.5:  Boko Haram 270 This map illustrates cotton production from SPAM ca. 2010 (Yu et al., 2020) and ginning Map 7.6:  factories (OECD, 2006) 273 These maps illustrate the location of livestock markets (black dots) from FEWS NET (2009); Map 7.7:  Motta et al. (2017) and distribution of cattle from Gilbert et al. (2018) (left) and goat (right) in 2010 from Gilbert et al. (2018) where a darker shade represents higher livestock density 275 This map illustrates land use (Nachtergaele et al., 2010) (Version 1.1) Map 7.8:  275 This map illustrates local markets in close proximity to Lake Chad by type Map 7.9:  276 Map 7.10: This panel set of maps shows the evolution of cropland for three distinct periods: 1992–2000 (left map); 2000–2009 (center map); 2009–2018 (right map) 279 Map 7.11: This panel map illustrates the distribution of burned density during the harvest season 281 Map 7.12: This panel set of maps shows the evolution of market status in and near Northeast Nigeria with a selection for each year from 2014 to present with the month that the report was published 282 Technical Paper 7. Trade Patterns and Trade Networks in the Lake Chad Region Map 8.1: Alternative Routing of the Douala-Ndjamena Corridor 294 Map 8.2: Border Status in the Lake Chad Region as of March 2021 296 Historical Trade Flows for Fish in Lake Chad Region Map 8.3:  301 Map 8.4: Red Pepper Trade Routes from Diffa to Maiduguri 304 Map 8.5: Circuits of Cattle Exports from Chad 306 Map 8.6: Market and Trade Route Activity, February 2021 308 Map 8.7: World Food Programme Operational Presence in Northeast Nigeria, January 2021 309 Tables Part I: Overview of the Lake Chad Regional Economic Memorandum Table A1.1: Socioeconomic Outcomes in the Lake Chad Region and Other Regions 78 Technical Paper 1. Socioeconomic Trends in the Lake Chad Region Table 2.1: Main correlates with local economic growth: Regression analysis 105 Table 2.2: Shapley decomposition on select indicators 106 Table A2.1: Socioeconomic Outcomes in the Lake Chad Region and Other Regions 110 Table of Contents xiii Lake Chad Regional Economic Memorandum  |  Development for Peace Technical Paper 2. Climate Change, Rural Livelihoods, and Urbanization: Evidence from the Permanent Shrinking of Lake Chad Table 3.1: Effect of Proximity to the Lake, Total Population, Niger 1950s–2010s 128 Table 3.2: Effect of Proximity to the Lake, Total Population, Cameroon 1960s–2010s 130 Table 3.3: Effect of Proximity to the Lake, Total Population, Chad 1948–2009 131 Table 3.4: Effect of Proximity to the Lake, Total Population, Flexible Specification 133 Table 3.5: Effect of Proximity to the Lake, City Population, Flexible Specification 136 Table 3.6: Effect of Proximity to the Lake, Road Investments, Flexible Specification 142 Technical Paper 3. Estimating the Spillover Economic Effects of Foreign Conflict: Evidence from Boko Haram  ost-2009 Effect of Proximity to the Boko Haram Area (0–200 km), Night Lights Table 4.1: P 163  ost-2009 Effect of Proximity to the Boko Haram Area (0–200 km), Rural Outcomes Table 4.2: P 165 Table 4.3: Post-2009 Effect of Proximity to the Boko Haram Area (0–200 km), Urban Outcomes 168 Table 4.4: Effects of Boko Haram on Domestic Conflict, Various Databases, 2000–2013 170 Table 4.5: Baseline Heterogeneous Effects of Boko Haram 173 Table A4.1: Effects of Boko Haram on Domestic Conflict, ACLED Database, 2000–2013 190 Table A4.2: Effects of Boko Haram on Domestic Conflict, UCD Database, 2000–2013 190 Table A4.3: Effects of Boko Haram on Domestic Conflict, SCAD Database, 2000–2013 190 Table A4.4: Effects on Domestic Conflict, 2000–2013, Excluding Military Headquarters Cells 191 Table A4.5: Post-2009 Effect of Proximity to the Boko Haram Area, Lights, Alternative SEs 191 Table A4.6: Post-2009 Effect of Proximity to Boko Haram, Alternative Measures of the Shock 191 Technical Paper 4. Infrastructure and Structural Change in the Lake Chad Region Table 5.1: Summary of Infrastructure data 196 Table 5.2: Survey data 198 Table 5.3: Additional district-level data 198 Table 5.4: Nigeria, Cameroon, Chad 203 Table 5.5: Nigeria, Cameroon, Chad: the usage perspective, 2008–2018 204 Table 5.6: Around Lake Chad 205 Table 5.7: Cameroon 205 Table 5.8: Nigeria 206 Table 5.9: Nigeria and Cameroon: 2SLS method 208 Table 5.10: Summary of counterfactual scenarios 213  oad and rail corridors: change of employment share in non-agricultural sectors (in percentage Table 5.11: R points)215  oad corridor in Chad: Percentage Change in nominal GDP Table 5.12: R 215  oad and rail corridors: Percentage Change in nominal GDP Table 5.13: R 215  oad corridor in Chad: Percentage Change in Welfare (real income) Table 5.14: R 215  oad and rail corridors: Percentage Change in Welfare (real income) Table 5.15: R 215 Table A5.1: GADM administrative levels 234 Table A5.2: Lake Chad (electricity grid) 235 Heterogenous effects on agriculture employment, by the initial share of agricultural Table A5.3:  employment, in Cameroon 236 Table A5.4: Nigeria, Cameroon, Chad in the period 2008–2018 236 Table A5.5: Around Lake Chad: the usage perspective, 2008–2018 237 Table A5.6: Cameroon: from the usage perspective, after 2008 237 Table A5.7: Nigeria: from the usage perspective, after 2008 238 xiv Table of Contents Table A5.8: Chad 238  eterogenous effects on agriculture employment, by the initial share of agricultural Table A5.9: H employment, in Nigeria 239 Table A5.10: Nigeria and Cameroon: comparison table (OLS) 240 Table A5.11: Nigeria - 2SLS method 240 Table A5.12: Cameroon - 2SLS method 241 Table A5.13: Lake Chad area: 2SLS method 241 Table A5.14: Energy sources in electricity production (in %) 241 Table A5.15: Parameters for Structural Estimation 242 Technical Paper 5. Conflict and Climate Change in the Lake Chad Region  umber of conflict events and fatalities 2001–2018 Table 6.1: N 246 Table 6.2: Summary statistics: Mean values of climate and control variables 249  airwise correlations between conflict and explanatory variables in pooled data Table 6.3: P 249 Table 6.4: Baseline results, Districts 252 Table 6.5: Baseline results, Cells 253 Table 6.6: Heterogeneous effects, Districts 254 Table 6.7: Heterogeneous croplands effects, Cells 254 Table 6.8: Heterogeneous population effects, Cells 254 Table A6.1: Data sources 257 Table A6.2: B aseline results with time lags, district level 258 Table A6.3: B aseline results with time lags, district level 258 Technical Paper 6. Building Rural Development in the Lake Chad Region  stimates of the impact of market access on cropland area Table 7.1: E 277  stimates of the impact of market access on Agricultural GDP Table 7.2: E 278  stimates of the impact of the proximity of conflict on cropland area Table 7.3: E 279  stimates of the operational status of local markets on night time lights Table 7.4: E 282 Technical Paper 7. Trade Patterns and Trade Networks in the Lake Chad Region  verage MFN Applied Duties by Product Groups, 2019 Table 8.1: A 292 Table 8.2: Transport Impediments on Cereal Supply Routes 298  armer-Reported Typical Harvests before and during Conflict in Borno State Table 8.3: F 300 Table of Contents xv Lake Chad Regional Economic Memorandum  |  Development for Peace Acknowledgments This report was prepared by a joint Macroeconomics, Trade, and Investment Global Practice and Poverty and Equity Global Practice team led by Marco Hernandez, Takaaki Masaki, and Carlos Rodríguez-Castelán. The authors of this report are Rogelio Granguillhome, Marco Hernandez, Samantha Lach, Takaaki Masaki, and Carlos Rodríguez- Castelán. Extended team members who prepared technical papers and databases include Remi Jedwab (George Washington University), Federico Haslop (George Washington University), Brian Blankespoor (World Bank), Mathilde Lebrand (World Bank), Peter Fisker (University of Copenhagen), and Peter Walkenhorst (American University of Paris). The report benefited from inputs and comments from Hiromi Akiyama, Luis Alberto Andres, Federico Antoniazzi, Abul Azad, Oliver Balch, Armel Castets, Olivia D’Aoust, Catherine Marie Rose Defontaine, Johanna Damboeck, Luc Gendre, Elaine Chee En Hui, Guillaume Laurent Marie Jeanrot, John Keyser, Aditya Khaparde, Jonathan William Lain, Jean Christophe Maur, Aimee Marie Ange Mpambara, Adrian Morel, Antonio Nucifora, Aissatou Ouedraogo, Vijay Pillai, Edward Rackley, Andrew Roberts, Aly Sanoh, Aboudrahyme Savadogo, Franck Taillandier, Issa Bitang A. Tiati, Emilija Timmis, Tara Vishwanath, and Albert Zeufack. The team is grateful to the peer reviewers for their excellent comments and suggestions: Nancy Lozano, Nicolas Perrin, and Siddharth Sharma. The team is also grateful to discussants of the technical papers during an author’s workshop: Erhan Artuc, Paul Brenton, Joanne Gaskell, Aparajita Goyal, Bob Rijkers, Emmanuel Skoufias, Hernan Winkler, and Roman Zarate. This project was conducted under the overall guidance of Deborah L. Wetzel (Director of Regional Integration for Africa), Abebe Adugna (Regional Director for Equitable Growth, Finance, and Institutions), Francisco Carneiro (Practice Manager for Macroeconomics, Trade, and Investment), Andrew Dabalen (Practice Manager for Poverty and Equity), Johan A. Mistiaen (Practice Manager for Poverty and Equity), and Pierella Paci (Practice Manager for Poverty and Equity). Rocio Manrique and Santosh Kumar Sahoo assisted the team, and the report benefited from editing by Robert Zimmermann. xvi Acknowledgments Lake Chad Regional Economic Memorandum  |  Development for Peace Executive Summary xvii Lake Chad Regional Economic Memorandum  |  Development for Peace The context of the Lake Chad Regional Economic The underdevelopment or lagardness of the Lake Memorandum: Understanding underdevelopment. Chad region is best understood as an agglomeration The Lake Chad region is an economically and socially of interconnected factors. This memorandum identifies integrated area located in west-central Africa. Spanning and examines the interplay within and among long- Cameroon, Chad, Niger, and Nigeria, this semiarid standing structural factors (such as weak governance, lack region faces a combination of long-term, structural of access to basic services, limited market accessibility, barriers to development, layered on top of which are a limited connective infrastructure, and socioeconomic complex set of exacerbating, near-term problems. The exclusion), as well as with two exacerbating factors that result is a situation of acute fragility that is trapping the have become more prominent in recent decades: violent region’s 30 million inhabitants in a vicious cycle of low conflict and climate change. The report then seeks to growth and endemic poverty. In turn, these conditions are show the interconnections between these two distinct fueling violence, conflict, emigration and displacement, sets of challenges, namely, the long-term and structural land degradation, youth alienation, and a general sense challenges on the one hand and the more recent of dissatisfaction with government institutions. In a exacerbating factors on the other. The use of a spatial lens region with limited traditional data, this memorandum reveals a more granular and nuanced picture of the poverty presents new quantitative and qualitative evidence by trap in which the Lake Chad region has been caught. integrating and leveraging existing population censuses, This opens the door to holistic policy recommendations, household surveys, administrative data, and information holding out the hope that the vicious cycle of suboptimal derived through the application of big data techniques development and fragility in which the region is currently to previously untapped datasets, such as nighttime light caught can be broken and replaced with a virtuous circle intensity, remote sensing data, and other geolocated data. of economic growth, job creation, and poverty reduction. This research offers valuable new insights on the nexus between suboptimal territorial development, on one Three Ds help explain territorial development: distance, hand, and climate change and conflict, on the other. density, and division. In line with the interrelational nature of the Lake Chad region’s underdevelopment, this Development in the Lake Chad region is not only memorandum adopts a cross-cutting approach to the limited, but has shown few signs of historical analysis of the territorial hurdles faced by businesses and improvement. The metrics of the socioeconomic individual economic agents in the region. The first of the development of the region paint a challenging picture. three spatial lenses the report adopts is density, which, as The region is characterized by high rates of poverty, low applied here, is defined as the economic mass or output human capital, and poor access to key services. In the last per unit of land area (often measured as gross domestic three decades, economic activity and household incomes product [GDP] per square kilometer). Economically have been decreasing. The region has one of the highest active urban settlements are generally taken as a strong population growth rates in the world, and fertility rates indicator of density (and growth potential). However, average around 5 children per woman. Communities the Lake Chad region is lacking in this element. Except in the vicinity of the lake are lagging compared for the cities of N’Djamena in Chad and Maiduguri in with the socioeconomic standards in other parts of Nigeria, which, together, account for around two million Cameroon, Chad, Niger, and Nigeria, which are already inhabitants, the vast majority of urban settlements in the underperforming compared with other developing region have fewer than 20,000 people. Rural migration economies worldwide. For instance, in Nigeria’s North is an ongoing trend in the region, and, because people East, which flanks the lake to the southwest, poverty rates are being displaced by conflict, the region has witnessed are estimated at over 70 percent, almost double the rate refugee urbanization rather than urban dynamism. The in the rest of the country. second lens is distance, which is the ease or difficulty of transporting goods, services, labor, capital, information, xviii Executive Summary and ideas between two locations. The Lake Chad region’s to the displacement of an estimated 2.7 million people. record is weak on this measure. For instance, nearly two- In total, about 12.8 million people need humanitarian thirds of the region’s rural population live more than assistance. Nigeria’s North East has been particularly two kilometers from an all-season road. Couple this badly affected. As with the 3Ds, the 2Cs feed into each with low phone and internet connectivity, plus limited other. The reduction in yields and farmer incomes caused access to electricity and other basic services, and the by deteriorating climate conditions is lowering the effect on development is highly prejudicial. Completing opportunity costs of participating in violence. Likewise, the 3Ds is the concept of division, which is defined in the rising levels of violence are impinging on the capacity both physical and social terms. Division captures tangible of governments to undertake climate mitigation and barriers to growth, such as crossborder trade restrictions, adaptation measures. A positive temperature anomaly of and differences in access to services and economic one standard deviation increases annual conflict events in opportunities across population groups such as based the region by 17.6 percentage points. Similarly, conflict on sex, age, economic activity (for example, between events in the Lake Chad region rose by an average of pastoralists and farmers), as well as displaced individuals 8.9 percentage points in response to a negative anomaly of and other vulnerable groups. The effect of each of the 3Ds one standard deviation in a district’s degree of greenness. alone is a serious impediment to growth, but, together, Moreover, the impact of climate on conflict is strongest in they make up a major derailment along the track to the areas that are largely agrarian and more densely populated. inclusive growth of the Lake Chad region. Thus, this memorandum not only analyzes these three factors on The policy response needs to reflect the recognition their own, but also the interplay among them. that the development challenges in the Lake Chad region are interconnected. Given the extent of the Two Cs—climate change and conflict—are region’s socioeconomic challenges, a big push is required exacerbating the region’s fragility. The memorandum in policies and programs that can effectively promote also focuses on two interrelated factors that are deepening territorial development, while addressing the drivers underdevelopment in the Lake Chad region. The first is of fragility. This will require a strong consensus and climate change, a worldwide phenomenon that presents prioritization of measures at the community, local, state, significant, immediate, and unique challenges among national, and regional levels. Measures aimed at tackling people living in the vicinity of Lake Chad, at the center the region’s challenges in isolation are not likely to result of the Sahel. Across the Sahel, temperatures are rising in sustained progress. An implication of the analysis 1.5 times more quickly than the global average, leading in this memorandum is that an approach focusing to hotter general conditions and more erratic weather on holistic policy levers represents the best chance patterns. Droughts have become more severe and more of breaking the region’s vicious cycle of suboptimal recurrent in recent decades. The variability in the size of development and fragility. As exemplified by the analysis the lake—which shrank between the 1960s and the mid- of the 3Ds and 2Cs, the factors behind Lake Chad’s 1990s, but has been recovering since then—has affected stubbornly high poverty rates are intimately interlinked livelihoods. Given that the region’s agriculture is almost and profoundly self-perpetuating. For instance, weak exclusively rainfed, the rise in temperatures is associated connective infrastructure (large distance) is shown to link with major issues in food security and the incomes of to smaller economic agglomerations (low density), which farmers and herders. A second factor that is intensifying reduces opportunities for trade and social dialogue and fragility is represented by violence and conflict, notably, inclusion (high division). As all of this plays out against the destabilizing activities of Boko Haram, a militant the backdrop of climate shocks and violent conflict, the insurgency group that emerged in Nigeria in 2009 and vicious cycle is reinforced dangerously. then spread to the other three countries in the Lake Chad region. Between 2009 and 2019, conflict in the region led xix Lake Chad Regional Economic Memorandum  |  Development for Peace This memorandum concludes with policy options Pathways to development and peace. The policy levers in four cross-cutting areas: infrastructure, trade, highlighted in this memorandum are associated with governance, and natural resource management. First, elements of the 3Ds and 2Cs and have the potential to investing in infrastructure would help close connectivity halt and reverse the self-reinforcing negative feedback gaps in the Lake Chad region, leading to higher loops of the vicious cycle. The goal is to inform the policy productivity and better-quality jobs, particularly in rural debate and build a consensus for integrative measures that areas. Important steps include improving road connectivity will enable greater local density in economic production between cities and rural areas, expanding the delivery (by agglomerating labor and capital), reduce the distance of basic services, and promoting digital infrastructure. to leading areas (increasing the flow of capital, labor, Second, enhancing trade and regional integration would goods, and services), and lower divisions (causing living serve to reduce distance and division, leading to stronger standards to converge), while addressing the conflict head- agricultural value chains, higher incomes, improved on (consequently increasing economic integration) and food security, and greater stability. Promoting fishing mitigating climate change (making income-generating and fish trading would be a timely step, as would be activities more productive and resilient). A holistic the gradual facilitation of crossborder trade, including agenda of this nature presents an immediate and realistic through tariff harmonization (by taking advantage of the opportunity to break the Lake Chad region’s cycle of opportunities inherent in the Africa Continental Free underdevelopment and fragility and kickstart a positive Trade Area) as well as the visa-free movement of people. cycle of more inclusive and resilient economic growth Third, strengthening the rule of law and the functioning that is supported by broad societal consensus, high-level of institutions through enhanced governance at the political commitment, and strategic and sustained policy community, local, national, and regional levels are crucial implementation. for promoting the better delivery of basic services, which in turn are pivotal to address persistent gaps in human capital outcomes, to mitigate the devastating effects of violence conflict on lives and livelihoods, and to promote social inclusion. Improving coordination between federal and subnational governments, mobilizing domestic revenues more effectively, improving data for evidence- based policy making, and investing in local government capacity is vital to restoring a positive government presence in the Lake Chad region, as are measures to restore social cohesion and trust between citizens and the state. Fourth, the report recommends a renewed focus on natural resource management, including efforts to strengthen the sustainability of food systems and more effective land and water management practices suited to local agroecological conditions. This would require a solid regulatory environment and targeted support for producers, such as through the provision of credit, inputs, and extension services, as well as investments in technological innovation and knowledge transfers. Given the key coordinating role of the Lake Chad Basin Commission (LCBC), improvements to the organization’s operating capacity are also a priority. xx Lake Chad Regional Economic Memorandum  |  Development for Peace Part I: Overview of the Lake Chad Regional Economic Memorandum Rogelio Granguillhome (World Bank), Marco Hernandez (World Bank), Samantha Lach (World Bank), Takaaki Masaki (World Bank), and Carlos Rodríguez-Castelán (World Bank) 1 Lake Chad Regional Economic Memorandum  |  Development for Peace 1.1 Introduction 1.1.1 Rationale An estimated 30 million people live in the Lake Chad region.3 The area consists of 10 national regions: the Far North Region in Cameroon; the Chari-Baguirmi, The region is noteworthy for important Hadjer-Lamis, Kanem, and Lac regions in Chad; the archaeological discoveries, its role in trans- Saharan trade, and its association with historic Diffa and Zinder regions in Niger; and Adamawa, Borno, African kingdoms... and Yobe states in Nigeria (see Map 1.1 and Map 1.2). The Chad basin contains the earliest evidence of The majority of the labor force is occupied in primary hominin occupation yet found in western Africa. sector activities—mostly agriculture, cattle herding and Gritzner (2021) fishing—and indirect employment in related activities, such as trade, transport, and manufacturing. These economic activities contribute to jobs and food security The Lake Chad region is an economically and socially among residents in the lake’s hinterlands and linked to the integrated area straddling four countries in West and two regional metropolises with seven-digit populations: Central Africa, namely, Cameroon, Chad, Niger, and N’Djamena, the Chadian capital, and Maiduguri, the Nigeria. The lake is situated in an interior basin, which capital of Borno State in Nigeria. was formerly occupied by a much larger ancient sea, sometimes referred to as Mega-Chad.1 The region appears The population in the Lake Chad region is growing to have been continuously settled since 500 BCE.2 Today, at a rapid pace, putting additional pressure on the many social and economic indicators confirm that the area limited resources and basic services. Fertility rates are is a lagging region, though its rich natural resources and high, and the total population in the Lake Chad Basin young population point to untapped economic potential. countries is projected to double over the next 25 years.4 The Lake Chad region is a geographical crossroad and High population growth poses challenges in access to basic an epicenter in terms of the cultural, historical, and services, such as electricity and piped water; where access sociological characteristics of the local communities in rates are already among the lowest in the region, with the area. The historical economy of traditional livelihoods implications for human capital. Literacy and completion and trade around the lake has traditionally been mobile rates in primary education in the areas around the lake and crossborder. Despite the heterogeneity of structural are significantly lower than in the rest of the respective factors in the basin countries, the crossborder movement countries. Furthermore, rather than converging, the gap and trade across the basin and the cultural ties and in access to core services has been widening between the common identity in the area translate it into a distinct Lake Chad region and other parts of the countries. region. This region is currently facing shared security, economic, and climatic troubles. Lagging in social and economic indicators, the Lake Chad region is characterized by weak territorial development. Compared with other parts of the basin 1 Gritzner (2021). 2 Ibid. 3 World Bank calculations based on the proposed administrative definition of the Lake Chad region, Linard et al. (2012), and remote-sensing data of Population Counts (dashboard), WorldPop, University of Southampton, Southampton, UK, https://www.worldpop.org/project/categories?id=3. 4 UNFPA (2017). The term Lake Chad Basin countries is used indistinguishably with Lake Chad region countries throughout the report to denote the four countries of the study: Cameroon, Chad, Niger and Nigeria. 2 1.1 Introduction Part I: Overview of the Lake Chad Regional Economic Memorandum countries, the Lake Chad region exhibits significantly Map 1.1: Lake Chad area higher poverty rates, chronic human capital deficits, and a historical lack of access to basic services and N’guigmi infrastructure. It has experienced little economic progress C H A D over the past three decades. The declining water level of Northern basin the lake until the mid-1990s pushed people to migrate N I G E R from rural to urban areas (although, since then, the r water level has been recovering). Currently, the region r rie Bol is characterized by widening spatial gaps because urban Ba at re Southern basin agglomerations in the region are growing more quickly G than rural areas. Rural areas have limited access to connective infrastructure; people are twice as likely to be disconnected from main roads and thus from access N I G E R I A Guitté to markets and economic opportunities. In both urban and rural settings, women, youth, displaced persons, and CAMEROON other vulnerable groups face unequal access to services and to income-generating activities. Chari-Logone River N’Djaména The long-term suboptimal territorial development challenges are exacerbated by the interplay of conflict Source: Magrin, Lemoalle, Pourtier, 2015. Atlas du lac Tchad. and climate change. Ten years of conflict, driven by Source: Magrin et al. 2015. the Boko Haram insurgency, have left an estimated  dministrative definition of the Lake Chad Map 1.2: A 12.8 million people in need of humanitarian assistance region in the Lake Chad region, 2.7 million of whom are people displaced by the conflict.5 Human displacement and the disruption of markets and value chains because of the physical destruction of facilities and direct threats against traders have resulted in loss of productive assets and inputs. While the region has traditionally been a commerce hub connecting the four basin countries and providing ties with North Africa, crossborder trade and economic activities around Lake Chad have also been disrupted by the Boko Haram conflict. Counterinsurgency measures, such as border and road closures, restrictions on farming and fishing, and the movement of goods and people, have also put a damper on economic activity.6 The intensity of fighting has tapered off in recent years, but the conflict has spread from its original location in Nigeria’s North 5 Of the 12.8 million people in need of humanitarian assistance, 10.6 million are in the three most highly affected states, Adamawa, Borno, and Yobe, in Nigeria’s North East (USAID 2020). Sources: Masaki and Rodríguez-Castelán 2021; data of GADM Database of Global Administrative Areas, Environmental Science and Policy, University of California, Davis, CA, 6 UNDP and OCHA (2018). https://gadm.org/. 1.1 Introduction 3 Lake Chad Regional Economic Memorandum  |  Development for Peace East and currently affects all four countries surrounding draws insights from seven original technical papers that Lake Chad.7 speak to different facets of the interlinked developmental challenges in the region.8 Given the limited availability In addition, climate change is increasingly becoming of rigorous economic studies in the area, this research a significant risk to livelihoods and food security helps bridge an important knowledge gap. A better across the region. Rising temperatures and increasingly understanding of the interlocked challenges and erratic rainfall patterns have rendered precarious the mechanisms that have trapped the region in a low-growth, livelihoods of farmers and fishers who rely critically high-poverty equilibrium is essential to identifying policy on uncertain water resources. Moreover, the greater instruments to improve service delivery, provide stability, frequency of climate anomalies (e.g., rainfall shortages, and strengthen economic opportunities. rising temperatures, and aridification) has been associated with a rise in conflict activities in the region. One of the main contributions of this Lake Chad Regional Economic Memorandum (LCREM) is the The effects of conflict and climate change are painfully definition of a novel analytical framework to elaborate visible through remote-sensing technology. The a comprehensive diagnostic of territorial development economic effects of conflict can be seen from outer space. challenges in the presence of conflict and climate Areas directly or indirectly affected by Boko Haram change. The proposed analytical framework captures the are experiencing slower rates of growth (measured by vicious cycle between suboptimal territorial development nighttime lights). There is evidence of spillover effects. in the region and the systemic risks associated with the Thus, even at a time when Boko Haram activity was violent conflict and climatic shocks that the region faces only occurring in Nigerian territory, it was possible to and that negatively affect development outcomes. The observe the negative effects on the neighboring countries framework helps identify policies with the potential of Cameroon, Chad, and Niger. There is also evidence to improve territorial development and reduce violent of the long-term negative effects of climatic factors on conflict and fragility, thereby allowing developing regions population growth and economic agglomeration. As to escape the self-perpetuating vicious loop that makes a result of the shrinkage of Lake Chad between the them diverge from their long-term potential. 1960s and the 1990s, areas near the lake experienced substantially slower population growth, particularly in Another key contribution of this LCREM is the Cameroon and Niger. This is likely explained by the production of an innovative data-driven diagnostic loss of economic opportunities, including because the on inclusive growth across the region in a context of receding lake offered less irrigation for agriculture and limited data availability. The LCREM integrates both cattle herding and lower incomes from fishing. Since the traditional and innovative sources of data to provide a late 1990s, the level of the lake has been recovering. rigorous economic analysis of the Lake Chad region. The ability to provide data-driven analysis is a particularly This project helps close a critical knowledge gap by important feat, given that the data environment in the identifying opportunities to promote sustainable and region is extremely poor. Primary data collection in the area inclusive economic growth in the Lake Chad region. is difficult because of tenuous security, access constraints, Existing policy research is extremely thin. The report and—more recently—the COVID-19 pandemic, 7 The nature and frequency of violent events in Lake Chad Basin countries can be tracked through ACLED (Armed Conflict Location and Event Data Project) (dashboard), Robert S. Strauss Center for International Security and Law, Austin, TX, http://www.acleddata.com/; GTD (Global Terrorism Database), National Consortium for the Study of Terrorism and Responses to Terrorism (START), University of Maryland, College Park, MD, https://www.start.umd. edu/gtd/; UCDP (Uppsala Conflict Data Program) (database), Department of Peace and Conflict Research, Uppsala University, Uppsala, Sweden, http:// ucdp.uu.se/?id=1. 8 See Appendix 1.C for a list of the technical papers prepared for this report. 4 1.1 Introduction Part I: Overview of the Lake Chad Regional Economic Memorandum which make in-person data collection unfeasible. In this around the world face a combination of territorial particularly difficult data environment, the LCREM has development challenges and a substantial risk of systemic performed extensive stocktaking and data-generation shocks and are often caught in suboptimal equilibriums. based on traditional sources of data, including household The analytical framework and approach depicted in surveys, censuses, and administrative data, and new this LCREM, which explicitly address the feedback sources of data from satellite imagery and remote-sensing mechanisms among the challenges in a solution-oriented technology. This data collection and generation process manner, can be useful beyond Lake Chad. It can help has involved digitizing historical census population inform policy interventions in settings experiencing data dating back to the 1950s and standardizing and a similarly vicious cycle to identify challenges and integrating existing micro-level household surveys opportunities for inclusive growth. In addition, because available for the Lake Chad Basin countries. The new the characteristically limited data on the Lake Chad sources of data—remote-sensing and satellite data— basin is also the typical setting of many lagging regions, leverage spatially and temporarily granular data on the methods for data integration and analysis used in various development outcomes, including local economic this report could also help inform evidence-based policy activities (for example, nighttime lights), agricultural making in numerous data-poor areas. productivity, conflict, climate (rainfall, temperature), and infrastructure (roads, electricity, digital infrastructure). 1.1.2 Road Map of the Report The value of this LCREM also resides in its integral diagnostic of regional development challenges, This report sheds light on the interlocked long-term focusing on a particular territory nested within territorial development challenges and the recently several countries. Unlike a traditional Country realized systemic risks affecting the Lake Chad region. Economic Memorandum (CEM) produced by the World It summarizes the findings of seven technical papers, each Bank, which offers a country-level diagnostic of key investigating different aspects of the interlinked challenges development challenges and a policy agenda in a single faced by the region. These studies are accompanied by country, this LCREM presents a comprehensive analysis complementary research on labor market and geospatial of development challenges that are specific to the Lake socioeconomic trends, as well as by a review of the thin Chad region. And it identifies policy directions that the literature on economic development across the region. In Lake Chad Basin countries may pursue to facilitate their addition to presenting the main results of the technical growth. This regional or territorial focus is unique and papers, the report positions the findings in the broader particularly important in framing current policy debates context of an analytical framework depicting the feedback around inclusive growth because, around the world, mechanisms between the region’s territorial development poverty has become spatially concentrated and economic gaps and the self-reinforcing link to shocks, namely, progress highly uneven across space.9 Unlocking economic violent conflict and climate change. This analytical opportunities for lagging regions thus entails regional framework is presented in Section 1.2. The rest of the interventions and coordination across different countries. report is structured as follows. Given its novel framework and analytical approach Section 1.3 describes the main social and economic in a context of limited data availability and its focus trajectories in the region. It reviews long-term on a set of subregions across countries, this report demographic trends—suggesting that population growth represents a model for other, similar settings. Regions in the region is among the highest worldwide—and finds 9 See World Development Report 2009 (World Bank 2009). 1.1 Introduction 5 Lake Chad Regional Economic Memorandum  |  Development for Peace limited access to basic services in the areas surrounding from harsh environmental conditions. The region has the lake. Poverty and socioeconomic trends show that experienced a higher share of droughts compared with the region is lagging relative to other parts of the basin other areas in the basin countries, with implications countries, and local economic dynamics indicate that the for livelihoods and food security. More regular rainfall region has experienced little economic progress over the is associated with positive effects on local economic past decades. Agriculture is the main sector of economic growth. The section also shows that climate anomalies, activity in the Lake Chad region, accounting for the labor such as deteriorating vegetation, rising temperature, and of a large share of young workers, as shown by the analysis erratic rainfall are closely linked with conflict events in of labor market data. Wage employment is limited, and the Lake Chad region, suggesting that there is a climate- the gap in the quality of jobs in the region extends into conflict trap. Violent conflict has had significant negative gaps by sex. economic effects in the region by disrupting trade and shattering agricultural production. The downturn in Section 1.4 argues that the low-growth, high-poverty local economies is not only visible in the directly attacked equilibrium observed in the region is closely linked areas, but has also spilled over to neighboring regions. to the region’s economic geography. A low degree of The slump in economic activity is particularly harsh economic density (concentration of economic activity), in on less well developed and less well connected urban combination with great distance and wide divisions that areas, highlighting the link among gaps in territorial limit the ease of movement of people, goods, capital, and development, conflict, and suboptimal development ideas, appears to be derailing the region from a sustainable outcomes. track of growth. The region shows low levels of density and urbanization, whereby urban agglomerations tend to Section 1.6 presents policy directions structured grow more quickly than rural areas, with widening spatial around four crosscutting themes: infrastructure, gaps and a lack of regional convergence. Connectivity trade, governance, and natural resource management. gaps limit access to markets and economic opportunities The crosscutting nature of these themes encourages the among people, particularly in rural areas, with implications exploration of potential synergies across challenge areas. for local economic development. Over the past 10 years, The discussion in the section aims to inform policy- border closures in response to the Boko Haram conflict making efforts to strengthen territorial development and have limited mobility and the historically strong mitigate the impacts of conflict and climate change. Such crossborder trade in the Lake Chad Basin. In addition endeavors can increase the likelihood of breaking free to hampering trade, violent conflict has aggravated social from the self-reinforcing negative mechanisms and boost exclusion in the region, curtailing access to services and the potential return of the region to a path of stability and income-generating opportunities, particularly among inclusive economic development. vulnerable groups. Violent conflict has driven the forced displacement of people in the region, resulting in one of the worst humanitarian crises in 2019.10 Section 1.5 discusses how the impact of climatic variation and violent conflict experienced in the region interlink with and exacerbate the territorial development challenges. Highly dependent on agriculture, the Lake Chad region is at particular risk 10 OCHA (2019). 6 1.1 Introduction Part I: Overview of the Lake Chad Regional Economic Memorandum 1.2 Analytical Framework Socioeconomic and governance challenges across the access to health care, food, religious education, and region are interlocked with issues of fragility, conflict, funding that is aimed at strengthening their position.15 and harsh environmental conditions, which have trapped the region in a low-growth, high-poverty This report proposes an analytical framework based cycle. The region faces multidimensional challenges on two main components: (a) a self-reinforcing link related to weak governance, low human capital, limited between suboptimal territorial development and market accessibility and economic opportunities, poor fragility, conflict, and violence (FCV) and challenges citizen security, regional instability, limited connective relating to climate change and (b) policy instruments infrastructure, and engrained social exclusion.11 The poor aiming at strengthening territorial development and quality of services in the region has been exacerbated by the mitigating risks. The report is guided by the analytical destruction of public and private infrastructure.12 These framework illustrated in Figure 1.1 that draws analytic mutually reinforcing challenges have resulted in a fragile elements from World Development Report 2009: Reshaping region characterized by conflict and violence, endemic Economic Geography (World Bank 2009), World poverty, limited economic opportunities, especially Development Report 2010: Development and Climate among youth, land degradation, insecurity, and general Change (World Bank 2010), and World Development dissatisfaction with public institutions. Climate change Report 2011: Conflict, Security, and Development (World and demographic trends—the rapid growth and young Bank 2011).16 Furthermore, this LCREM is aligned with age-structure of the population—amplify and exacerbate the World Bank FCV strategy’s two pillars of engagement: these threats. A lack of central government presence that (a) preventing violent conflict and interpersonal violence predates the ongoing crisis, particularly in rural areas, has and (b) mitigating the spillovers of FCV.17 The center of left a governance void in the region.13 Already weak, the the illustration in Figure 1.1 helps explain the outcomes social contract between citizens and the state has eroded observed in the region, including low growth, high in recent years, as governments are increasingly less able poverty rates, and a low human capital index. The to provide basic public services in the region as a result framework depicts the feedback between suboptimal of the widespread insecurity. This has reduced the trust territorial development and systemic risks prevalent of citizens in government, which also fuels the conflict, across the region, such as violent conflict, weather shocks, especially where a sense of exclusion exists.14 Armed rebel and resource scarcity. All these risks negatively affect groups have taken advantage of this gap in governance, development outcomes, which results in a vicious cycle. particularly in public service delivery, to provide valued This negative feedback loop deviates lagging regions from their long-term economic potential, leading to lower 11 Such as exclusion from local decision-making processes and capture (of policies, services) by elites (World Bank 2018). 12 Al Jazeera (2017); Obi and Eboreime (2017). Further details available under the ‘3.4 Human capital outcomes and access to basic services’ section, below. 13 Magrin and Perouse de Montclos (2018). 14 Magrin and Perouse de Montclos (2018). Horizontal inequalities—differences (real or perceived) in access and opportunities across groups—can create grievances among disadvantaged groups, making countries more vulnerable to conflict (United Nations and World Bank 2018). 15 Vivekananda et al. (2019). Local evidence suggests that the ISWAP faction of Boko Haram has sought to fill social service provision gaps and foster income- generation opportunities to try to win over Lake Chad Basin communities and secure its position. According to community members and security sources, ISWAP has set up state-like structures in the Abadam, Kukawa, Guzamala, Marte and Monguno local government areas in Borno State, north-east Nigeria (Samuel 2019). 16 The report is also informed by World Bank (2003, 2013b, 2017). 17 For more information, see World Bank (2020b). 1.2 Analytical Framework 7 Lake Chad Regional Economic Memorandum  |  Development for Peace  nalytical framework to identify opportunities to strengthen territorial development and address Figure 1.1: A fragility in the Lake Chad region Policies to improve territorial development • Supporting higher densities and agglomeration • Ensuring shorter economic and physical distances • Reducing divisions: (social, cultural, ethnic—thick borders) to facilitate regional convergence Suboptimal Territorial Fragility, Violence & Dimensions Development Link between challenges deviates Conflict Challenges of economic lagging regions from their long • Lack of economic term economic potential: • Violent conflict geography: agglomeration Lower: • Ineffective institutions • Density • Limited flow of factors • Climate change/harsh • growth • Distance of production environmental • poverty reduction human • Division • Lack of coverage development outcomes conditions (WDR 2009) (WDR 2010, 2011) Policies to reduce FCV • Service delivery (WDR 2004) • Risk management (WDR 2014) • Governance (Cooperation, Coordination, Commitment)(WDR 2017) Source: World Bank elaboration based on World Bank 2003, 2009, 2010, 2011, 2013b, 2017. growth, stagnant poverty reduction, and low human thick divisions and borders curb convergence in living development outcomes.18 The policy framework (top and standards, including through the unequal coverage of bottom of the figure) identifies policy options that can basic services and by hindering the spread of the benefits help strengthen territorial development and reduce FCV, of growth.19 Suboptimal development outcomes derived helping the region break this vicious cycle. from low density, long distances, and thick divisions tend to exacerbate FCV challenges, low government Territorial development challenges are understood capacity, and the scarcity of resources. These collectively through three dimensions of economic geography, create a negative feedback loop that leads to worsened the three Ds: density, distance, and division. A low development outcomes. local density of economic production limits the efficient agglomeration of labor and capital and, thus, the potential Territorial development challenges often intersect for economic growth. Economic and physical distance to with challenges related to the two Cs—conflict and leading areas restricts the flow of capital, labor, goods, climate change—thus exacerbating the gap between and services, and thus the opportunity for individuals lagging and leading areas. Areas with low economic and firms. Physical, sociocultural, ethnic, or other density (insufficient agglomeration to foster economies of 18 Given data constraints, alternative variables may be used as a proxy to illustrate these indicators; e.g. using nightlights as a proxy of economic growth, living standards for poverty reduction and malaria incidence for human development to show how due to challenges and shocks these indicators deviate from their optimal trajectory. 19 While the inverse—active crossborder dynamics, trade and mobility—can be a factor of resilience. 8 1.2 Analytical Framework Part I: Overview of the Lake Chad Regional Economic Memorandum scale in production) and high unemployment tend to be a deterioration of infrastructure, further interrupting access fertile ground for illicit actives and violence.20 Enforcing to services and the erosion of assets. The inability to use the rule of law in areas distant and disconnected from assets productively and to access services can deepen markets is also more difficult for governments that are existing divisions and frictions among groups. limited in reach or lack relevant incentives. Violent conflict often leads to an overall increase in transaction Fragility and conflict pose challenges for public and costs, which raises physical and economic distance to private investment. This increases economic distance markets. Divisions also aggravate distance. For example, and lowers economic density, leaving affected areas differences in language, place of origin, and ethnicity are increasingly isolated.23 Discrimination can likewise be magnified by conflict over scarce resources and constitute reinforced by profound divisions, such as the social or strong barriers to internal migration.21 Economic political differences associated with persistent disparities distance, meanwhile, limits economic opportunities and in living standards. Unequal social and economic employment among a population, particularly among opportunities and the public perception of such inequality young people. This lowers the cost of engaging in illicit can adversely affect social cohesion by deepening economic activities and violent behavior. Rebellion is grievances and feelings of exclusion and marginalization, often perceived to offer a viable living to followers who which, if unaddressed, can lead to tensions and have no other source of livelihood.22 Violent regions, sometimes turn into violent mobilization. Additionally, for their part, tend to exhibit high levels of corruption, climate change and harsh environmental conditions can weak rule of law, and ineffective institutions, all of which limit opportunities in lagging areas, aggravating existing make them less successful at attracting economic activity. problems and perpetuating disparities. Lagging areas This demonstrates the close link between violence and that face difficult climatic conditions, lack access to basic economic isolation. Shocks to the system, such as violent services, and experience poor governance in a region conflict arising from adverse environmental conditions affected by insurgencies and conflict are often burdened because of human activity or from pandemics, can limit by violence. Lagging regions—lacking access to basic the flow of capital and labor, affecting income-generating services and the ability to use assets productively and activities and leading to lower growth and higher poverty subject to suboptimal economic and social development rates. outcomes—are thus as much a driver as a consequence of FCV, in a vicious cycle that makes escaping the fragility Conflict and climate change pose challenges to trap difficult for countries. household access to basic services and the ability of households to accumulate and use productive assets. G  uided by this analytical framework, the next sections Violent conflict in affected regions tends to interrupt synthetize the previous literature and policy reports, while public service provision or even render it impossible and also drawing on original policy research prepared for this typically leads to the depletion of household productive Regional Economic Memorandum that contribute new assets. It often also results in the forced displacement knowledge on the trends and drivers behind the region’s of people, including over national borders, and the low economic growth and high poverty rates. 20 Unemployment and idleness are cited as the most important factor motivating young people to join rebel movements in areas affected by violence, according to the 2011 Conflict, Security, and Development World Development Report. At the same time, the relationship between unemployment and violence has not been established as clearly through econometric analysis, likely due to poor data and/or because the link is indirect rather than direct (World Bank 2011). 21 World Bank (2009). A study of 11 Sub-Saharan countries showed that, while ethnicity was a strong predictor of differences in under-5 mortality, if combined with geography, it predicted the probability of survival among children (Brockerhoff and Hewett 2000). 22 World Bank (2011). 23 Isolation tends to result both in divided identity groups and in marginalization, as well as fewer economic opportunities. For example, the average GDP per capita of all landlocked developing countries is three-fifths that of their maritime neighbors (World Bank 2011). 1.2 Analytical Framework 9 Lake Chad Regional Economic Memorandum  |  Development for Peace 1.3 Recent Socioeconomic Trends in the Lake Chad Region 1.3.1 Long-Term Demographics Lac and Hadjer-Lamis regions of Chad are the exception: the average fertility rate is slightly lower than the average in other parts of the country (6.2 versus 6.5 children per Poverty rates, economic growth, and other core woman, respectively).26 socioeconomic indicators in the Lake Chad Basin trail the indicators in other areas of the countries. Some of the critical drivers behind demographic shifts in the Lake Chad region are related to climate and environmental factors. In the 1970s, the Sahel Population growth in the Lake Chad Basin countries experienced severe droughts that strained the livelihoods is among the highest worldwide. The population of of agriculturalists and pastoralists across a vast area. The Cameroon, Chad, Niger, and Nigeria is forecast to double droughts reduced water levels dramatically, dividing Lake over the next 20 years. The Lake Chad region had an Chad into two separate bodies of water, the northern and estimated increase in population by 14 million between southern pools. By the 1980s, the water area had shrunk 2000 and 2020.24 While significant progress is being to 2,000 km2 (from 25,000 km2 in the 1960s). NASA made in other regions of Africa, countries in the Lake satellite pictures reveal a clear deterioration in the lake’s Chad Basin are still lagging in the demographic transition. surface area, decreasing by approximately 82 percent Indeed, the classic pattern of demographic transition—a since the 1960s (Map 1.3).27 The droughts drove some significant decline in under-5 mortality leading to a sharp people from the region to migrate toward the lake. Some drop in fertility—has not yet unfolded in the Lake Chad moved to the lake’s shore, but most chose to migrate to Basin countries. The average number of children per the numerous islands in the lake for their fertile farmland, woman in most Lake Chad Basin countries remains high, fishing opportunities, and pastures.28 at close to or above five children per woman, with no signs of a significant decline.25 Fertility rates are higher in the The historical population growth in the Lake Chad lake area than in the rest of the corresponding countries. region is rapid, but not especially more rapid than For example, the areas of Cameroon and Nigeria that in the other parts of the countries. An analysis of surround the lake present rates of 6.8 and 5.8 children historical population census data tracking total and per woman, respectively, compared with 4.8 and 5.3 urban population patterns at a fine spatial level from children per woman in the rest of these two countries. In the 1960s to the 2010s in three of the four Lake Chad Niger’s Diffa and Zinder regions, fertility rates are even Basin countries—Cameroon, Chad, and Niger—shows higher, at 8.2 children per woman compared with 7.5 how demographic dynamics have shifted in areas near children per woman in other parts of the country. The the lake.29 A simple comparison of the annual population 24 World Bank calculations based on 2020 data of Population Counts (dashboard), WorldPop, University of Southampton, Southampton, UK, https://www. worldpop.org/project/categories?id=3. 25 See https://wcaro.unfpa.org/en/publications/demographic-dynamics-and-crisis-countries-around-lake-chad. 26 Data on total fertility rates come from the latest Demographic and Health Surveys available in each country: Cameroon, 2018; Niger 2012; Nigeria, 2018; and Chad, 2014. 27 It has been estimated that Lake Chad lost about 90 percent of its surface water area (around 23,000 sq. km) between the mid-1960s and the mid-1990s. While its water level has been slightly recovering since the mid-1990s, it is still on average 80 percent less than it was in the mid-1960s. 28 See Vivekananda et al. (2019). 29 Nigeria was excluded from this analysis because of a long history of disputed census results. The results presented in this section are taken from Jedwab, Haslop, et al. 2021, technical paper for this report. 10 1.3 Recent Socioeconomic Trends in the Lake Chad Region Part I: Overview of the Lake Chad Regional Economic Memorandum growth rate between the Lake Chad region and the other roughly the same (around 3.5 percent for both the Lake parts of the countries reveals that population growth in Chad region and rest of the country between 1951 and the two areas is roughly the same. In Cameroon, the 2017). annual rate of population growth in the Lake Chad region between 1956 (the earliest year of census data availability) The shrinkage of Lake Chad between the 1960s and and 2005 (the latest census year) is 2.8 percent, which mid-1990s—the level has been recovering since is slightly lower than the rate in the rest of country then—posed downward pressure on population (3.2 percent). In Chad, the annual population growth growth in areas proximate to the lake. This effect was rate of the Lake Chad region between 1948 and 2009 particularly pronounced in Cameroon and Niger, where (3.2 percent) exceeded the rate in the rest of the country areas close to the lake saw as much as a 40 percent relative (2.6 percent), whereas, in Niger, these numbers are slower growth in population. One explanation for this Map 1.3: The evolution of Lake Chad a. Satellite imagery, 1972 b. Satellite imagery, 2018 c. Total water surface, 1950–2020 sq km 30,000– Large Lake Chad phase Shrinking Lake Chad phase Recovering Lake Chad phase 25,000– 20,000– 15,000– 10,000– 5,000– 0– 1950 1956 1960 1963 1965 1968 1970 1972 1973 1977 1984 1985 1990 1995 2000 2001 2002 2005 2008 2011 2012 2014 2019 2020 Sources: Panels a and b: UNEP/DEWA/GRID Geneva, based on NASA’s satellite images. Panel c: Olivry et al. 1996; S´edick, no date; FAO 2009; LCBC 2015; Okpara et al. 2016; Ighobor 2019. 1.3 Recent Socioeconomic Trends in the Lake Chad Region 11 Lake Chad Regional Economic Memorandum  |  Development for Peace  istorical map of population growth, Lake Chad Basin countries, 1950s–2010s Map 1.4: H a. Annual growth rate in population b. Absolute change in population Source: Jedwab, Haslop, et al. 2021, technical paper for this report. Note: This figure shows the annual population growth rate and absolute change in the size of population by historically consistent subdistrict boundaries reconstructed for Cameroon, Chad and Niger. Nigeria is not included because of data limitations. These three countries are divided into 113, 138, and 119 subdistricts, respectively. Lake Chad is shown in the center of the map. 12 1.3 Recent Socioeconomic Trends in the Lake Chad Region Part I: Overview of the Lake Chad Regional Economic Memorandum relationship may be the loss in economic opportunities.  overty is more severe in the Lake Chad Figure 1.2: P Basin than in other parts of the countries As the water level receded between the 1960s and the mid- Poverty headcount rate (US$1.90 per day), percent 1990s, the lake shore moved farther from cultivated land, 100– increasingly limiting irrigation possibilities. A smaller 90– lake also reduces incomes in fishing communities. It can 80– likewise impact cattle herding (requiring proximity to 70– 72.3 the water and vegetation around the lake), an important 60– sector in the Lake Chad region, where herders typically 58.8 50– 51.6 sell their cattle to urban markets in Nigeria. Recent years 40– 45.4 43.4 39.8 39.1 have seen signs of the lake water level resurging from its 38.1 37.7 30– 30.7 lowest level (roughly 2,000 km2) in the 1990s to roughly 20– 26.0 18.8 14,000 km2. It remains to be seen whether this resurgence 10– in the water level will attract more people into the basin 0– Cameroon Chad Niger Nigeria areas by generating new economic opportunities.30 J Country J Lake Chad J Rest of country Source: Masaki and Rodríguez-Castelán 2021, technical paper for this report. Note: Data on poverty are based on the latest household surveys conducted in Cameroon (2014), Chad (2011), Niger (2014), and Nigeria (2018). Rest of country = outside the Lake Chad region; LCB = within the Lake Chad Basin region. 1.3.2 Trends in Poverty Reduction Given its high poverty rate, low human capital, and There is also a significant spatial gap in poverty within poor access to key services, the Lake Chad region is the Lake Chad region. Poverty is most prevalent in the characterized as a lagging region. An analysis of the parts of the Lake Chad region that lie within Nigeria. The most recent household surveys available for each country poverty rates in Adamawa and Yobe states reach as high as shows that households in the Lake Chad region are 74 percent and 70 percent, significantly higher than the poorer compared with households in neighboring regions national average of 38 percent (Map 1.5, panel b). These (Figure 1.2).31 The regional poverty rate in the Far North regions are also home to the largest number of the poor in Region of Cameroon (59 percent) is three times higher the Lake Chad region (Map 1.5, panel c). Kanem Region than the rate in the rest of the country (19 percent). in Chad has the lowest poverty rate (19 percent) across In Nigeria, the poverty rate in the Lake Chad region the Lake Chad region. (72 percent) is nearly twice as high as the rate in the rest of the country (38 percent); part of this spatial gap is Not only is the level of poverty high in the Lake Chad likely explained by the devastating impact of the Boko region relative to the other parts of the countries, Haram conflict in Nigeria’s North East.32 Chad is the but the pace of poverty reduction in the region is only exception. There, the poverty rate in the country’s slow. There is little sign that the spatial gap in poverty Lake Chad region (31 percent) is lower than the rate in between the Lake Chad region and neighboring regions is the rest of the country (40 percent).33 This is explained by narrowing. In Cameroon, for instance, poverty declined the fact that the areas in Chad around the lake are near by 4 percent in the Far North Region compared with the capital of the country, with a consequently higher a 6 percent decrease in the rest of the country between urbanization rate and a relatively high population density. 2007 and 2014. While Niger as a whole saw a reduction in poverty from 51 percent to 45 percent between 2011 30 Vivekananda et al. (2019). 31 The results presented in this section are drawn from Masaki and Rodríguez-Castelán (2021), technical paper for this report. 32 The country’s Borno state is excluded from the analysis given that there is no representative household survey for that state. 33 Mahmood and Ani (2018). 1.3 Recent Socioeconomic Trends in the Lake Chad Region 13 Lake Chad Regional Economic Memorandum  |  Development for Peace Map 1.5: Poverty in the Lake Chad region  overty rates in Chad, a. P  overty rates in the Lake Chad b. P  umber of poor in the Lake c. N Cameroon, Niger, and Nigeria region Chad region Source: Masaki and Rodríguez-Castelán 2021, technical paper for this report. Note: Data are based on the latest household survey in Cameroon (2014), Chad (2011), Niger (2014), and Nigeria (2018). Poverty rates are calculated at US$1.90 per day (2011 purchasing power parity). Borno State is excluded given that there is no representative household survey for that state for security reasons. and 2014, the Lake Chad region in Niger experienced a  sset deprivation in the Lake Chad Basin Figure 1.3: A versus other parts of the countries slight increase in poverty, from 48 percent to 52 percent. This pattern of nonconvergence in welfare and poverty Percent of bottom 40 percent in the wealth index 100– is corroborated by data on the ownership of assets and 90– how they have changed in the Lake Chad region. The 80– 83.3 82.4 share of households that are relatively asset poor—or in 70– the bottom 40 percentile of asset wealth distribution in a 60– 64.1 given survey by country and year (the bottom 40)—shows 50– 53.3 52.6 no clear sign of convergence between the Lake Chad and 40– 46.7 44.2 41.9 non–Lake Chad areas of each country (Figure 1.3).34 For 30– 35.7 38.2 37.9 34.1 31.3 31.9 instance, in Niger and Nigeria, the share of asset-poor 20– households increased in the Lake Chad region, while, 10– in Cameroon, the share remained almost unchanged 0– between the two latest rounds of the Demographic CMR '11 CMR '18 NER '06 NER '12 NGA '13 NGA '18 TCD '14 J Lake Chad J Rest of country and Health Surveys. These findings suggest that wealth Source: Masaki and Rodríguez-Castelán 2021, technical paper for this report. gaps between the Lake Chad region and the rest of the Note: Data based on the latest two rounds of Demographic and Health Surveys in each country. CMR = Cameroon. TCD = Chad. NER = Niger. NGA = Nigeria. The year refers to the year the survey was conducted. countries may have worsened. 34 The wealth index was constructed for the latest two Demographic and Health Surveys in each of the Lake Chad Basin countries. Our wealth index is a composite measure of various household assets, including housing materials, access to electricity, cooking fuel, access to improved water, as well as ownership of various items such as televisions and bicycles. We applied a principal component analysis to generate the composite index. To make our wealth index comparable over time within the same country, we applied the same coefficients for use as weights across the two latest surveys. “Asset-poor” households refer to those households whose wealth index score is in the bottom 40 percent of distribution for the given survey country/year. 14 1.3 Recent Socioeconomic Trends in the Lake Chad Region Part I: Overview of the Lake Chad Regional Economic Memorandum Food insecurity is also an increasing concern in distribution of people and economic activity (Map 1.6, the region. Undernourishment tends to be driven by panel a).38 Overall, nighttime light grew more quickly escalating conflict and competition over natural resources in areas that appear to be more densely populated or and by climate change and environmental degradation characterized by higher levels of economic activity (as spurred by population growth. The Lake Chad Basin was indicated by nighttime light), particularly in Nigeria’s recently characterized as one of three major food insecure North Central and South West (Map 1.6, panel b). hotspots in West Africa, where food insecurity is on the rise after having declined for several years, according to a Seen from space, the regions near Lake Chad in World Bank and FAO report.35 Between 2014 and 2019, Cameroon and Nigeria exhibit a relatively low level the number of undernourished people in West Africa rose of luminosity and lower rates of growth. The gaps in from 32 million to 56 million (that is, from 10 percent the intensity of nighttime light between the Lake Chad to 15.2 percent of the population). The highest numbers region and other parts of the countries are particularly were found in northern Nigeria (5.0 million), Cameroon stark in Cameroon and Nigeria, whereas, in Chad and (1.4 million), and Niger (1.4 million). The United Nations Niger, the average intensity of nighttime light is slightly Office for the Coordination of Human Affairs puts the higher in the Lake Chad region (Map 1.6, panel c). The number of people facing crisis and emergency levels of annual rate of growth in nighttime light is also slower food insecurity in Nigeria’s North East at 4.3 million, in the Lake Chad region compared with other parts of and 500,000 children are at risk of severe malnutrition.36 Cameroon and Nigeria. This implies that there has been Food insecurity is likely increasing because of COVID- no substantial regional growth in the areas around the related impacts. Five million more people were acutely lake. In Nigeria, in particular, increases in the intensity food insecure in West Africa in 2020 during the lean of nighttime light between 1992 and 2013 were much season between June and August, compared with the slower in the Lake Chad region compared with the rest of five-year average, that is, 17 million versus 12 million the country (Map 1.6, panels c and d). people, respectively).37 Between March and May 2021, 19.6 million people required immediate food assistance. 1.3.4 Human Capital Outcomes and Access to Basic Services 1.3.3 Local Economic Dynamics In addition to monetary poverty indicators and In addition to lagging in terms of core poverty economic growth, the Lake Chad region lags in key indicators, the Lake Chad region has experienced human capital indicators.39 The literacy rate (ages 15 little economic progress over the past three decades. or more) and the completion rate in primary education An analysis of local economic growth based on nighttime (ages 14–25) are significantly lower in the Lake Chad light intensity—which serves as a useful proxy for region compared with the national average (Figure 1.4). capturing both the size of local economic activities and Child health conditions in the region are also grim. For the change in this activity over time—shows that the instance, child stunting is roughly 10 percent–15 percent intensity of nighttime light is strongly correlated with the higher in the Lake Chad region compared with other 35 The other two areas are the Central Sahel and eastern Mauritania (World Bank and FAO 2021). 36 OCHA (2020). 37 World Bank and FAO (2021). 38 The analysis of nighttime light relies on Defense Meteorological Satellite Program–Operational Line-Scan System data that are intercalibrated by Li et al. (2020), allowing for a better comparison over time. The intensity of nighttime light is measured in a digital number ranging from 0 and 63 that represents an average of lights in all nights after sunlight, moonlight, aurorae, forest fires, and clouds have been removed algorithmically, leaving mostly human settlements. 39 The results presented in this section are drawn from Masaki and Rodríguez-Castelán (2021), technical paper for this report. 1.3 Recent Socioeconomic Trends in the Lake Chad Region 15 Lake Chad Regional Economic Memorandum  |  Development for Peace parts of the countries (see Appendix 1.A, Table A1). 30 percent, and community teachers (largely the parents Based on original analysis performed for this report, of pupils) generally stand in for trained teachers.40 In the these results are in line with other studies. For example, Chadian part of the lake, there is only one doctor for every according to the International Crisis Group, the gross 140,000 inhabitants, that is, a quarter of the national school enrolment rate in the lake area of Chad is below average.41 The low access and quality of education, health Map 1.6: Growing economic gap, Lake Chad region and rest of the countries, 1992–2013 a. Nighttime light intensity, 2013 b. Annual change, nighttime lights, 1992–2013 c. Nighttime light intensity, 2013 d. Change in nighttime lights Annual rate of change, 1992–2013, percent 3– 3– 2.87 2– 2– 1.50 1.38 1– 1– 0.99 0.90 0.87 0.80 0.79 0.78 0.70 0.60 0.63 0.60 0.59 0.43 0.37 0– 0– Cameroon Niger Nigeria Chad Cameroon Niger Nigeria Chad J Lake Chad J Rest of country J Lake Chad J Rest of country Source: Masaki and Rodríguez-Castelán 2021, technical paper for this report. Note: Panel a shows the mean of nighttime luminosity in 2013 based on stable Defense Meteorological Satellite Program intercalibrated nighttime lights data (Li et al. 2020) at a spatial resolution of 10 kilometers. Panel b shows the annual rate of growth in the mean of nighttime luminosity between 1992 and 2013 in percent. Panels c and d show the mean of nighttime luminosity and the annual rate of change in nighttime luminosity in percent during the same time period. The calculations for panels c and d were performed only on a subset of grid cells that are lit (with a positive value in digital number at some point between 1992 and 2013) thus excluding areas that are largely rural and unpopulated. 40 ICG (2017). 41 ICG (2017). The figure for Chad is much lower than in Cameroon’s Far North region (1/52,000) or Niger’s Diffa region (1/24,500), both close to the lake. 16 1.3 Recent Socioeconomic Trends in the Lake Chad Region Part I: Overview of the Lake Chad Regional Economic Memorandum care, and other services in the region has been aggravated average rate of access to electricity in Cameroon, Chad, by the erosion of infrastructure, both public and private, Niger, and Nigeria is 62 percent, 8 percent, 14 percent, resulting from the conflict.42 and 59 percent, compared with an estimated 20 percent, 2 percent, 10 percent, and 38 percent in the Lake Chad Access to core public services in the Lake Chad Basin region, respectively. The Lake Chad areas of Cameroon is also among the lowest in the area. The national and Chad suffer from lower levels of access to improved Figure 1.4: Literacy and primary school completion rates are lower in the Lake Chad region a. Literacy rate b. Completion rate, primary education, 15+ Percent Percent 100– 100– 90– 90– 80– 83.7 80– 77.8 79.0 78.2 79.0 70– 71.9 72.4 70– 72.3 60– 60– 58.7 60.0 50– 50– 47.1 45.5 40– 41.6 40– 39.4 30– 33.0 34.0 32.8 30– 32.8 29.5 27.8 20– 20– 25.4 21.0 17.4 10– 10– 12.2 0– 0– Cameroon Chad Niger Nigeria Cameroon Chad Niger Nigeria J Country J Lake Chad J Rest of country J Country J Lake Chad J Rest of country Source: Masaki and Rodríguez-Castelán 2021, technical paper for this report. Note: Data on poverty are based on the latest household surveys conducted in Cameroon (2014), Chad (2011), Niger (2014), and Nigeria (2018). Rest of country = outside the Lake Chad region. Figure 1.5: Access to core public services in the Lake Chad region a. Access to improved water b. Access to improved sanitation c. Access to electricity Percent Percent Percent 100– 100– 100– 90– 90– 90– 80– 80– 80– 84.8 79.2 76.8 76.3 70– 70– 70– 74.8 74.1 74.0 70.4 68.8 68.4 66.9 66.7 65.5 65.1 60– 60– 60– 62.9 61.9 61.3 57.8 56.6 56.4 55.1 50– 50– 50– 48.9 40– 40– 40– 44.5 44.5 41.7 38.4 30– 30– 30– 30.8 30.2 28.5 20– 20– 20– 23.1 19.6 16.2 16.0 10– 10– 10– 14.3 13.7 12.8 10.0 10.4 2.4 9.0 6.0 5.7 0– 0– 0– '11 '18 6 '12 '13 '18 '14 '11 '18 6 '12 '13 '18 '14 '11 '18 6 '12 '13 '18 '14 '0 '0 '0 R R R R R R A A A D D D A A A R R R R R R CM CM CM NG NG NG NE NE NE NG NG NG CM CM CM TC TC TC NE NE NE J Lake Chad J Rest of country J Lake Chad J Rest of country J Lake Chad J Rest of country Source: Masaki and Rodríguez-Castelán 2021, technical paper for this report. Note: The figure shows the percentage of households with access to improved water and sanitation and electricity. Data on access to these core public services are taken from the two latest Demographic and Health Surveys in each country. CMR = Cameroon. TCD = Chad. NER = Niger. NGA = Nigeria. The year is the year in which the survey was conducted. 42 It is reported that, during the armed group’s eight-year rebellion, almost 1,400 schools have been destroyed in Borno and more than 57 percent of schools are unable to open because of damage or being in areas that remain unsafe (Al Jazeera 2017). Regarding health facilities: “Insurgents have destroyed about 788 health facilities in the region. In Borno 48 health workers have been killed and over 250 injured. The state has lost up to 40 percent of its facilities and only a third of those left in Borno state remain functional,” (Obi and Eboreime 2017). 1.3 Recent Socioeconomic Trends in the Lake Chad Region 17 Lake Chad Regional Economic Memorandum  |  Development for Peace water and sanitation facilities compared with other parts generates significant indirect employment in related of the countries (Figure 1.5). This gap is particularly activities such as trade, transport, and manufacturing (for pronounced in Cameroon, where the rate of access to example, food processing, leather industry, brewing).43 improved water and sanitation is, on average, about The main crops produced in the Lake Chad area include 36 percent lower in the Far North Region than in the rest subsistence crops (cassava, millet, rice, sorghum, and of the country. onions) and cash crops (cotton, groundnuts). Red peppers are also an important cash crop along the Yobe River in There are also signs of a widening gap between the Niger. Most of the farming in the Lake Chad Basin is Lake Chad region and the rest of the surrounding rainfed, harvested by hand, and cultivated without the countries in access to improved sanitation and use of fertilizers and other agrochemicals. Millions of electricity. In Cameroon, the share of households with people—particularly in Cameroon, Chad, and Niger— access to improved sanitation in the Lake Chad region depend on the lake for most of their economic activities declined from 42 percent to 31 percent between 2011 and livelihoods. The resulting pressure on the soil and and 2018, whereas the rest of the country experienced the depleting water resources pose serious sustainability a modest improvement (from 62 percent to 67 percent) problems for these activities.44 At the same time, rather over the same period. A similar divergence pattern than a homogeneous market, agriculture in the region is a emerges in Nigeria, where access to improved sanitation complex sector, encompassing both farming and herding. in the Lake Chad area decreased from 74 percent to The two modes of production sometimes compete over 55 percent between 2013 and 2018, a more rapid rate of resources and land. The competition over land between decline than in the rest of the country (where access fell farmers and herders is often cited as a source of conflict, from 66 percent to 56 percent). Progress in expanding which is exacerbated by climate change and the lack of access to electricity in the Lake Chad region has also land rights. Tenure insecurity can limit access to land, stagnated. In Niger, the regions of Diffa and Zinder investment in agriculture, and productivity. The limited saw access to electricity improve by 4 percentage points capacity of local customary and informal mechanisms (from 6 percent to 10 percent) between 2006 and 2012, of enforcement of land rights across the region do not a slightly lower increase than in the rest of the country appear to be sufficient to cope with competition among (where access improved by nearly 6 percentage points, farmers and herders.45 It is estimated that, in 2018, from 10.4 percent to 16.0 percent) (Figure 1.5). there were more than 1,800 deaths across Africa from transhumance-related conflict associated with the added pressures on access to land.46 1.3.5 Trends in Agriculture The Lake Chad region has seen an increase in arable Agriculture constitutes the main sector of economic or cropland areas over the past two decades, although activity in the Lake Chad region. According to the latest recent years have seen a slight decline. According to household expenditure survey available in each country, an analysis of geospatial data from the European Space the primary sector (agriculture, cattle herding, and Agency,47 the annual growth rate of cropland area inside fishing) accounts for about three-fourths of employment the study area near Lake Chad in the four countries started in areas near Lake Chad (Figure 1.9). Agriculture also at 0.31 percent during 1992–2000, fell to 0.24 percent 43 UNEP (2004). 44 Odada et al. (2005). 45 World Bank and FAO (2021). 46 Skah and Lyammouri (2020). 47 The results presented in this section draw on Blankespoor (2021), technical paper for this report. 18 1.3 Recent Socioeconomic Trends in the Lake Chad Region Part I: Overview of the Lake Chad Regional Economic Memorandum Map 1.7: Trends in cropland area: 1992–2000, 2000–09, and 2009–18 Sources: Blankespoor 2021, technical paper for this report; data of ESA 2017. during 2000–10, and was slightly negative during 2010– method based on cross-entropy optimization that 19. The annual growth rate of cropland area outside the disaggregates administrative level agricultural GDP into study area in the four countries started at 0.48 percent grids depending on satellite-derived indicators of the during 1992–2000, fell to 0.33 percent during 2000–10, components that make up agricultural GDP, namely, and was slightly positive during 2010–19 (Map 1.7). crop, livestock, fishery, hunting, and timber production.49 Irrigated areas represented only about 5 percent of the The level of agricultural GDP in Nigeria is considerably cropland area inside the study area and about 3 percent higher compared with the other three Lake Chad Basin of the cropland area outside the study area between 1992 countries. Patterns of agricultural production also differ and 2019. The poor quality of irrigation—exacerbated by significantly within the Lake Chad region by crop. For the variability in the level of the lake and the associated instance, cotton production is spatially concentrated water resources as well as by the intensification of conflict in Adamawa in Nigeria and the Far North Region leading to the destruction of irrigation systems—has in Cameroon (panel b), whereas millet and sorghum made agricultural productivity in the region particularly production is more common in southern Niger and vulnerable to erratic rainfall patterns and climate change.48 northern Nigeria (panel c) and in northern Nigeria and Cameroon’s Far North (panel d), respectively. For the Most of the agricultural production within the Lake four countries, panel e illustrates dominant livelihoods Chad region is spatially concentrated in the three with similar patterns considering how people gain access states of Adamawa, Borno, and Yobe in Nigeria’s to food and income as well as markets. The northern North East. Map 1.8, panel a, illustrates the distribution areas of Chad and Niger are sparsely populated, with of subnational agricultural gross domestic product activities including salt, dates, and trading activities in (GDP) circa 2010, which is derived using a data fusion oases along with nomad pastoralism and transhumance. 48 FAO (2016). 49 For more details on the methodology, see Blankespor et al. (2021). 1.3 Recent Socioeconomic Trends in the Lake Chad Region 19 Lake Chad Regional Economic Memorandum  |  Development for Peace Map 1.8: Agricultural activities in the countries of the Lake Chad Basin a. Agricultural GDP estimates b. Cotton production c. Millet production 20 1.3 Recent Socioeconomic Trends in the Lake Chad Region Part I: Overview of the Lake Chad Regional Economic Memorandum Map 1.8: Agricultural activities in the countries of the Lake Chad Basin (continued) d. Sorghum production e. Livelihoods Sources: Blankespoor 2021, technical paper for this report. Data of Blankespoor et al. 2021; FEWS NET (Famine Early Warning Systems Network) (dashboard), Washington, DC, https://fews. net/; Yu et al. 2020. 1.3 Recent Socioeconomic Trends in the Lake Chad Region 21 Lake Chad Regional Economic Memorandum  |  Development for Peace An agropastoral belt with millet and sorghum is located region, only accounting for 8 percent of jobs, versus twice in southern Niger, where most of the population lives. that rate (17 percent) in areas outside the lake basin. In Northern Nigeria has cultivated areas with diverse crops, the Lake Chad area in each country, wage jobs make including millet and sorghum as well as livestock. The up 5–10 percent of workers, from the lowest share in area nearby Lake Chad includes flood retreat cultivation Chad (5 percent) to the relatively larger rate in Nigeria and fishing activities. This belt has relatively higher local (10 percent) (Figure 1.6). Nonremunerated employment crop production value and contributes over US$1 million is also prominent in the region, representing 19 percent in local agricultural GDP (2010 US dollars). of jobs in the Lake Chad area of the four countries.50 Wage employment among women is particularly 1.3.6 Jobs and Labor Market limited in the Lake Chad region. The gap in the quality Composition of jobs is exacerbated by sex. At the national level, 11 percent of women have wage employment compared The labor market in areas near Lake Chad is with 22 percent of men in the four basin countries predominantly characterized by poor jobs—that (Figure 1.7). In the Lake Chad region, the share of is, self-employment and informal work. The overall women who have wage employment is one-fourth that employment rate among working-age individuals is of men (3 percent versus 12 percent, respectively). At high in the Lake Chad region, averaging 71 percent, the country level, the largest gap in wage employment compared with 72 percent in areas outside the lake is in Cameroon, where 2 percent of women have wage basin. Men are more likely to be employed (82 percent) employment in the areas near Lake Chad, compared with than women (60 percent). However, most working-age 15 percent of women in the rest of the country (Figure individuals hold relatively lower-quality jobs that are 1.7). The share of wage employment among men is also largely characterized by self-employment (particularly lower in the Cameroonian Lake Chad region (9 percent) farm self-employment) and unpaid employment. Wage compared with other parts of the country (34 percent). employment is particularly limited across the Lake Chad Overall, wage employment is skewed toward men. Figure 1.6: Employment type across the Lake Chad region Percent 100– 90– 80– 70– 60– 50– 40– 30– 20– 10– 0– National Rest of Lake National Rest of Lake National Rest of Lake National Rest of Lake National Rest of Lake country Chad country Chad country Chad country Chad country Chad Cameroon Chad Niger Nigeria Total J Self employed J Non-paid J Wage Source: World Bank calculations based on the latest household surveys available in Cameroon (2014), Chad (2018), Niger (2018), and Nigeria (2018). Note: Nigeria’s latest household survey does not differentiate between paid and unpaid employment. Thus, only for Nigeria unpaid employment is subsumed in self-employment. Includes only working-age individuals (ages 15–65). Rest of country = outside the Lake Chad region; Lake Chad = within the Lake Chad Basin region. 50 Nonremunerated employment includes apprenticeships and family workers. Nigeria’s latest household survey does not differentiate between paid and unpaid employment and the latter is subsumed in self-employment. Because of the sampling design of the Nigeria 2018 survey, distinguishing between unpaid and wage employment is not possible for this country. 22 1.3 Recent Socioeconomic Trends in the Lake Chad Region Part I: Overview of the Lake Chad Regional Economic Memorandum Figure 1.7: Wage employment by gender across the Lake Chad region Percent 40– 35– 30– 25– 20– 15– 10– 5– 0– Rest of Lake Rest of Lake Rest of Lake Rest of Lake Rest of Lake National National National National National country Chad country Chad country Chad country Chad country Chad Cameroon Chad Niger Nigeria Total J Female J Male Source: World Bank calculations based on the latest household surveys available in Cameroon (2014), Chad (2018), Niger (2018), and Nigeria (2018). Note: Data Include only working-age individuals (ages 15–65). Rest of country = outside the Lake Chad region; Lake Chad = within the Lake Chad Basin region. Nigeria’s latest household survey does not differentiate between paid and unpaid employment. Thus, only for Nigeria, unpaid employment is subsumed in self-employment. The gender gap in access to wage employment is more 79 percent of workers are employed in the agricultural pronounced across young individuals ages 15–24. At sector compared with half that rate (39 percent) in the national level, 8 percent of young women engage the rest of the country. The proportions are slightly in wage employment (4 percentage points lower than less extreme in Nigeria, but still large, with 72 percent adult women) compared with 13 percent of young men of workers in agriculture in the Nigerian section of (11 percentage points lower than adult men) in the four the lake compared with 42 percent in the rest of the basin countries. In the Lake Chad region proper, the country (Figure 1.8). Chad and Niger do not exhibit share of young women who have wage employment is major differences in subnational areas given that most roughly one-third that of men (3 percent versus 8 percent, of the national economy is already heavily dependent on respectively). This gap more than doubles among agriculture in the two countries. The role that agriculture adult individuals, where 13 percent of men have wage plays in employment and the labor market highlights the employment, compared with 4 percent of adult women. importance of opening (and keeping open) agricultural These figures attest to low access to quality jobs across the trade and agricultural markets, which closed down as a Lake Chad region among young individuals, particularly result of the crisis. among young women. The service sector is the second largest source of Agriculture—including farming, fishing, and employment across the Lake Chad region, but the hunting— is the predominant sector of employment sector’s share is significantly higher in other parts of in the Lake Chad region. Around 72 percent of workers the countries. On average, 17 percent of workers are are employed in agriculture across the four countries in employed in the service sector in the Lake Chad region the Lake Chad region, employing 70 percent of men and (Figure 1.8). In Cameroon and Nigeria, the employment 73 percent of women.51 In Cameroon and Nigeria, the share in the service sector in the lake region stood at share of people in agriculture in the lake basin is much 11 percent and 20 percent, respectively, compared with higher compared with the rest of the respective countries 35 percent and 38 percent in other parts of the two (Figure 1.8). In the Cameroonian area of Lake Chad, countries. 51 Cameroon has the highest labor share of agriculture, at 78 percent of workers and Nigeria the less high, at 69 percent. 1.3 Recent Socioeconomic Trends in the Lake Chad Region 23 Lake Chad Regional Economic Memorandum  |  Development for Peace  istribution of employment by sector across the Lake Chad region (4-digit) Figure 1.8: D Percent 100– 90– 80– 70– 60– 50– 40– 30– 20– 10– 0– National Rest of Lake National Rest of Lake National Rest of Lake National Rest of Lake National Rest of Lake country Chad country Chad country Chad country Chad country Chad Cameroon Chad Niger Nigeria Total J Agriculture J Industry J Other J Services Source: World Bank calculations based on the latest household surveys available in Cameroon (2014), Chad (2018), Niger (2018), and Nigeria (2018). Note: Data Include only working-age individuals (ages 15–65). Rest of country = outside the Lake Chad region; Lake Chad = within the Lake Chad Basin region. Gender gaps within the service sector are also employment among women in commerce, which is less significant. In the service sector in the Lake Chad than half compared with areas outside the Lake Chad region, men are employed at a higher rate than women region. (20 percent and 14 percent, respectively). This pattern does not hold, however, in areas far from the lake, where A larger proportion of young workers engage in a larger share of women are employed in the service agriculture compared with adults. Agricultural jobs sector (40 percent), compared with men (30 percent). are concentrated among young workers (ages 14–25), Youth employment in the service sector in the Lake with 83 percent employed in the agricultural sector Chad region is roughly the same for men and women in the Lake Chad region, compared with 68 percent (10 and 9 percent, respectively). But differences exist among adults (Figure 1.9). The share of employment between the region and elsewhere: youth employment in in agriculture among youth is much lower outside the the service sector among women in the areas surrounding Lake Chad region. Among young individuals, the share the lake is less than half compared with the areas outside of agricultural employment decreases to 67 percent in the Lake Chad region, where it stands at 25 percent. A the rest of the country. A similar pattern is observed similar pattern is observed in adult employment among among adults (down to 41 percent). The country with women, for whom the share of employment in services the highest differential is Cameroon, where the share of in areas far from the lake is 44 percent, compared with youth employment in agriculture in areas near Lake Chad only 16 percent in areas near the lake. This gap is much is 86 percent, compared with 40 percent in the rest of the narrower among adult men, among whom there is only a country. A similar pattern is also observed among older 10 percentage point difference in employment in services workers. In contrast, in Niger, there is little difference between the lake and non-lake areas. Commerce accounts in the share of agricultural employment between areas for the largest share of service sector employment in the near Lake Chad and the rest of the country (Figure Lake Chad region. The share of employment in commerce 1.9). Considering the distribution of gender as well as is 10 percent among both men and women in the Lake age in areas near the lake, it emerges that 84 percent of Chad region. This is one-third the employment share young men are employed in agriculture, compared with in commerce in areas outside the region among women 66 percent of adult men. The gap between young people (nearly 31 percent), and lower than the share among men and adults is more acute among women, where 82 percent (at 15 percent). A similar pattern can be seen in youth of young women are employed in agriculture, compared 24 1.3 Recent Socioeconomic Trends in the Lake Chad Region Part I: Overview of the Lake Chad Regional Economic Memorandum  istribution of employment by sector and age (youth versus adults) (4-digit) Figure 1.9: D Percent 100– 90– 80– 70– 60– 50– 40– 30– 20– 10– 0– Lake Chad Lake Chad Lake Chad Lake Chad Lake Chad Lake Chad Lake Chad Lake Chad Lake Chad Lake Chad National National National National National National National National National National Rest of Rest of Rest of Rest of Rest of Rest of Rest of Rest of Rest of Rest of country country country country country country country country country country Adult Youth Adult Youth Adult Youth Adult Youth Adult Youth Cameroon Chad Niger Nigeria Total J Agriculture J Industry J Other J Services Source: World Bank calculations based on the latest household surveys available in Cameroon (2014), Chad (2018), Niger (2018), and Nigeria (2018). Note: Data Include only working-age individuals (ages 15–65). Youth includes individuals ages 15–24. Adult includes individuals ages 15–65. Rest of country = outside the Lake Chad region; Lake Chad = within the Lake Chad Basin region. with 70 percent of adult women in the lake areas. In areas away from the lake, the gap widens; employment in agriculture among young women stands at 61 percent, compared with 38 percent among adult women. 1.3 Recent Socioeconomic Trends in the Lake Chad Region 25 Lake Chad Regional Economic Memorandum  |  Development for Peace 1.4 Territorial Development within the Lake Chad Region 1.4.1 Density economic activities in the region are spatially concentrated among a few large cities. Two metropolitan cities have a population of over one million—N’Djamena and Economic stagnation in the region is linked to Maiduguri. A few other secondary cities contribute to the low levels of density and urbanization: urban agglomerations in the region have grown economy of the region, including Damaturu (Nigeria), more quickly, widening spatial gaps, while the Jimeta (Nigeria), Maroua (Cameroon), Mubi (Nigeria), shrinking of the lake between the 1960s and and Zinder (Niger). In Cameroon, most economic mid-1990s pushed people to migrate from rural activities in the Lake Chad region are concentrated in to urban areas. the southern part of the Far North Region, particularly around the city of Maroua.54 In Niger and Chad, the volume of economic activity in the regions around Lake Enduring poverty and slow economic growth in the Chad is small and tends to cluster around areas near the Lake Chad region have been linked to economic borders with Cameroon and Nigeria. geography. A combination of low economic density and great distance and wide division appear to be derailing the region from a sustainable growth track. Density refers 1.4.1.2 Urbanization55 to the economic mass or output per unit of land area. It can be measured as the value added or GDP generated The long-term shrinking of the lake observed until the per square kilometer of land.52 The concentration of mid-1990s had a negative impact on local population economic activity rises with development. Density tends growth. The analysis presented here takes advantage of a to characterize urban settlements, though it can be low novel dataset based on digitalized population censuses.56 even if population density is high, such as in low-income The dataset tracks population patterns at a granular urban enclaves. level between the 1950s and the 2010s, facilitating an assessment of local population growth. The findings of the analysis show that areas close to the lake experienced 1.4.1.1 Economic Density relatively slower total population growth after the lake began to shrink around the early 1960s up to the mid- The Lake Chad region is characterized by low economic 1990s.57 In Niger, for instance, a one standard deviation density and lack of agglomeration economies. While in proximity to the lake is associated with a 0.3 and 0.5 the Lake Chad region accounts for 17 percent of the area standard deviation decrease in log population by 1969 of the four neighboring countries, its economy makes up and 1988, respectively, relative to the population level as only 5 percent of the relevant GDP (Map 1.9).53 Most first recorded in 1962—a few years before the lake began 52 World Bank (2009). 53 Calculated based on Ghosh et al. (2010). 54 See UNHCR and World Bank (2016). 55 Due to data limitations, this report does not assess forced displacement in the Lake Chad region, which is certainly an important topic. 56 The results presented in this section are taken from Jedwab, Haslop, et al. 2021, technical paper for this report. 57 The observed shrinkage of the lake between 1960s and mid 1990s had to do with reduced rainfall in the Central African Republic, not local economic conditions, thus assuaging reverse causality concerns. The shrinkage of Lake Chad during those years thus offers a natural experiment to examine how long- term lake drying can affect both rural and urban communities. 26 1.4 Territorial Development within the Lake Chad region Part I: Overview of the Lake Chad Regional Economic Memorandum Map 1.9: Economic activity in the Lake Chad region, 2010  stimated subnational real GDP (2006) in a. E  stimated subnational real GDP (2006) in the Lake b. E Cameroon, Chad, Niger, and Nigeria Chad region Source: Masaki and Rodríguez-Castelán 2021, technical paper for this report. Calculations are based on data of Ghosh et al. 2010. GDP estimates are based on nighttime lights satellite imagery and LandScan population grids. Figure 1.10: Total population effect of proximity to Lake Chad, 1940s–2010s Water level loss of Lake Chad since 1965, percent Post-1965 effect, percent relative to latest pre-1965 year -10– – -10 -20– – -15 -30– – -20 – -25 -40– – -30 -50– – -35 -60– – -40 -70– – -45 -80– – -50 -90– – -55 -100– – -60 1967 1969 1976 1987 1988 1993 2001 2005 2009 2012 ▬ Water level loss Q Effect in Niger ´ Cameroon S Tchad Source: Jedwab, Haslop, et al. 2021, technical paper for this report. 1.4 Territorial Development within the Lake Chad region 27 Lake Chad Regional Economic Memorandum  |  Development for Peace to shrink (Figure 1.10). Negative population effects are In Niger, between 1965 and 2012, the number of small even larger in Cameroon, where a one standard deviation towns (at least 5,000 inhabitants) increased from 14 to in proximity to the lake is associated with a 0.7 and 1.0 161, while the number of (relatively) larger towns (at least standard deviation decrease in log population in 1976 20,000 inhabitants) rose from 4 to 26. In Cameroon, the and 1987, respectively, relative to the population level in number of small and large towns increased from 51 to 1963. In Chad, a one standard deviation in proximity to 173 and from 10 to 54 between 1965 and 2005, while, the lake is associated with a 0.9 standard deviation in log in Chad, the corresponding numbers rose from 11 to 94 population in 1993. Since the mid-1990s, the water level and from 4 to 23 between 1964 and 2009 (Map 1.10). in Lake Chad has been recovering. The shrinking of the lake observed between the 1960s There are few secondary towns or cities with more and the mid-1990s led to migration from rural areas than 20,000 inhabitants in the region, which to cities near the lake. The analysis finds signs of refugee could otherwise serve as a catalyst for generating urbanization in areas near the lake because of the lake’s agglomeration economies to foster economic growth. shrinkage during these years.58 As access to the rich water Map 1.10: Trends in city population around Lake Chad, circa 1965–2010 Source: Jedwab, Haslop, et al. 2021, technical paper for this report. Note: The map shows the location of 5,000+ and 20,000+ urban settlements circa 1965, when the lake started shrinking, and circa 2010, at the end of the period of study. It also indicates regionally important (20,000+) cities in the 1960s, such as Diffa, N’Guigmi and Zinder in Niger, N’Djamena in Chad, and Maroua and Garoua in Cameroon. It also shows paved roads, improved roads, and earthen roads, all circa 1965. 58 See Jedwab, Haslop, et al. 2021, technical paper for this report. 28 1.4 Territorial Development within the Lake Chad region Part I: Overview of the Lake Chad Regional Economic Memorandum resources and economic opportunities provided by Lake  opulation density is positively correlated Figure 1.11: P with regional growth, 1990 Chad became increasingly limited, people in the region may have migrated to cities in search of better economic Annual rate of growth in NTL, 1992–2013 0.08– opportunities. This phenomenon was particularly visible in Niger, where the shrinkage of Lake Chad between the 0.06– 1960s and mid-1990s had a clear positive impact on the expansion of larger cities around the lake. Despite the 0.04– existence of many rural settlements and small towns close 0.02– to the lake, there were no small cities in eastern Niger and no large cities close to the lake in 1962. But two large 0– cities—Diffa and N’Guigmi—rose quickly in the area. -0.02– Diffa had fewer than 1,000 inhabitants in 1962; yet, by 2012, it had become Niger’s 11th largest city. N’Guigmi -0.04– was historically located on the shore of the lake, a center <50pc 50–75pc 75–95pc >95pc Source: Masaki and Rodríguez-Castelán 2021, technical paper for this report. for fishing communities. Its dramatic growth from 3,000 Note: Excludes outside values. The bottom of the rectangular box represents the lower quartile (25th percentile), and the top is the upper quartile (75th percentile). The people in 1962 to more than 25,000 today must have been horizontal line indicates the 50th percentile, which is provided for different initial levels of population density in 1990, ranging from the bottom 50 percentile (< 50 pc) to above the driven by the locality functioning as a refugee settlement top 95 percentile (> 95 pc). The analysis is performed based on the sample of 5,212 grid cells (at a spatial resolution of 0.1 degrees) defined over the Lake Chad Basin countries for individuals who had lost their rural livelihoods. As that were lit (with a positive digital number in nighttime light luminosity) at some point between 1992 and 2013. these two larger cities emerged, the need for smaller cities might have been reduced; hence, the negative effect even after controlling for other factors that led to their observed among these smaller locations. A similar pattern establishment in the first place.60 Urban agglomerations of refugee urbanization was also observed in Cameroon continue to grow more quickly than more sparsely during the years of the shrinkage of the lake, although the populated areas, and this has important implications for positive effects on city populations were much weaker in widening spatial gaps between core cities and the rest of Cameroon compared with Niger. In Chad, no such effect the countries. was observed. More densely populated urban agglomerations 1.4.1.3 Regional Convergence (Conditional continue to grow faster than less densely populated Convergence) areas, thereby widening spatial gaps in density. Controlling for the level of economic activity (as proxied The Lake Chad region as a whole does not show a clear by nighttime lights in 1992), the initial level of population sign of convergence with the rest of the countries in density is positively correlated with the annual rate of terms of local economic growth, thereby implying the economic growth measured by the intensity of nighttime perpetual nature of laggardness in the region. According lights (Figure 1.11). More substantively, a 1 percentage to a multivariate regression analysis exploring the main point increase in the initial level of population density drivers of local growth as measured by the annual rate of is associated with a 0.2 percent increase in the annual change in nighttime lights, the pace of local economic rate of growth in nighttime lights.59 The findings are growth in the Lake Chad region is not statistically consistent with other studies showing that the locations different from that of the other parts of the countries of urban agglomerations remain persistent over time, after one controls for other potential confounders 59 This relationship holds whether the analysis is performed for all the Lake Chad Basin countries or restricted to the Lake Chad region only. 60 Henderson et al.(2018); Jedwab et al.(2017). 1.4 Territorial Development within the Lake Chad region 29 Lake Chad Regional Economic Memorandum  |  Development for Peace (Figure 1.12).61 This implies that, conditional on various annual rate of growth in nighttime lights. This is perhaps socioeconomic and geographic factors, the Lake Chad not surprising given that nighttime lights are a function region is no different from the rest of the countries in the of both population density and economic activity.62 One pace of growth. However, what this analysis also shows is way to interpret these results is that urban areas that that the laggardness of the region is persistent over time, initially had low levels of development (or luminosity) with little economic dynamism in the region that might grew more quickly than other areas that exhibited high allow it to catch up with the rest of the countries. There levels of development, thus narrowing the gaps between are also some important differences across the Lake Chad lagging and more advanced cities if one controls for Basin countries. In particular, as seen in Map 1.6, panel population density and other socioeconomic factors.63 d, the spatial gap between areas near Lake Chad and the This finding echoes a well-established body of literature rest of the country is clearly deepening in Nigeria, with on regional convergence whereby poor economies grow areas near Lake Chad experiencing a slower rate of growth more quickly than rich economies.64 Another important in nighttime lights. factor that drives regional growth is access to markets (see the following section). Meanwhile, exogenous Two factors stand out as the key determinants of the geographical factors, such as land use (cropland or trajectory of local economic growth: the initial level of grazing land), elevation, and terrain constraints have no nighttime light luminosity and population. These two significant impact on regional economic growth. variables explain roughly 20 percent of the variation in the Figure 1.12: Main correlates with local economic growth: Regression analysis 0.01– 0.005– 0– -0.005– -0.01– -0.015– ion s y y ) s y ion s In) In) ity rid In) 1992 nsit sit 13) 13 ict In) In) sit int 9 2 ( d reg 9 0 ( dens015) ity g e x( i n d e d en 2 –20 2–20 sity onfl c t s ( ots ( den levat stra 9 9 d I 9 n c i i on 1 t in e C ha n 1 tion 90–2 tric in E SP plan plan d d 99 19 de H I (1 I ( d f B on fl ts/ r lan d E nc yi ec ss PE SPEplan er o H c rotes zing rai l igh Lak n sit pula (19to el acce C ro C ro S e o - B e r im e e n d n p cces o s rke t 2X e ag rag Cr um b n no ilian p Gra T i g htt a tio wth i A Ma n 199 A ver Ave X N r of i v N l i e c pu Gro EI mb ro f Po SP Nu mbe Nu Q Point estimate ▬ Confidence interval (95 percent) Source: Masaki and Rodríguez-Castelán 2021, technical paper for this report. Note: The results are based on the beta-convergence regression wherein the dependent variable is the annual rate of growth in nighttime light luminosity between 1992 and 2013 and regressed on a number of socioeconomic, demographic, and geographical variables. The analysis is restricted to areas that are lit at some point between 1992 and 2013 and thus exclude largely rural or unpopulated areas. For ease of comparison, all the variables are standardized so that the result shows the effects of a standard deviation in each variable on the annual rate of growth in nighttime lights. 61 Note that this analysis is restricted to areas that are lit at some point between 1992 and 2013 (indicated by a positive value in digital number of luminosity). 62 Henderson et al.(2018). 63 World Bank (2009). 64 See Barro and Sala-I-Martin’s and Bairro et al.’s (1995) seminal work on this topic. Our work is not the first to use nighttime light as an instrument to empirically test convergence. Gennaioli et al. (2015) and Chandra and Kabiraj (2020), for instance, also use nighttime light to explore how lagging regions may catch up to more advanced regions and find strong evidence of convergence. 30 1.4 Territorial Development within the Lake Chad region Part I: Overview of the Lake Chad Regional Economic Memorandum 1.4.2 Distance (Lack of Connectivity) countries. The score of the rural access index—that is, the share of rural population living within 2 kilometers of an all-season road—is low for the region (Map 1.11, Closing connectivity gaps in the Lake Chad panel a).65 Nearly two-thirds of about 60 percent of the region can lead to higher productivity and higher-quality jobs, particularly in rural rural population in the Lake Chad region live farther areas, where people are twice as likely to be than 2 km away from an all-season road (proxied by disconnected from main roads, and thus from OpenStreetMap), that is, about twice the share in the non- access to markets and economic opportunities. lake parts of the basin countries (about 30 percent). Conflict and border closers have further distanced rural The Lake Chad region suffers not only from a lack populations from the market. For example, take-home of density, but also from long distance or lack of profits for small producers and sharecroppers reduced connectivity to the rest of the countries or to the by about 80 percent before and after the Boko Haram neighboring countries. Distance refers to the ease or crisis and its associated border closures.66 Sales volumes difficulty for goods, services, labor, capital, information have decreased while the cost of agricultural inputs has and ideas to traverse space. It measures how easily capital risen (as cheaper Nigerian imports are not available and flows, labor moves, goods are transported, and services are small farmers are unable to cross the river to purchase delivered between two locations. In this sense, distance small amounts). As a result, the crisis has decreased the is an economic concept not just a physical one, related potential of the dried red pepper market to act as a source to connectivity and access. An area is more likely to be of income for producers, and as a source of employment, lagging the farther away it is from leading areas since where producers report having to lay off daily laborers and greater distance-to density implies a lack of integration having less ability to offer sharecropping opportunities to into the economy. It also implies poorer access to the the poor. “thick” markets of capital, labor, goods, services and ideas, and the spillovers of knowledge and information The Lake Chad region and its vicinities host several they provide. As highlighted in this section, the Lake key cities (Maiduguri in Nigeria, Maroua and Kousséri Chad region exemplifies an area that lacks access to major in Cameroon, N'Djamena in Chad, and Diffa in markets due not only to its landlocked geography but also Niger) that can serve as trade hubs for driving the due to poor connective infrastructure and intensifying regional economy. The Market Access Index–a measure conflicts that make the flow of people and goods across of the size of population that can be reached within a the region extremely costly. certain travel time67–is relatively high in the Lake Chad region compared with some other parts of the countries (Map 1.11, Panel B). This indicates that, with proper 1.4.2.1 Market Accessibility connective infrastructure, people in the Lake Chad region could benefit from economic opportunities that Rural people in the Lake Chad region are twice as likely large markets—both within and around the region— to be disconnected from all-season roads (motorable can offer. Road transportation connects some key local year-round), compared with areas in the rest of the agricultural markets in and around the Lake Chad 65 An “all-season road” is defined as a road that is motorable all year round by the prevailing means of rural transport. Trunk, primary, secondary, and tertiary roads in OpenStreetMap are used as a proxy for all-season roads following the methodology by Azavea: https://rai.azavea.com/. 66 Sissons, Corrie and Clotilde Lappartient. 2016. "A Modified Emergency Market Mapping Analysis (EMMA) and Protection Analysis: Smoked Fish and Dried Red Pepper Income Market Systems - Diffa Region, Eastern Niger." Oxfam GB, Oxfam House, John Smith Drive, Cowley, Oxford, OX4 2JY, UK. 67 Estimated travel time to the closest city with a population of 500,000 or greater. 1.4 Territorial Development within the Lake Chad region 31 Lake Chad Regional Economic Memorandum  |  Development for Peace Map 1.11: Market and rural access in and around the Lake Chad region a. Rural access index b. Market access index Source: Masaki and Rodríguez-Castelán 2021, technical paper for this report. Note: Panel a shows the rural access index or the share of the rural population who live within 2 kilometers of all-season roads as proxied by OpenStreetMap. See appendix B for details on the construction of the index. Panel b shows areas that score very high (top 20 percentile), high (20–40 percentiles), medium (40–60 percentiles), low (60–80 percentile), or very low (bottom 20 percentile) in the market access index. See appendix B for details on how the index is calculated. region, including (a) Bol and N’Djamena in Chad, (b) costly. Access to the Lake Chad region from the exterior is Kousséri in Cameroon, (c) N’Guigmi and Diffa in Niger, at best poor, aside from a paved road in Chad (N’Djamena and (d) Bosso, Niger, along with Marte and Monguno to Karal), which is barely functional. The conditions via Madiguri in Nigeria. Maiduguri is an important of travel within and between the areas surrounding the connection for the trade corridors between Nigeria and lake are also difficult because of invasive vegetation on Cameroon.68 Yet, due to security concerns, many roads the body of water, which obstructs navigable channels, remain closed and border restrictions also further limit and due to the lack of maintenance of rural roads. the movement of people and goods across the region—a The northern basin and the north-east archipelago are topic that is discussed more in details in Section 1.4.3. landlocked, which slows down the diversification and intensification of the farming economy. Additionally, insecurity is reported as one of the main causes of 1.4.2.2 Poor Road Infrastructure concern for transporters, alongside the quality of road infrastructure, and excessive checkpoints and payments Poor road infrastructure—compounded by on routes.69 Better connectivity and mobility within the insecurity—undermines both intra- and inter- Lake Chad region—and also between the region and other regional connectivity. Connectivity across borders (or areas of the countries—have the potential to improve the between cities within national boundaries) is poor due living conditions of the population, by improving access to insufficient road infrastructure and a volatile security to basic services, jobs, and markets. situation, which make trade and transportation of goods 68 See Appendix 1.A for a map of local markets in the region. 69 WFP (2016a, 2016b). 32 1.4 Territorial Development within the Lake Chad region Part I: Overview of the Lake Chad Regional Economic Memorandum 1.4.2.3 Digital Connectivity Sahara African average of 28 percent. However, the share of unique mobile internet subscribers in Lake Chad In addition to physical disconnectivity due to a lack of countries remains substantially below regional leaders, sound road infrastructure, the Lake Chad region also such as South Africa (52 percent). Chad registered a suffers from digital disconnectivity, further isolating unique mobile internet subscription rate of 17 percent the region not only from the rest of the Lake Chad of the population in 2020, compared with 34 percent Basin countries and also from the rest of the world. in Nigeria and 34 percent in Cameroon. On the other Access to the Internet is also limited in the Lake Chad hand, Niger has the lowest mobile internet penetration Basin countries. While digital infrastructure in Sub- rate across the Lake Chad region, and among the lowest Saharan Africa as a whole is lagging behind compared in Sub-Saharan Africa. It is important to identify the with the rest of the world,70 the Lake Chad countries main constraints to adopt internet services faced by have a particularly low level of internet penetration. individuals to fully harness the potential benefits of Approximately 12 percent of the population in the Lake digital technologies in the region. Chad countries reported using the internet, compared with 19 percent across Sub-Saharan Africa, on average.71 Digital infrastructure—mobile broadband internet There is heterogeneity within the region. Chad lies among in particular—is limited in the Lake Chad region.73 the countries with the lowest internet penetration rates A large swath of areas in the Lake Chad region have in the world, at 7 percent of the population, compared little connectivity to fiber optics transmission nodes with Cameroon, which at 23.2 percent ranks above the or 3G technology except for the Far North Region of regional average. Cameroon where there appears to be more comprehensive coverage.74 Access to the internet (either through fixed Mobile internet in the Lake Chad Basin countries has broadband or mobile broadband) can serve as a catalyst undergone a rapid expansion, although its pace still for poverty alleviation,75 improved labor outcomes76 and lags regional leaders like South Africa. Unique mobile the functioning of rural markets,77 specifically regarding internet subscribers across the Lake Chad Basin countries price information, access to inputs and consumers78 and increased almost twofold as a share of the population access to capital markets.79 Thus, together with a lack of between 2014 and 2020.72 In 2020, this figure stood at physical connectivity, poor digital connectivity presents 31 percent of the population, above the regional Sub- 70 World Bank (2019a). 71 Data of 2017, WDI (World Development Indicators) (database) (accessed on 04/07/2021), World Bank, Washington, DC, https://datatopics.worldbank.org/ world-development-indicators/. Internet users are individuals who have used the internet (from any location) in the last 3 months. The internet can be used via a computer, mobile phone, personal digital assistant, games machine, digital TV etc. 72 Given that consumers may use multiple SIM cards to take advantage of discounts or to avoid high charges for off-network calls, market penetration in terms of unique subscribers may provide a better picture of the degree of access to mobile services. GSMA defines mobile internet as the use of internet services by unique users on mobile devices at the end of a given period. Mobile internet services are defined as any activity that uses mobile data (that is, excluding SMS, multimedia messaging services, and cellular voice calls). See GSMA Intelligence (database), Global System for Mobile Communications (GSM Association), London, https://www.gsmaintelligence.com/. Accessed on April 7 2020. 73 Hjort and Poulsen (2019). 74 The nodes correspond to add or drop points (entrance or exit) in the long-haul fiber networks. Long-haul fiber networks are like motorways that have junctions (on and off ramps, that is, add and drop points) that feed smaller class roads (access fiber, wireline, and wireless networks). In the motorway scenario, even if a household is located close to the motorway, it may be a long drive to the nearest junction. The same applies to fiber-optic networks, in which the speed of fixed broadband Internet is determined by proximity to the transmission nodes rather than the network lines connecting the nodes. While second- generation (2G) technologies enable voice, SMS, and limited Internet access, third-generation (3G) technologies enable more rapid Internet browsing and data downloading. The 2G/3G coverage data should be treated with caution, however; see the note to map 1.12. 75 See Bahia et al. (2019) and Masaki et al. (2020). 76 See Hjort and Poulsen (2019); Paunov and Rollo (2014); Fernandes et al. (2019); Chun and Tang (2018); Viollaz and Winkler (2020). 77 See Kaila and Tarp (2019); Goyal (2010); Ritter and Guerrero (2014); Salas-Garcia and Fan (2015). 78 See Aker and Mbiti (2010); Aker (2011); Debo and Van Ryzin (2013). 79 See Hasbi and Dubus (2019); Alibhai et al. (2018). 1.4 Territorial Development within the Lake Chad region 33 Lake Chad Regional Economic Memorandum  |  Development for Peace an additional hurdle that prevents the region from 1.4.2.4 Reducing Distance to Markets Matters for tapping its full economic potential. Local Economic Development Not only is access to digital infrastructure limited, Market accessibility is among the key drivers for ownership of digital devices like cellular phones is regional integration and economic growth. Areas that also particularly low in the Lake Chad region. Cell are better connected to large markets experienced a faster phone ownership as a share of population in the areas rate of growth than other areas (Figure 1.13).80 Controlling near the lake in Niger stood at 13 percent compared with for the initial level of nighttime lights and population size 20 percent for the rest of the country. A similar pattern as well as other socioeconomic and geographic factors (as can be seen in Nigeria, where cell phone ownership is shown in Figure 1.12), market access is indeed one of the 5 percentage points lower in the regions near the lake. main determinants of local growth (approximated by the Chad is the only exception, where ownership is higher in intensity of night lights) in the four Lake Chad countries areas near the lake compared with the rest of the country as well as within the Lake Chad region itself (the areas (20 percent versus 16 percent, respectively). surrounding the lake).  igital connectivity in and around the Lake Map 1.12: D Figure 1.13:  Market accessibility index and regional Chad region (2018–2019) growth Annual rate of growth in NTL, 1992–2013 0.1– 0.08– 0.06– 0.04– 0.02– 0– -0.02– -0.04– -0.06– <50pc 50–75pc 75–95pc >95pc Source: Masaki and Rodríguez-Castelán 2021, technical paper for this report. Note: Excludes outside values. The results are based on the beta-convergence regression where the dependent variable is the annual rate of growth in nighttime light luminosity between 1992 and 2013 and regressed on a number of socioeconomic, demographic, and geographical variables. The analysis is performed based on the sample of 5,212 grid cells (at a spatial resolution of 0.1 degrees) defined over the Lake Chad Basin countries that were lit (with a positive digital number in nighttime light luminosity) at some point between 1992 and 2013. Sources: Africa Bandwidth Maps (dashboard), Hamilton Research, Bath, UK, http://www. africabandwidthmaps.com/; Mobile Coverage Maps (dashboard), Collins Bartholomew, HarperCollins Publishers, Glasgow, https://www.collinsbartholomew.com/mobile- coverage-maps/. Connectivity to regional hubs like N’Djamena and Note: Mobile coverage corresponds to 2018. Fiber optics correspond to 2019. The 2G/3G coverage data should be treated with caution, however, because the Collins Bartholomew coverage maps do not necessarily include all network providers in each country. Thus, this Maiduguri appears to be particularly important for coverage map should be treated as a lower bound of 2G/3G availability. growth in agriculture and livestock trade. For instance, fish routes were still supplying several tons of produce to the regional hubs of N’Djamena and Maiduguri with an annual estimate of 50,000 to 100,000 tons of fish 80 These results are drawn from Masaki and Rodríguez-Castelán (2021), technical paper for this report. 34 1.4 Territorial Development within the Lake Chad region Part I: Overview of the Lake Chad Regional Economic Memorandum per year between 2010 and 2014.81 As noted above, the entire region.88 These findings imply that investments in livestock trade is vital for the region and crossborder trade enhancing connective infrastructure to improve market has long played a role in trade in livestock markets in access for the Lake Chad region does not guarantee gains Africa.82 Traditionally, livestock trade routes from Chad in agricultural expansion unless such investments are and Niger pass through Maiduguri on the way to regional made in tendon with complementary policies to secure markets.83 Sixteen out of 97 large livestock markets in the peace and security in the region or at least mitigate the four countries are located nearby Lake Chad, while more negative impact of conflict. than half of the livestock markets are within 100km of the border.84 Better access to connective infrastructure in the Lake Chad region is also associated with a shift away Improved access to markets serves to expand from agricultural jobs. Using data on the expansion agricultural activities. An analysis of access to markets of infrastructure and the sectoral composition of and land cultivation using over three decades of remotely employment at the subnational level, the analysis89 shows sensed and geospatial panel data shows that an increase in that access to paved roads is linked with diversification market access is associated with an increase in cultivated away from agriculture in the Lake Chad region. More land.85 Given the modest gain in length of paved road, substantively, having access to paved roads is associated the growth in population, which is a proxy for the size of with a 6 percentage point reduction in the employment the market, is the main driver for the increase in market share of agriculture, and a 4 percentage point increase access. A 1 percent increase in market access is associated in the employment share of manufacturing and a with a 3.9 percent increase in cropland area. Given the 2 percentage point increase in the employment share approximate total of cropland in the four countries of services. These effects are even larger in the districts is nearly 600,000 km2, this result implies a growth of neighboring Lake Chad, where having access to a paved around 23,400 km2 given a 1 percent increase in market road at the district level is associated with a 13 percentage access over 9 years.86 point reduction in the employment share of agriculture, a 8 percentage point increase in the employment share The positive impact of market access on agricultural of manufacturing, and a 5 percentage point increase in activities is constrained by conflict and insecurity. the employment share of services. In particular, road As discussed above, market access is associated with an connectivity appears to have particularly significant increase in cropland area. This result, however, does not impact in Cameroon, where access to paved roads is incorporate short-term shocks or uncertainty in traveling associated with a reduction in agricultural employment to markets, especially related to conflict.87 Indeed, the by 12 percentage points and roughly a 6 percentage same analysis shows that areas that are closer to conflict point increase in both manufacturing and service sector events experience slower cropland expansion over the employment, respectively. 81 Lemoalle and Magrin (2014). 82 de Haan et al. (1999). 83 WFP (2016a, 2016b). 84 Blankespoor (2021), technical paper for this report. 85 Specifically, the panel includes the following years: 1983, 1992, 2001, 2010 and 2019. 86 The harmonized night light series includes both the Defense Meteorological Satellite Program–Operational Line-Scan System and Visible Infrared Imaging Radiometer Suite satellites. 87 Travel time assumes the fastest route and does not include any measures of delays or roadblocks. Conversely, Van Der Weide et al. (2018) incorporate road closure obstacles in the travel time analysis to quantify the impact of market access on local GDP in the West Bank. 88 Blankespoor (2021), technical paper for this report. 89 The results presented in this section are taken from Lebrand (2021), technical paper for this report. 1.4 Territorial Development within the Lake Chad region 35 Lake Chad Regional Economic Memorandum  |  Development for Peace While structural transformation may directly by the World Bank: i) an alternative road transport contribute to poverty reduction in the long run, its corridor to Chad; and ii) the rehabilitation of the rail impact may be more nuanced in the short run. As line in Cameroon.90 The alternative road corridor links noted above in this report, despite having a relatively high N’Djamena, the capital of Chad, with Moundou, the share of non-agricultural employment, parts of the Lake second city in Chad and Ngaoundéré in Cameroon.91 Chad region of Nigeria and Cameroon still have relatively The investment project of the rail line in Cameroon high poverty rates. A transition away from agriculture consists of the renovation of the main rail line between per se does not necessarily guarantee immediate poverty Ngaoundéré, Yaoundé and Douala. Overall, those two reduction and complementary policies and investments transport corridor projects alone would not expect to yield are also needed to increase productivity for farmers— substantial welfare gains without any complementary which still account for a disproportionate number of the policies to reduce crossborder frictions. When combined poor in the region. with a reduction in crossborder frictions, regional real income (i.e. the sum of real incomes for the entire Overall, the welfare effects of the new transport population in a given region) is expected to increase— corridors are positive but modest unless combined with particularly in areas within the Lake Chad region where complementary policies to reduce border frictions. the overall welfare gain is estimated to be around a Map 1.13 graphically shows the estimated welfare gains 5 percent increase in the overall real income of people from two pipeline infrastructure investments financed living in the region. Map 1.13:  Regional welfare impacts from transport corridor investments (left) with additional border reduction (right) - percentage change in regional welfare. 10 10 5 5 0 0 Ndjamena Ndjamena −5 −5 Abuja Abuja −10 −10 Lagos Lagos Yaounde −15 Yaounde −15 Source: Lebrand 2021, technical paper for this report. Note: The maps show the welfare impact of the two proposed infrastructure investments with and without complementary policies to reduce border-crossing time by half. The model used to estimate expected welfare effects from the proposed infrastructure investments consider the combined effect of those investments with a reduction in travel time for crossing borders. The model assumes the effect of halving border-crossing time from 30 hours to 15 hours. 90 The model does not consider investments in electricity and internet. The plan for future research is to include those infrastructure sectors in the model and link it with the empirical analysis. 91 Because of insecurity in the Far North, road transporters now opt for this alternate route (rather than the more direct route through Maroua and Kousséri) and therefore the corridor is in need of investment to sustain the increase traffic. In 2015 alone approximately 500,000 tons of goods passed through this corridor compared with 40,000 tons through the previous corridor (CPCS-EGIS, 2019). 36 1.4 Territorial Development within the Lake Chad region Part I: Overview of the Lake Chad Regional Economic Memorandum 1.4.3 Division creates the thickest borders. While borders in the rich world have become increasingly thin, hereby facilitating trade and the movement of people and capital, borders in The historically strong crossborder trade around many developing countries remain thick, as is generally Lake Chad has been disrupted by the Boko Haram conflict, a source of division in the region. the case in the Lake Chad region. At the same time, Yet, regional trade shows signs of resilience, borders in the areas around Lake Chad have historically and exploiting further trade opportunities could been characterized as relatively porous—with trade and have a direct positive impact on household social ties permeating borders. This mobility, however, incomes and employment. has subsided over the last decade with the hardening of borders and counterinsurgency measures as a response to the Boko Haram insurgency. Together with density and distance, the third important geographic dimension for territorial development is division. It applies at both national and international 1.4.3.1 Boko Haram scales. At the national scale, nations can be internally divided due to conflicts and tensions arising from The intensification of conflict in the Lake Chad region linguistic, ethnic, religious, cultural, or political divisions. since the rise of Boko Haram in 2009 has been a large At the international level, divisions mainly arise from so- source of division driving the laggardness of the region. called thick borders, i.e., the many restrictions countries While the group was fist founded in 2002, the insurgency impose on other countries regarding the flow of goods, is considered to have begun in full in 2009 in Nigeria. In capital, people and ideas.92 Thick borders limit trade 2014–15, it expanded into northern Cameroon, Niger and and the flow of factors of production. Interstate conflict Chad. Since then, the group has retreated into inaccessible Map 1.14:  The evolution of the number of Boko Haram violent events from 2009–2020 Sources: Blankespoor (2021). technical paper for this report. The elaboration is based on ACLED (Armed Conflict Location and Event Data Project) (dashboard), Robert S. Strauss Center for International Security and Law, Austin, TX, http://www.acleddata.com/. 92 Fratianni and Kang (2006). 1.4 Territorial Development within the Lake Chad region 37 Lake Chad Regional Economic Memorandum  |  Development for Peace areas, mainly along the borders, but has continued to well as a site of strong domestic trade in local (mostly carry out more frequent and sophisticated attacks.93 Boko agricultural) productions. Trade, however, has historically Haram has been aligned with the Islamic State of Iraq and been informal in the region, with official trade figures the Levant since 2015.94 It is not a unified group; in 2016 tending to underestimate actual flows. A recent study, it split into two factions: the Islamic State’s West Africa for instance, suggests that Nigeria exported more than Province (ISWAP) and Jama’atu Ahl al-Sunnah lil-Dawa 213,000 metric tons of nonfuel products to Cameroon wal-Jihad (JAS).95 At its peak—that is between 2010 and annually, i.e. over forty times the official estimates.97 The 2015—the group seized a large swath of territories in crossborder trade largely took place between the two largest Nigeria’s North East, including major cities, pushing the cities in the area, N’Djamena in Chad and Maiduguri government of Nigeria to declare a state of emergency (an in Nigeria, across secondary cities such as Maroua in action that was later followed by other governments in Cameroon and Yola in Nigeria, as well as between a the region). While most of the attacks between 2009 and growing number of smaller towns and market towns.98 2013 were geographically concentrated in a few states in There are also important trade flows between Zinder in the northeastern corner of Nigeria, the terrorist group Niger and Kano in Nigeria. Official crossborder trade is moved some of its activities to the neighboring areas the main source of public revenue collected locally for of Cameroon, Chad, and Niger (Map 1.14). Vigilante landlocked countries: tax revenue collected by customs groups have been created in response to the insurgency, funds most of the public services (including salaries of and these are becoming increasingly violent. civil servants, in some cases).99 Regional integration through crossborder trade has 1.4.3.2 Crossborder Trade Barriers been severely disrupted by road/border closures associated with the Boko Haram insurgency.100 The Lake Chad Region has historically been Both crossborder and inter-regional trade have been characterized as a system of (mainly informal) regional substantially affected by the conflict. In Nigeria and and crossborder trade. The Lake Chad region is heavily Cameroon, most trade took place through the corridor dependent on trade flows from neighboring areas, as a connecting Maiduguri in Borno State in Nigeria to landlocked area that is more than 1,300 km away (in the Kousséri or Maroua in Cameroon’s Far North Region.101 case of Maiduguri) from the main ports of Cameroon The lack of border infrastructure also constrains and Nigeria. Economic interdependence has historically crossborder trade. The only international city-to- manifested in strong (though largely unrecorded and city crossing is between Kousséri in Cameroon and informal) crossborder trade.96 Trade flows straddle the N’Djamena in Chad; while most manufactured goods in Lake Chad region both from east to west and north to Chad tend to arrive by road from Douala in Cameroon. south. The region serves both as a transit corridor as Intensification of the conflict since 2009, as well as the 93 Magrin and Perouse de Montclos (2018). 94 Vivekananda et al. (2019). 95 The indiscriminate targeting of civilians appears to have been a major point of disagreement. The extremist group ISWAP avoids harming civilians, focusing mainly on military and government targets (Samuel 2019). 96 See Magrin and Pérouse (2018). 97 World Bank (2013a). 98 Magrin and Pérouse (2018). 99 This claim was made regarding landlocked countries: Chad, Mali, Niger and CAR, in contrast to Cameroon and Nigeria: “le commerce transfrontalier est la principale source de revenus publics perçus localement: les recettes fiscales collectées par les douanes alimentent la majeure partie des activités des services publics (y compris les salaires des fonctionnaires dans certains cas)” WCO (2018). 100 WFP (2016a, 2016b). 101 Magrin and Perouse de Montclos (2018). 38 1.4 Territorial Development within the Lake Chad region Part I: Overview of the Lake Chad Regional Economic Memorandum closing of land borders in Nigeria since 2019, and the Conflict has significantly shifted the pre-crisis trade state of emergency declared in Diffa and the Lac region in routes. A study for the Lake Chad Governors’ Forum Chad also in 2019 disrupted this trade flow. Banditry and discusses the resulting shifts in trade patterns.106 The use armed attack threaten the trucking routes, reducing the of major roads in the Borno State has been restricted107, circulation of vehicles. In the few places where physical with the situation only partially improving since 2015. border control exists, ‘thick borders’ arise due to conflict The overall volume of traded goods and services appears and insecurity102—suicide bombings occur regularly by to have declined. However, alternative functional trade pedestrians heading to the market, drivers of taxi motos, routes emerged.108 In these, trade has shifted away from even by children entering schools. Since Boko Haram the Borno State to safer courses through Niger and and its splinter groups tend to be viewed regionally as Cameroon.109 These routes, however, are often costlier a Nigerian problem, security and surveillance are largely in terms of time and distance.110 Displacement of trade concentrated along terrestrial borders with Nigeria.103 also has complex effects in terms of redistribution of economic activities. The corridors between Nigeria and Conflict and insecurity in the region have also raised Cameron South of the Far North Region in Cameroon the cost of regional trade. A survey of 305 transporters will benefit from the increased activity that has left the undertaken on behalf of the World Food Programme corridors of with Maroua and Kousséri. On the other in 2016 found that banditry and insecurity became the hand, the displacement of cattle herds to the Adamawa main cause of concern for transporters in two of the four and Northern regions of Nigeria and Cameroon, fleeing countries and the second constraint in Cameroon and insecurity in the Far North (and conflict in English- Niger behind road infrastructure, which also ranks high speaking regions), create potential source of conflict in Chad and Nigeria, offering a reminder that transport between farmers and herders as competition for resources was never easy in the region.104 The same survey found increases.111 that, with the crisis, supply routes for cereals in Borno State became subject to a particularly high number of In addition to the direct negative impact of Boko checkpoints (every 15 km) and a high total amount of Haram on regional trade, counterinsurgency measures payments, as in other regions, such as Diffa in Niger. adopted by the governments—such as border and Country policy decisions also continue to interfere with market closures—have also stymied the movement of trade such as the recent decision by Cameroon to ban people and goods in the region.112 Douala is the closest exports of cereals to neighboring countries.105 maritime port to the capital city of N’Djamena, with approximately 79 percent of imports passing through the 102 Porous borders attract informal cross border trade (ICBT) both to save on customs duties and to avoid security forces concentrated at official crossings to check vehicles and inspect declared goods. When ICBT shifts to open land and nighttime crossings, insurgents often follow, looking to extort protection payments or confiscate goods. It is argued that the frequency of border attacks by insurgents may also be stimulated by the absence of security forces, due to poor resource allocation and funding. 103 WCO (2018). 104 WFP (2016a, 2016b). 105 Data on Cameroon, FEWS NET (Famine Early Warning Systems Network) (dashboard), FEWS Net, Washington, DC, https://fews.net/. 106 Caestens (2019). 107 An estimated 750 commercial vehicles were attacked by armed groups mainly in Borno (Mercy Corps et al. 2017). 108 Sissons and Lappartien (2016) report that traders had to take alternate routes instead of the direct 125 km route between Diffa and Maiduguri, the main market for red pepper in Northern Nigeria, resulting in an increased distance of 430 km for traders (in the best of case). 109 Two of these routes suitable for crossborder exchange are between Yobe State in Nigeria and Diffa in Niger (Geidam/Nguru – Diffa) and between Adamawa State in Nigeria and Garoua in Cameroon (Yola/Mubi – Garoua). 110 World Bank (2018). 111 Data on Cameroon, FEWS NET (Famine Early Warning Systems Network) (dashboard), FEWS Net, Washington, DC, https://fews.net/. 112 Magrin and Perouse de Montclos (2018). 1.4 Territorial Development within the Lake Chad region 39 Lake Chad Regional Economic Memorandum  |  Development for Peace port.113 However, the deteriorating security situation on Lake Chad, Chadian traders went to the Niger customs the Northern segment of the Douala-N’Djamena corridor to negotiate the way in which their goods—which would has been a serious concern for transport operators, who now transit through Niger on their way from Nigeria to have explored the use of alternative transport routes. Chad—should be declared.115 The road that avoids the Far-North of Cameroon, going through the Chadian territory has gained interest and Enhanced crossborder trade can have positive effects traffic, and the Chadian authorities and their developing on income and employment, particularly if it builds partners are considering upgrading the road.114 Instead on the existent strong informal trade. Crossborder trade of going from Ngaoundéré via Garoua and Maroua provides basic needs to populations living far from capital (Cameroon) to N’Djamena, the new corridor would run cities and national points of entry. People living in the from Ngaoundéré East to Koutéré (Cameroon) and then areas surrounding Lake Chad are characterized by having continue North to Moundou (Chad) and N’Djamena strong trade, ethnic, cultural, and political ties, making (about 600 km). Parts of the road still need to be these administrative areas economically interdependent. reconstructed or rehabilitated to make this alternative Exploiting opportunities for crossborder trade is likely to branch capable of sustainably handling the substantial have a direct impact on incomes and employment in the increase in traffic. region, particularly if the extensive informal trade relations can be capitalized on. The growth of regional value-chain, While crossborder trade has decreased as consequence especially in agricultural products and food processing, of conflict, it shows signs of resilience, including could be a key mechanism for enhancing economic through the strength of social networks. The extent opportunities within the region and beyond. Currently, of economic interdependence among the different poor trade facilitation and weaknesses in institutions, areas of the Lake Chad region is manifested in (mainly regulations, and monetary policy management exert unrecorded) strong crossborder trade. While the volume significant costs on intraregional trade in some countries. of goods and services traded has been impacted by the For instance, the trucking industry in West and Central security situation, some trade routes remain functional Africa is characterized by the presence of cartels offering and new ones have emerged, as outlined above. The high prices and low service quality. networks of family relationships, inter-connected border communities, and local alliances have bypassed many of Smuggling is commonplace in the Lake Chad region. the official restrictions on trade and movement of people, Smuggling tends to occur in border zones, particularly as well as conflict areas, and so borders in the Lake Chad where varying levels of subsidies and tax regimes exist region remain relatively permeable. The social structure between borders. One of the forms of contraband is based of local traders has been noted as beneficial to their around the subsidized price differentials of commodities adaptation to the conflict, including by negotiating new between oil-producing states and their neighbors, in the trade routes with state officials. For example, Bol traders form of trade from North African states to communities in Chad routinely send someone to foreign ports or cities along their southern borders in Chad, Niger and Mali.116 to trade on behalf of other traders, and they consolidate Illegal smuggling has an added economic incentive where their cargoes by means of transport. When the presence of import duties are high, often the case in resource-poor Boko Haram led to the end of the circulation of boats on countries neighboring large petroleum producers.117 Even 113 Taniform (2014). 114 United Nations and World Bank (2018). 115 WCO (2018). 116 Shaw and Reitano (2014). 117 For descriptions of this dynamic in the Maghreb, please refer to Ayadi et al. (2014). 40 1.4 Territorial Development within the Lake Chad region Part I: Overview of the Lake Chad Regional Economic Memorandum margins on licit consumer goods can be significant. Fuel sold in Nigeria is subsidized, which reduces its price and makes its trafficking to neighboring countries attractive. Fuel trafficked out of Nigeria is also sourced from millions of liters of crude oil either stolen or diverted to be refined in artisanal distilleries. This fuel feeds contraband, both nationally and regionally, to the neighboring countries.118 Furthermore, smugglers of small quantities of black- market gasoline tend to be profiled as Boko Haram enablers and are detained or arrested. 118 Assanvo et al. (2019). 1.4 Territorial Development within the Lake Chad region 41 Lake Chad Regional Economic Memorandum  |  Development for Peace 1.5 Climate Change and FCV challenges 1.5.1 Climate Change and Harsh More frequent climate anomalies—rising Environmental Conditions temperatures, and aridification in particular— are associated with a rise in conflict activities The Lake Chad region has historically been subject in the region. to various climatic and environmental risks, such as recurrent droughts, rising temperatures and increasingly erratic rainfall patterns. Between the Territorial underdevelopment—rooted in low 1960s and the mid-1990s, the Lake Chad shrank due economic density coupled with high distance and to severe and recurrent droughts, which resulted in lost division (3Ds)—is intricately linked to another layer economic opportunities and displacement of people of risks that are characterizing the region: conflict and in search of new ways of life.123 Looking at patterns of climate change (2Cs). On the one hand, suboptimal climatic conditions over the past two decades, there is a territorial development can be a direct source of fragility sign of rising temperature in the Lake Chad region (Figure and conflict. A well-established body of literature exists 1.14).124 Across the Sahel, temperature is increasing that highlights the primary role that poverty and low 1.5 times faster than the global average. Furthermore, economic development play in fueling conflict and temperature is predicted to increase by 0.65–1.6°C and instability.119 On the other hand, conflict and fragility precipitation is estimated to decrease by 13–11 percent also perpetuate underdevelopment, the feedback loop in the next two decades (that is, 2016–2025 and 2026– that is commonly referred to as a conflict trap.120 The 2035) relative to 1961–1990.125 Analysis of patterns in ongoing conflict in the Lake Chad region can also be seen the standardized precipitation-evapotranspiration index as a manifestation of long years of underdevelopment.121 (SPEI)—which measures the extent to which the amount Furthermore, increasingly erratic climate conditions in of rainfall in a given location deviates from its historical the Lake Chad region have intensified competition for average after taking into account the ability of the soil to limited resources and triggered conflict and violence, retain water—reveals that rainfall shortages appear to be which have in turn stymied the economic progress of increasingly common in the Lake Chad region (Figure the region.122 As highlighted in the analytical framework 1.15).126 These increasingly erratic climate conditions are (Figure 1.1), it is this nexus between suboptimal territorial making the livelihoods of people in the Lake Chad region development and deepening fragility and climate risks more uncertain and vulnerable. that entrenches the laggardness of the region. Increasingly erratic climate and its impact on the hydrology of the lake present a significant risk to livelihoods and food security across the region. The 119 See, for instance, Hess and Orphanidis 1995; Collier and Hoeffler 2002; Collier et al. 2003; Fearon and Laitin 2003; Sambanis 2004; Blomberg et al. 2006. 120 Collier et al. 2003. 121 Tayimlong 2020. 122 GEOGLAM 2020. 123 Vivekananda et al. (2019). 124 The results presented in this section come from Fisker (2021) “Conflict and Climate in the Lake Chad Region”, technical paper for this report. 125 Mahmood et al. (2019). 126 The calibration period for the SPEI is January 1950 to December 2010. 42 1.5 Climate Change and FCV challenges Part I: Overview of the Lake Chad Regional Economic Memorandum  rends in vegetation health (NDVI), Figure 1.14: T  rends in the Standardized Precipitation- Figure 1.15: T temperature, and rainfall, 2001–18 Evapotranspiration Index Standard deviations from the mean 3– 3– 2– 2– 1– 1– 0– 0– -1– -1– -2– -2– -3– -3– 2001 2003 2005 2007 2009 2011 2013 2015 2017 1950 1960 1970 1980 1990 2000 2010 2020 ▬ Vegetation health ▬ Temperature (day) ▬ Temperature (night) ▬ Rainfall Source: Fisker 2021, technical paper for this report; normalized difference vegetation Source: Fisker 2021, technical paper for this report; SPEI (Standardised Precipitation- index (NDVI): MODIS (Moderate Resolution Imaging Spectroradiometer) (dashboard), Evapotranspiration Index) (dashboard), Spanish National Research Council, Zaragoza, Terra, National Aeronautics and Space Administration, Washington, DC, https://terra.nasa. Spain, https://spei.csic.es/index.html. gov/about/terra-instruments/modis; rainfall and temperature: WorldClim, https://www. Note: The figure shows SPEI values (6 months) over the past seven decades. worldclim.org/. Lake Chad region contributes to the food security of are unsure of what crops to specialize in, and when to 13 million people within a range of 300km, considering switch from one occupation onto another. connections with regional towns127 and the Sahel region as a whole, which relies on resources from Lake Chad.128 Climate conditions are key determinants of local Droughts and human activities appear to have altered the economic growth in the LCB countries where hydrology of the lake through stream flow modification agricultural remains the most dominant economic and water diversion129, contributing to the water scarcity sector. Climate conditions play an integral role in and fragility of the region.130 Droughts can challenge determining local economic growth particularly in agricultural production (in addition to being linked with agrarian areas whose livelihoods rely critically on weather increases in violence against civilians).131 The fluctuations conditions. Between 1992 and 2013, higher-than- in inter-annual and seasonal water can also impede the normal rainfall amounts had greater positive effects on development of stable resources exploitation rights and local economic growth in areas that are largely agrarian the administrative management of a transboundary (and dependent on rainfall) as indicated by a positive resource.132 Uncertainty over the timing, longevity, interaction term between the SPEI and cropland density and strength of rainfall has coincided with increasing (see Figure 1.12). These findings suggest that the impact temperature and wind speeds.133 These shifts are making of climate shocks is not spatially uniform. Thus, assessing it more difficult to understand what land is suitable for the potential risks that erratic weather conditions may agriculture and pastoralism, and to sustain fish catches. pose to local agricultural economies need to be carefully Individuals that rely on the lake for income generation evaluated. 127 Galeazzi et al. (2017). 128 United Nations and World Bank (2018). 129 Lemoalle et al. (2012). 130 Okpara et al. (2015). 131 Begozzi et al. (2017). 132 Sarch (2001). 133 Vivekananda et al. (2019). 1.5 Climate Change and FCV challenges 43 Lake Chad Regional Economic Memorandum  |  Development for Peace 1.5.2 Links between Climate Variability productivity (proxied by greenness) lead to an increase and Conflict in conflict activity.136 For instance, a positive temperature anomaly of one standard deviation is associated with a Conflict dynamics and climate change are closely 17.6 percentage point increase in the yearly number of interlinked in the Lake Chad region. There is a well- conflict events taking place in a given district (at the established body of literature showing the link between second level administrative unit). Conflict events are violent conflict and climate change. Rising temperatures also more likely in areas that experience lower-than-usual and increasingly erratic rainfall patterns due to climate levels of greenness, measured by the NDVI (which also change reduce the opportunity cost of fighting by means lower agricultural productivity). Here, a negative lowering agricultural productivity, weakening state anomaly of one standard deviation leads to an increase in capacity by tightening its fiscal envelope, and intensifying the number of conflict events of 8.9 percentage points. resource competition through displacing people.134 In the The effects of climate factors on violent conflict are Lake Chad region, increasingly erratic climate conditions particularly pronounced in areas that are largely agrarian are also directly linked to conflict events.135 As shown in and more densely populated. Map 1.15, the Lake Chad region is home to a variety of different climate conditions. A large swath of lands in the Increasingly erratic climate conditions make northern parts of Niger and Chad is characterized largely communal violence more likely. For example, in as a desert, with little annual rainfall. Conversely, the Cameroon, livestock transhumance-related conflicts southern parts of the region are home to more vegetation between farmers and pastoralists are an increasing concern (as indicated by higher values in NDVI), enjoying in the country’s Far North Region. Between November higher annual rainfalls. These climatic conditions are and December 2020, the International Organization closely linked to conflict proneness. Based on remote for Migration registered more than 320 transhumance sensing data, the analysis shows that higher-than-usual conflicts. Insecurity and climate variability have forced temperature/rainfall and lower-than-usual agricultural shifts in the seasonal migratory routes of transhumant  verage rainfall, temperatures, and greenness (normalized difference vegetation index) Map 1.15: A Source: Fisker 2021, technical paper for this report. 134 See Burke and Leigh (2010); Brückner and Ciccone (2011); Chaney (2013); Eberle et al. (2020); Fetzer (2020); Harari and La Ferrara (2018); Hidalgo et al. (2010); Miguel et al. (2004). 135 Onuoha (2014); Vivekananda et al, (2019). 136 The results presented in this section come from Fisker (2021) “Conflict and Climate in the Lake Chad Region”, technical paper for this report. 44 1.5 Climate Change and FCV challenges Part I: Overview of the Lake Chad Regional Economic Memorandum Figure 1.16: The climate-conflict trap Source: Vivekananda et al. (2019). movements, which in turn, contribute to fuel the extreme and more intense weather events in recent years in crisis. The International Crisis Group (Africa Briefing Lake Chad is increasing livelihood insecurity and natural 105) has argued that “There is a danger that traditional resource conflicts and decreasing the coping capacity of transhumance will make the crisis worse than it would individuals and communities to deal with shocks. People otherwise have been.” These community-based conflicts are caught between extremes—conditions are too wet or have led to the formation of militias to protect resources too hot and dry—and those already escaping from violence (as well as to offer protection from armed groups), who are may be uprooted again by droughts or floods. Agriculture then drawn into conflict themselves.137 That said, while it and fishing activities that support most people in the Lake is a potential source of conflict, however, greater mobility Chad region are increasingly subject to weather shocks, can also be a source of resilience, allowing people to move soil degradation, and livestock diseases. Projections toward available resources, regulating social pressures and indicate that weather conditions will only become more generating income by facilitating trade. extreme and unpredictable. Moreover, conflict hinders the ability of communities in the Lake Chad region to Communities in the Lake Chad region are vulnerable adapt to climate change, creating a climate-conflict trap to a “climate-conflict trap.” The size and frequency of that has “fragmented social bonds among families, among 137 In Cameroon, the Central African Republic, Mali and Northern Nigeria, militia groups originally created for self-defense have played a strong role in driving conflict (ICG 2018; United Nations and World Bank 2018). 1.5 Climate Change and FCV challenges 45 Lake Chad Regional Economic Memorandum  |  Development for Peace generations, among ethnic groups and between displaced of conflict: battles, riots, protests and violence against people and host communities, making it harder for civilians. Based on these data, the findings presented here people to cope with and adapt to climate impacts than show that the number of conflicts has increased across in the past.”138 all types of conflict in the region, particularly since the rise of Boko Haram in 2009.140 The number of fatalities Together, conflict and climate change pose a direct from conflict follows a similar pattern. Fatalities began to threat to territorial development, and vice versa. increase since 2009, and peaked around 2014 and 2015, Climate change has made weather increasingly variable at around 1,000 per year, before plateauing from 2016 within the Lake Chad as well as in the surrounding onward (Figure 1.17). countries. The highly volatile security situation created by Boko Haram, negatively associated with the pace of local The decade-long Boko Haram insurgency, which first economic growth, poses another significant economic rose in Northeastern Nigeria, has taken a devastating threat. Mitigating security and climate risks should humanitarian toll in the Lake Chad region. The region remain among the top priorities for ensuring sustainable has 2.7 million internally displaced people, 257,000 growth in the region. refugees, and 5.3 million people who are facing severe food insecurity as of 16 September 2020.141 While other conflicts exist in the area142, the Boko Haram insurgency 1.5.3 The Social and Economic Effects of has been among the chief drivers for a record level of forced Conflict displacement in Nigeria and the Lake Chad Basin.143 Assuming that displaced people do not return to their places of origin, the accumulated cost of displacement The Boko Haram insurgency has caused a rapid— between 2013 and 2022 would be around N465 billion and lasting—decline in the level of economic activities across the region, particularly affecting (US$2.3 billion), even if further displacement were less developed and less connected urban areas. to be stopped. According to the Food and Agriculture Organization of the United Nations, nearly 50 percent of the population in the Diffa region in Niger is in need of Despite government efforts to establish peace and humanitarian assistance, and nearly 20 percent are facing stability, the number of conflicts and conflict-related issues of food security.144 In the case of Nigeria, per the fatalities has been on the rise in the Lake Chad region. same report, nearly 70 percent of the population living in Historical marginalization, exclusion from centers of areas near the lake is in need of humanitarian assistance, power and decision-making processes, and a persistent with 43 percent facing issues of food insecurity. lack of access to services are all structural drivers of fragility in the region, which have made fertile ground The Boko Haram conflict has also eroded the social for the emergence and expansion of Boko Haram.139 fabric of the Lake Chad region. The negative impact The Armed Conflict Location & Event Data Project of the violent conflict on women and youth tends to (ACLED) (Raleigh et al. 2015) records four different types be disproportionate on these groups’ higher existing 138 Vivekananda et al. (2019), p.10. 139 A lack of state presence in the region and elite capture have been associated with the rise of the insurgency: “The group itself is an effect and not a cause; it is a symptom of decades of failed government and elite delinquency finally ripening into social chaos,” (Felter 2018; Mahmood and Ani 2018). 140 The results presented in this section come from Fisker (2021) “Conflict and Climate in the Lake Chad Region”, technical paper for this report. 141 OCHA (2020). 142 Notably in Burkina Faso, Sudan, the Central African Republic and Mali. 143 UNHCR and World Bank (2016). 144 FAO (2017). 46 1.5 Climate Change and FCV challenges Part I: Overview of the Lake Chad Regional Economic Memorandum Figure 1.17: Conflict events and fatalities over time across the Lake Chad region Number of events, 2001–2018 100,000– 10,000– 1,000– 100– 1– 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 ▬ Battles ▬ Riots ▬ Protests ▬ Violence … Fatalities Source: Fisker 2021, technical paper for this report. vulnerability.145 The conflict has also reinforced distrust, as well as the destruction of private and public assets.147 whereby people are wary of anyone who may be former The Institute for Economics and Peace put the annual or active Boko Haram combatants. It has eroded social cost of violence in 2019 in Cameroon, Chad, Niger, and cohesion between groups following kidnappings and Nigeria at 6 percent, 7, percent, 8 percent, and 8 percent attacks against entire villages, as well as within villages, of GDP, respectively.148 Between 2011 and 2015, the where the families of members of Boko Haram reside northeastern part of Nigeria—one of the most affected among other people. Heavy handed counter-insurgency regions—suffered an estimated accumulated output loss measures have also contributed to the erosion of social of N1.66 trillion (US$8.3 billion).149 In 2015 alone, cohesion and trust in the State, limiting future rebuilding close to 800,000 individuals in the same subregion lost efforts by governments. their income as a consequence of the forced displacement caused by Boko Haram.150 This resulted in estimated Violent conflict and insecurity have also taken a losses of about N90 billion (US$250 million). significant toll on the regional economy. The level of violence in the region has intensified since 2009 when The rise of Boko Haram has had significant negative state security forces killed 800 of Boko Haram members, spill-over effects undermining the economies of including its founder M. Yusuf.146 At its peak (2015), the neighboring countries. The reduction in nighttime group seized a large swath of territories in Northeastern light could be as high as 20 percent in areas within Nigeria, including major cities. The conflict has led to 200 km from the epicenter of the conflict. It was not the disruption of economic activity and social networks, until 2014 that Boko Haram expanded more formally 145 For example, higher exposure to the risk of violent extremism and criminal activity in the context of high youth unemployment; or increased risk of gender- based violence. 146 Kimenyi et al. (2014). 147 Vivekananda et al. (2019). 148 Estimates include direct and indirect costs of violence. Direct costs of violence are those costs to the victim, the perpetrator, and the government (e.g., military and medical expenditure and cost of policing). Indirect costs of violence are those that accrue after a violent event takes place, and include indirect economic losses, physical and psychological trauma to the victim, and loss of productivity. Estimates exclude spillover effects from conflict and violence, cost of crime to business, judicial system expenditure, domestic violence, and out-of-pocket spending on safety and security by households. Estimates are conservative and should be taken with caution given these exclusions. Methodology includes 19 variables across three domains: 1) Violence Containment; 2) Armed Conflict; 3) Interpersonal and Self-Inflicted Violence. IEP (2020). 149 See World Bank (2015b). Within the region, Borno State suffered from the largest loss in output, which fell by N708.18 billion (US$3.54 billion). 150 Pardo and Rossiasco (2016). 1.5 Climate Change and FCV challenges 47 Lake Chad Regional Economic Memorandum  |  Development for Peace Map 1.16: Boko Haram Conflict in the Lake Chad region a. Boko Haram Area and the Three Countries of Study b. Number of Boko Haram Events, 2009–2018 700– 600– 500– 400– 300– 200– 100– 0– 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Period of analysis After period of analysis J Cameroon J Chad J Niger J Nigeria Source: Jedwab, Blankespoor, et al. 2021, technical paper for this report. its terrorist activities outside Nigeria and into the Figure 1.18:  Boko Haram effects by distance to the Boko Haram area post-2009 (Incl.) territory of Cameroon, Chad, and Niger (Map 1.16, Panel B). Yet between 2009 and 2013—years for which Estimated post-2009 effect (incl.) for each bin 0– temporarily comparable data on nighttime light are available—proximity to the Boko Haram conflict was -0.05– already strongly associated with relative declines in local economic activities in Cameroon, Chad, and Niger. -0.1– The analysis indicates that there is a significant effect of Boko Haram in urban areas within a range between 25 -0.15– and 200 km from the insurgency’s activities. The average effect within 50 km suggests that the rise of Boko Haram -0.2– reduces nighttime light luminosity by 15 percent. The effects for 50–100 km, 100–150 km, and 150–200 km -0.25– are -15, -11 and -7 percent, respectively. Within the 25 50 75 100 125 150 175 200 225 250 Distance bin (Km; to Boko Haram area) 200 km range, the effect suggests an average decrease of Source: Jedwab, Blankespoor, et al. 2021, technical paper for this report. -12 percent (Figure 1.18). These negative spillover effects Note: The figure shows the post-2009 Boko Haram effect for each distance (to the Boko Haram area). Bin 25 corresponds to 0–25 kilometers; bin 50 corresponds to 25–50 kilometer, and so on. *p < .10 **p < .05 ***p < .01 persisted and became even larger post-2013, reaching -35 percent by 2015 and -50 percent by 2018. effects were not seen in urban areas that initially had The negative spillover effects of Boko Haram activities relatively more robust economies (as measured in are particularly significant in urban areas initially less nighttime light intensity) or that had better access to developed and less connected to other markets. The other major markets. The fact that those areas were more opposite is true for more connected towns. Negative resilient and less affected by the Boko Haram conflict is 48 1.5 Climate Change and FCV challenges Part I: Overview of the Lake Chad Regional Economic Memorandum likely due to their more diversified economies and their decline of 72 percent.157 The loss of mobility required to ability to trade with markets other than those in Northern reach markets has also made for sizable trade losses.158 Nigeria, which became inaccessible with the conflict. Many markets in the Lake Chad region have closed Conflict has significantly disrupted production in the due to security concerns. The ongoing conflict poses primary sector in the Lake Chad region. In Cameroon, significant challenges to economic activities including after Boko Haram extorted farmers in the lake area as a through the closing of markets. Map 1.17, below, provides source of revenue, the army banned the production of a visual description of the number of markets in the region millet and maize (including in certain nonborder areas), that have remained either closed or been operating at a which led to a decline in the agricultural production of low capacity.159 Many markets in Northern Nigeria where cereals and to displaced farmers.151 Estimates suggest most of the Boko Haram attacks took place, were not that, crop yields in Northern Nigeria could have operating between 2014 and 2016. This was partly due been down by 50 percent or more at the height of the to the Nigerian government’s mandate for some markets conflict, compared with pre-Boko Haram times.152 In to close given that these were frequent targets of Boko Chad, cereal production in 2016 was 11 percent lower Haram attacks. Between 2017 and 2020, several markets than in the previous year; while in Cameroon it fell by on the fringe operated with a slightly below or normal 25 percent in the Far North Region.153 The World Food status. However, markets in close proximity to Lake Chad Programme reports that the insurgency likely contributed were well below or not operating at all. More recently, in to the reduction in the production of sorghum and 2020, markets in Chad near the border with Cameroon millet in Adamawa, Borno, and Yobe states in Nigeria and Nigeria were not operating. by forcing farmers to leave.154 Fishing activities constitute an important source of employment and income in the Crossborder livestock trade has declined as a result region with an estimated value of US$54 million to of the insurgence. Conflict has affected production and US$220 million.155 These activities have been disrupted trade directly, as well as indirectly, through the counter- by the insurgency looking for a source of revenue, as well insurgency measures that restrict movement and put as by the embargo from the Nigerian armed forces to bans on farming and trade.160 Transit flows of livestock stop the insurgents.156 In the Diffa Region in Niger, the seem to be declining. The transit of cattle to Nigeria from revenue of fishers selling smoked and dried fish fell from Chad and Cameroon decreased by 39 percent between US$1,515 yearly before the crisis to US$420, that is, a 2015 and 2016–2017, as shown by customs data from the Yagoua livestock crossing point.161 The deteriorating 151 World Bank (2018). 152 Macaulay (2014). 153 FAO (2017). 154 WFP (2016a, 2016b). 155 FAO (2017). 156 FAO (2017). 157 Oxfam (2017). 158 An anecdotal, yet common example of market and petty trade disruption refers to the Baga fish trade, with an estimate value of US$19 million in annual sales in 2001. Given its profitability and strategic location as a border town on Lake Chad, Boko Haram insurgents overrun the fishing town twice, taking overfishing activities. The securitization response to Boko Haram included the implementation of administrative and security barriers to prevent the insurgents from benefitting from the large revenue stream. Fishing trade fell to a fraction of its previous levels. The security-related road closures also meant that those allowed to fish were not able to transport their fish to markets without military escort. The price of transporting fish increased from approximately N700 precrisis to around N2,000–N2,500 (UNDP 2020). 159 These results are taken from Blankespoor (2021), technical paper for this report. 160 UNDP and OCHA (2016). 161 World Bank (2018). 1.5 Climate Change and FCV challenges 49 Lake Chad Regional Economic Memorandum  |  Development for Peace impact that the conflict has had on Chad’s livestock crops to markets in Northern Nigeria have had to find exports to Nigeria is even more poignant considering that alternative destinations for exports within their own these exports are the country’s second source of foreign country. Restricted access to key strategic trade centers revenue after oil.162 In Cameroon, estimates suggest that in Northern Nigeria (for instance, Baga in Nigeria) have Boko Haram has stolen US$6 million worth of cattle, posed a significant loss for people in the region whose sheep, and goats since 2013.163 Market infrastructure has livelihoods depended critically on crossborder trade (Map also been subject to physical damage. For example, in 1.18).165 Damaturu in Yobe, Nigeria, over 650 shops have been reported to have been damaged.164 Insecurity and restrictions on trade are also affecting prices, exerting upward pressure on food prices while Border crossings have been significantly reduced due to depressing the price of tradeable such as livestock. the heightened insecurity situations surrounding the Security measures, such as the banning of large vessels region. Farmers in Cameroon who previously exported in Lake Chad by the Chadian government led to an Map 1.17: The evolution of market status in the Lake Chad region, 2014–20 Sources: Blankespoor 2021, technical paper for this report; data of FEWS NET (Famine Early Warning Systems Network) (dashboard), FEWS Net, Washington, DC, https://fews.net/; Van Den Hoek 2017. Note: This panel set of maps shows trends in market status in and near Nigeria’s North East, with a selection for each year from 2014 to 2020 during the same month of the publication of the report. 162 World Bank (2015a). 163 World Bank (2018). 164 Mercy Corps et al. (2017). 165 Vivekananda et al. (2019). 50 1.5 Climate Change and FCV challenges Part I: Overview of the Lake Chad Regional Economic Memorandum Map 1.18: Restrictions on crossborder movement and trade Source: Vivekananda et al. 2019. Note: The map shows a selection of restrictions for illustrative purposes rather than a comprehensive assessment. The selection is based on field research. The boundaries and names shown and the designations used on this map do not imply official endorsement or acceptance by Adelphi or any of the funding parties. automatic increase in the price of transport and goods. Boko Haram also plays an active role in smuggling in According to residents of the city of Bol in Chad, the the region. Like other terrorist groups in the Sahel, Boko price of basic goods increased by 30 percent since the ban Haram works in connection with local criminal groups on vessels came into force.166 Data from the IMF show a to control smuggling routes around the Lake Chad Basin. surge in food prices and inflation in Chad, associated with The insurgency provides young people with motorcycles, lower agricultural production and security disruptions expecting them to monitor the positions of the defense to the crossborder trade flows with Cameroon and and security forces (DSFs), allowing Boko Haram to plan Nigeria.167 Prices in the northeastern part of Nigeria rose attacks or change the routing of contraband transfers as by 5.4 percent annually during 2011–15, while prices for needed. The collaboration tends to be more transactional food items rose by 7.5 percent annually.168 Staple food than ideological, and the proportion of recruited youth is prices in Niger are estimated to have risen steeply in the small.171 Nonetheless, for many youths in the Lake Chad affected areas because of insecurity and the increased region that lack economic opportunities, Boko Haram cost of transport.169 At the same time, the inability to offers potential material and social advancement.172 trade across borders is putting downward pressure on previously traded goods. The prices of livestock in Chad and Cameroon have dropped by 30 to 50 percent, given the countries’ inability to export to Nigeria.170 166 Cantens and Raballand (2017). 167 IMF (2016). 168 World Bank (2015b). 169 WFP (2016a, 2016b). 170 FAO (2017). 171 Lierl (2020). 172 Gaye (2018). 1.5 Climate Change and FCV challenges 51 Lake Chad Regional Economic Memorandum  |  Development for Peace 1.6 Policy Options The analyses collated in this regional economic started recovering since—had a permanent impact on memorandum present a comprehensive diagnostic of local population growth, forcing people to migrate to the Lake Chad region, taking as a basis the feedback urban areas. Both urban and rural settings, however, often cycle between suboptimal territorial development, on lack access to basic services, infrastructure, and income- one side, and FCV, on the other. The memorandum generating opportunities, particularly for women, youth, shows that over the last decades, the Lake Chad region displaced people, and other vulnerable groups. The has displayed little progress in social and economic historically strong crossborder trade in the Lake Chad development, with areas around the lake trailing behind region was disrupted by the Boko Haram insurgency, the rest of the basin countries in terms of poverty which has become a source of social division in the reduction, human capital indicators, and economic region. The combination of low economic density, and growth. Limited access to basic services as well as to high economic distance and division has contributed to markets, infrastructure, and economic opportunities— prevent the region from realizing its potential as a diverse particularly for youth, women and vulnerable groups— and vibrant agricultural and commerce hub, strategically has rendered people unable to accumulate and use assets placed within West-Central Africa, and to lay down productively. At the same time, the region has been foundations toward its structural transformation. stricken by violent conflict and harsh climatic variations. This intersection is at the heart of this memorandum, Violent conflict and climatic change are aggravating which poses that the lag in territorial development is the region’s territorial development challenges. The as much an outcome as a driver of FCV. Specifically, findings illustrate the interlocking links between climate the analysis shows how low economic density and high change and economic progress and stability: from the distance and division—the ‘3Ds’—interact with and negative effect of the variability in the level of Lake Chad potentiate conflict and climate change—the ‘2Cs’—in the on population growth and urbanization, to the more region, with negative impacts on development outcomes, recent variations in rainfall, vegetation and droughts in a self-reinforcing cycle. Breaking free from this cycle and their impact on driving violent conflict and regional toward an inclusive and stable growth path requires instability. Areas near the lake have experienced a higher promoting territorial development as well as reducing share of drought than other parts of the basin countries, systemic risks, strengthening governance, and improving putting livelihoods and food security at risk. Droughts service delivery (See Figure 1.1 in Section 1.2). and human activity appear to be contributing to the scarcity of natural resources, which in turn, is a trigger of Longstanding challenges to territorial development conflict, notably among pastoralists and farmers. There partly explain the Lake Chad region’s enduring are signs of a climate-conflict trap, suggested by the poverty and sluggish economic growth. The region is association between climate anomalies—such as rising characterized by low economic density and the absence of temperature, and erratic rainfall—and violent conflict agglomeration economies, where urban areas are growing in the region. The Boko Haram conflict has affected faster, with widening spatial gaps, and a lack of regional agricultural production, limited mobility and hampered convergence. Connectivity gaps in the region are severe, crossborder trade in the basin. In addition, the conflict particularly in rural areas, which limit people’s access has aggravated social exclusion, curtailing access to to markets and higher-quality jobs. The variability in services and income-generating opportunities, and driven the water level of Lake Chad—whose surface decreased the forced displacement of people. The economic impacts significantly between the 1960s and mid-1990s but has are not limited to the areas directly impacted but have 52 1.6 Policy Options Part I: Overview of the Lake Chad Regional Economic Memorandum spilled over to neighboring regions. The memorandum complement connective infrastructure. Improvements in shows that less well-connected and developed urban areas transfer systems and local capacity can help strengthen are more affected by the conflict. This underlines the self- the provision of local infrastructure and services. Easing reinforcing link between economic geography challenges, the movement of goods and labor by reducing trade and conflict and suboptimal development outcomes. Policies information barriers can help facilitate trade. By building with the potential to improve territorial development social cohesion, increased citizen participation can help and reduce conflict and the impact of climate variations restore government presence. And, coordinated resource can help break the vicious loop that is making the region management, information and technology transfer can diverge from its long-term potential. help reduce divisions. In this context, there are several policy implications A third implication is that the needed interventions that this memorandum offers. First, as an overarching must generate a ‘big push’, strong enough to alter the matter, it is urgent to address insecurity and conflict existing dynamics in the region. Marginal interventions and restore the rule of law in the Lake Chad region. are unlikely to break or revert the self-reinforcing cycle Notwithstanding progress, violent conflict and insecurity that has kept the Lake Chad region in a suboptimal continue to undermine the stability for the inhabitants equilibrium. It is not that measures that go in the right of the region, and impede advancement in other direction will not have a positive impact on development development areas. Concerted and bold efforts are needed outcomes, but rather, that these single interventions to secure peace as a first step to inclusive and sustainable would be limited in what they can achieve given the growth. complexity of the challenges involved.173 A second implication of the analysis is that for the Fourth, it is important to identify entry points, Lake Chad region to escape its vicious cycle of weak or policy levers, that can help break or revert the territorial development and fragility, actions on several cycle of weak territorial development and climate fronts will be required. Looking for a single action or change and conflict. Breaking this cycle will require policy to act as an engine of security and development a concentrated focus on improved natural resource is insufficient. Addressing the challenges emerging from management and strengthened governance to reduce territorial development and leaving aside those related the high social and economic costs imposed by climate to FCV would risk maintaining the status quo. This is change and conflict. Interventions aimed at mitigating not to say that a single policy implemented in isolation the negative effects of climatic risks can reduce the stress will not have a positive development impact. Yet, when over the primary sector and other economic activities, the objective is to dramatically alter the development but also reduce potential conflicts between pastoralists dynamics in the Lake Chad region, a holistic and and farmers over diminishing land and water resources. coordinated effort along different fronts has the most These policies, coupled with interventions aimed at potential. In this context, a multisectoral approach improving governance and service delivery in the region, for policy implementation, that uses complementary can further reduce conflict and fragility to enhance interventions, is needed to address the interaction between economic prospects and improve the credibility and climate change, violence, and laggardness. For example, legitimacy of governments in the region. The poor stand investments in local public goods and services can to gain the most from a reduction in conflict since they 173 This is also well anchored in the World Bank’s Crisis Response to COVID-19 and Climate Change, which, as discussed in the Development Committee Paper, lays out a broad framework for supporting green, resilient, and inclusive development (GRID) in IDA and IBRD countries. Integrated, longer-horizon GRID strategies are needed to repair the structural damage caused by COVID-19 and accelerate climate change mitigation and adaption efforts while restoring momentum on poverty reduction and shared prosperity. 1.6 Policy Options 53 Lake Chad Regional Economic Memorandum  |  Development for Peace are often the victims. Less conflict implies reductions in The level at which policies are designed and production costs, decreasing spending associated with implemented matters, as well as the understanding protection and elevated transportation costs. A reduction of the institutional function they are serving. The in violence would also create stronger value chains, implementation of the following policy options would potentially contributing to an increase in trade and open benefit from taking into consideration whether they space for other areas of economic activity to grow. It are to be designed and implemented at the regional, would also reduce out-migration from the Lake Chad national, subnational, or community levels. Actions with region and incentivize migrants and displaced people to potential to enhance security, trade, and natural resource return and invest. These policies can lead to an increase management (land, water, climate change) require in productivity for farmers, herders, fisherfolk, and regional coordination and cooperation. On other hand, micro and small enterprises, leading to overall territorial while investments in human capital can have positive development. spillovers onto neighboring regions, improving service delivery and social protection mainly requires robust The policy discussion, next, is organized around policies at the national and local levels (that can also help four crosscutting policy areas: infrastructure, trade, strengthen each country’s social contract). Considering governance, and natural resource management. Policies the different agents and tractions at play, including at the and programs across these four dimensions, which are subnational level, are also key to define whether policies grounded in the analytical framework174, would help would be better implemented through a top-down or strengthen territorial development and reduce FCV, bottom-up approach. It is also useful to consider the three thus helping the region to break free from its current core functions of institutions—and the challenges they low-growth and high-poverty trap. First, investing in address—that can ensure that rules and resources yield the infrastructure can help close connectivity gaps in the desired outcomes, notably: commitment, coordination Lake Chad region, leading to higher productivity and and cooperation (Box 1.1). Under this lens, security better-quality jobs, particularly in rural areas. Second, could be viewed as a commitment problem, requiring enhanced trade and regional integration are associated the appropriate incentives whereby all parties stand to with stronger agricultural value chains, higher incomes, lose if they default on an agreed arrangement. Improved improved food security, and greater stability. Third, coordination between subnational governments— enhancing governance at the local, national, and regional building on the region’s crossborder ties—could help levels is crucial to strengthen the rule of law which is facilitate trade, potentially leading to a better equilibrium needed to mitigate the devastating effects of violent for all parties. The sustainable management of natural conflict on lives and livelihoods and to ensure the resources in Lake Chad and climate change mitigation, delivery of quality services (e.g., access to schools, health on the other hand, will likely require explicit cooperation, facilities, electricity, safe water/sanitation) that would with checks and balances, between the four countries. promote social inclusion and reduce divisions. Finally, improved natural resource management, including more effective land and water management practices suited to 1.6.1 Connective Infrastructure local agroecological conditions, would help mitigate the negative impacts of weather shocks, natural hazards, and A strategy to promote economic agglomeration in climate change on productivity and livelihoods. cities in the Lake Chad region would need to consider establishing better links with rural areas. Density, in the form of economic agglomeration and/or urbanization, 174 Which draws elements from the World Bank (2003, 2009, 2010, 2011, 2013b, 2017). 54 1.6 Policy Options Part I: Overview of the Lake Chad Regional Economic Memorandum  hree institutional functions—commitment, coordination, and cooperation—to increase the Box 1.1: T effectiveness of public policies In insecurity settings, commitment is key to reach credible agreements. Commitment is achieved by establishing institutional arrangements that provide sufficient incentives for all key groups to work within the rules. The commitment is credible because all parties stand to lose if anyone reneges on those arrangements. Coordination can also enhance policy effectiveness for security, growth and equity. For investment and innovation, agents must believe that others will also invest. Institutions can help solve market failures by coordinating both the investment decisions and the expectations of participants. Finally, policies to achieve equitable development require cooperation. Among others, cooperation problems are often seen in the provision of public goods or solving environmental concerns related to overexploitation of natural resources. In coordination problems, multiple equilibriums exist, and policy is a matter of helping make the jump to the optimal one. Solving cooperation problems, by contrast, typically requires credible rewards or penalties to prompt actions that lead to the jointly preferred outcome. Enhancing policy effectiveness Designing policies to improve security, growth, and equity also requires understanding the balance of power among different actors. In the presence of powerful actors who can block or undermine policies, optimal policies from a strict economic standpoint (first-best policies) may not be the optimal implementable policies (second-best but feasible). Adopting an implementable second-best design could therefore be more effective than choosing the seemingly first-best but less-feasible policy. Power sharing and resource redistribution can reduce exclusion and the incentives to engage in violence. Just as exclusion may lead to violence, mechanisms that encourage power sharing—such as legislatures that guarantee the representation of all groups—can reduce the incentives to engage in the use of force by raising the benefits of security. Controlling clientelism can help solve problems related to delivering on redistributive policies. In clientelistic settings, the provision of public spending and services is often used for political purposes, for example favoring certain groups, while more vulnerable groups are excluded from resources. Mechanisms that control clientelism can enhance equity and make commitment to long-term objectives credible. Source: Adapted from the World Development Report 2017: Governance and the Law (World Bank 2017). is associated with economies of scale in production and or at least increase their proximity to urban areas. Firms an efficient accumulation of labor and capital, and thus located closer to each other can reduce transaction costs with their potential for economic growth. A large share of and facilitate the exchange of knowledge to improve the rural population in the Lake Chad region, however, productivity, with a higher concentration of jobs. Policy is disconnected from the main road networks, making interventions that improve connectivity between rural it difficult for people to benefit from the agglomeration and urban areas in the Lake Chad region can, in this way, that larger cities offer. Better links with rural areas can promote the growth of cities and reduce marginalization. help low-density areas build up their economic densities Agglomeration in cities would also facilitate public service 1.6 Policy Options 55 Lake Chad Regional Economic Memorandum  |  Development for Peace delivery, presenting possible savings in water, sanitation, previous branch (Ngaoundéré-Garaoua-Maroua). Cost- electricity, and road infrastructure, as well as making it benefit analysis and risk assessments can complement the easier to monitor violence and insecurity, all of which resources and technical expertise necessary to reconstruct are needed to spur economic transformation to boost damaged infrastructure and markets instrumental for re- inclusive growth in the Lake Chad region. launching regional trade. Investing in road infrastructure and connectivity is Investing in digital infrastructure and improving a priority for reducing economic and social distance access to electricity would significantly reduce distance and division. Economic and physical distance hinder and division. As discussed in the report, the Lake Chad the flow of capital, labor, and goods and services. region lags in terms of digital infrastructure, access to Improving connectivity, both within the Lake Chad digital technologies, and access to electricity. Access to region as well as between the region and other areas of electricity, cell phone coverage and broadband internet the respective countries, would improve welfare through infrastructure are drivers of economic growth, with the more income-generating opportunities and better—and potential of higher wages due to the lower costs faced more equitable—service delivery (which can, in turn, by workers and firms, increased earnings of firms and help minimize social divisions). The evidence presented household enterprises, higher consumer surplus derived in this report suggests that access to a paved road is from lower prices, and higher quality of services. Unlocking associated with diversification away from agriculture in private capital and competition to fuel expansion in the Lake Chad region. This is because roads enhance digital and electricity connectivity, particularly in rural access to markets and competition from other locations. areas, hinges on governments building frameworks that Improvements in connectivity can have a catalytic impact promote private sector participation. For instance, public- for improved access to basic services. New investments private partnerships can help engage nonpublic actors to need to take into account existing infrastructure to assume risks and increase the efficiency of infrastructure take advantage of complementarities, and importantly, investments. For digital and electricity services, where making sure that existing roads are safe to travel. cost recovery is possible, it is important to ensure cost- reflective tariffs across the region, and at the same time, A connectivity strategy for the region needs to consider leverage the regulatory capacity of national governments revitalizing damaged infrastructure and markets and (e.g., through competition authorities) to ensure market investing in maintenance and security. Insecurity and contestability and improved service delivery. This is to say poor road infrastructure make up the main impediments that investments in digital and electricity connectivity to trade and transport in the Lake Chad region. need to be accompanied by investments in institutional Revitalizing infrastructure can include the rehabilitation capacity. of roads that provide safe alternative transport routes. Box 1.2 describes an alternative Eastern branch of the Douala- Policies that support urbanization and agglomeration N’Djamena corridor, which has the potential to become a need to take into account associated risks and include more secure route (Ngaoundéré-Koutéré-Moundou) for mitigation measures. By increasing competition, transport operators. To enable this corridor, parts of the urbanization and agglomeration could lead to aggravated road would need to be reconstructed and/or rehabilitated social and communal divisions or entrenching patterns of to ensure that the route can handle a substantial increase exclusion in the short term. In Maiduguri, for example, in traffic—and subsequently be well maintained and the influx of refugees may have contributed to fuel monitored for safety, for which it is important to enhance segregation and communal tensions. Interventions that mechanisms for coordination between local, national, support urbanization and agglomeration could also be and regional agencies. One risk, however, is that once perceived as favoring ‘settled’ farming over nomadic the conflict is mitigated, traffic may not return to the pastoralism. The opportunities and risks of efforts to 56 1.6 Policy Options Part I: Overview of the Lake Chad Regional Economic Memorandum Box 1.2: Alternative routing of the Douala-N’Djamena corridor Almost 80 percent of Chad’s imports enter the country through the Douala-N’Djamena corridor. The deteriorating security situation and attacks by Boko Haram on the Northern segment of the corridor are a serious concern for transport operators, who have explored the use of alternative transport routes to N’Djamena. In particular, a passage that avoids the Far North of Cameroon and runs on Chadian territory has gained interest and traffic. Instead of traversing from Ngaoundéré via Garoua and Maroua to N’Djamena, the alternative route would run from Ngaoundéré East to Koutéré and then continue North to Moundou and N’Djamena (see figure). In 2015 alone approximately 500,000 tons of goods passed through this corridor compared with 40,000 tons through the previous corridor.a Parts of the road still need to be reconstructed or rehabilitated to make this alternative branch capable of handling a substantial increase in traffic, but corresponding preparations and works are in progress. Source: World Bank elaboration using ARCGIS Pro. The new Eastern branch of the Douala-N’Djamena corridor would provide transporters with an alternative, more secure route to ship their goods to N’Djamena. This would help mitigate against the risk of Chad being cut off from international markets by the Boko Haram attacks in the Far North of Cameroon. On the other hand, the re-routing would drain traffic from the Ngaoundéré-Garaoua-Maroua branch, potentially depriving the population along the corridor of business opportunities. And, there is significant risk of a hysteresis effect. Once the risk of Boko Haram is mitigated and the Far North of Cameroon is safe again, it is unclear that all previous traffic would return to the Ngaoundéré-Garaoua-Maroua branch. The long-term effects of the emergency development of the Ngaoundéré-Koutéré-Moundou branch thus need to be assessed and mitigated to prevent the risk of further economic depression and isolation in the region. Source: Walkenhorst 2021, technical paper for this report. 1.6 Policy Options 57 Lake Chad Regional Economic Memorandum  |  Development for Peace concentrate higher economic density of labor and capital markets, especially near or at borders that are instrumental may play out differently across time, with the benefits of for re-launching regional trade in the medium term. agglomeration being realized in the longer term. While complex to implement, another aspect that could bear benefits is contributing to ensure that local security forces enable roads that are passable to work properly as a 1.6.2 Trade Facilitation route for the transport of goods, without excessive police roadblocks or red tape. Improved customs operations The effectiveness and efficiency of economic and trade is key to revitalize long-distance trade corridors. In the measures intended to counter Boko Haram must be immediate term, however, borders are closed, transport regularly assessed, including at the regional level, as routes have been abandoned, and several markets have these measures often affect the livelihoods of export been disrupted or closed. In this context, it is important producers and traders. This includes considering ways to to provide support for communities that have been allow gradual and safe access to parts of Lake Chad to renew deprived of their traditional export production so that fishing and fish trading, and opening borders. Another they can support infrastructure rehabilitation efforts. important step is to re-evaluate the current restrictions on movement and access to farmland, balancing the need to A key step to recover regional trade is facilitating contain and suppress Boko Haram with the desirability to crossborder trade between the Economic Community restart the local economy. Leveraging spatial data would of West African States (ECOWAS) and Central African help in this regard. Crossborder agricultural trade can be a Economic and Monetary Community (CEMAC) source of food security and resilience, where weather-and members, taking advantage of the opportunities insecurity-patterns are not neatly confined to national offered in implementing the newly signed the Africa borders, and often the closest source of food supply is Continental Free Trade Area (AfCFTA). The four Lake across a border. Given the urgency to boost food security Chad countries are members of different regional trading and restore commercial ties in the wake of COVID-19, blocs: Cameroon and Chad are members of CEMAC it would be important that initiatives aimed at boosting and CEEAC (Economic Community of Central African trade build on the strong informal crossborder trade States), while Niger and Nigeria are part of ECOWAS. practices. Historic ties binding the region are a potential This means that trade is not duty-free between the strength. Elements in the policy levers of trade could two blocs and trade regulations are not harmonized. leverage the resilience of trade networks in the region— For example, the import tariffs applied by Cameroon family relationships, connected border communities, and are generally higher than those charged on imports local alliances—and be designed with a view to better into Niger and Nigeria. Differences in tariff and taxes leverage this social capital (the same could also be applied create incentives for trade diversion and smuggling. in terms of natural resource management). In addition, The recent signing of the AfCFTA agreement and its an aim to manage the crisis, minimizing the potential implementation would eliminate tariffs within the region for additional harm, can benefit from considering short, and offer the opportunity to align other policies. Gains medium, and longer-term priorities. from trade facilitation, in particular, the reduction of nontariff barriers under the AfCFTA are expected to be Functional roads and markets are instrumental to large.175 Trade facilitation and integration measures in recover regional trade and contribute to close divisions. the Lake Chad region could involve, among others, the There is a strong case to focus resources and technical visa-free movement of persons as well as the exemption expertise on reconstructing damaged infrastructure and for agricultural and livestock products and handicrafts 175 See World Bank (2020a). 58 1.6 Policy Options Part I: Overview of the Lake Chad Regional Economic Memorandum of the requirement to be accompanied by a certificate 1.6.3 Governance of origin.176 Complementary trade facilitation measures would also enhance the benefits of transport corridors. Restoring a positive state presence in the Lake Chad For example, reduced border frictions (smaller transport region is paramount. Improving the delivery of basic waiting times) would have positive economic effects, as public services is a foundational aspect of restoring state shown in this report, including positive spillover effects presence, not only because of the need for basic services on nearby countries. but as a cornerstone to start rebuilding government legitimacy in the region. Improved accountability Investing in economic infrastructure to support the and transparency of state structures are also necessary collection of data on economic activity and trade can to rebuild government legitimacy, which can help provide policymakers with a better information base. improve—and sustain—security in the area. Addressing More and better data on traded quantities in markets and the attrition of public institutions can provide a better the sources of supplies could be collected and monitored, foundation for peace than a focus on a rapid exit from as well as more comprehensive and consistent market price asymmetric conflict. Strengthened institutions that can data than those currently available. Novel data gathering create incentives both to reach agreements and to enforce techniques (e.g., remote sensing, border surveys, cell them can create the foundations for peace and stability.178 phone data records) would help better understand the Promoting inclusive decision-making processes at the complexity of trade and smuggling in the Lake Chad local level can help increase the participation of citizens region, and how these are evolving. Priorities in this in the development of their communities, which can regard include improving the collection of information also increase legitimacy and the sustainability of efforts. along points of entry/exit and trade routes, for instance In some cases, effective state presence may also imply by attaching geospatial data (locations, roads) to customs striking a balance between governments’ decentralization declarations, intelligence reports, and fraud cases. processes while strengthening local governments to ensure they have the sufficient capacity to carry out their Having substantive input from borderland functions. communities for economic development strategies, including trade, can help with the sustainability of Increasing the opportunity cost of engaging in violence efforts. Research suggests that strict border controls and providing economic opportunities to younger negatively affect borderland communities, increasing populations is needed to mitigate conflict. Engagement unemployment, crime, and outmigration.177 Rather than in decision-making structures can contribute to reduce relying solely on security institutions as the dominant state youth vulnerability and exclusion, while better economic representatives in borderlands, border security practices opportunities can discourage engaging in violence by can benefit from increased participatory local governance increasing the relative opportunity cost of fighting. and state-sponsored people-to-people dialogue at the This report shows that droughts and abnormally high border. temperatures correlate with higher incidence of conflict possibly by lowering the opportunity cost of fighting. It is therefore crucial to provide alternative sources of livelihoods to people living in areas struck by heatwaves and droughts. In some cases, encouraging migration to 176 These measures are already part of the ECOWAS Trade Liberalization Scheme and could possibly be applied at ECOWAS-CEMAC borders on a reciprocal basis. 177 Ayadi et al. (2014). 178 United Nations and World Bank (2018). 1.6 Policy Options 59 Lake Chad Regional Economic Memorandum  |  Development for Peace urban or more fertile areas could be applicable (where institutions; fostering community-level reconciliation recipient areas, with basic service provision and income- and the establishment of institutional mechanisms for generating opportunities in place, have the potential to conflict resolution, in addition to the disarmament, absorb migrants). demobilization, de-radicalization and reintegration of ex- insurgents. Another key aspect to mitigate the violent conflict is to restore social cohesion and trust between citizens Investments in both local government capacity and and the state, as well as between communities. The community voice in the Lake Chad region hold great Boko Haram insurgency in the region has led to the potential to improve the quality and inclusiveness disruption of social bonds, the decline of social capital of service delivery, as well as government legitimacy. and the erosion of the social contract. Growing distrust, Strengthening state authority and institutional capacity, fear and anger toward people of different ethnic, religious with adequate financial and human resources, to enhance and political persuasion and geographical origin, as well the scope and improving the quality of social service as toward those suspected of any association with the delivery at the local level is a key element of restoring the insurgency are being reflected in everyday life—such as social contract.183 Restoring state presence also implies in the avoidance of previously used markets.179 Social responding to the root causes of the insurgency—such as divisions are also frequent among displaced people, who through the provision of quality services in areas where face barriers to integrate into local communities. There is there were no public services before—as well as taking evidence of discrimination and limited access to services advantage of new opportunities, such as formalizing the (education, health care, social assistance, and access to new markets provided by new population concentrations. land and livelihoods) in the region, including in urban Real and perceived state neglect and grievances related to areas that have grown rapidly and unplanned as a result the exclusion of certain regions or groups from services of this displacement.180 In parallel to the disruption of and opportunities can be important drivers of conflict social bonds, the population has also lost confidence in and violence.184 In such contexts, how investments and the government’s capacity to take effective public action, services are delivered matters just as much as what is further eroding the social contract.181 Both social divisions delivered. A key aspect to the sustainable repair of social and loss of confidence in the government contribute to division in Lake Chad is ensuring equity in the provision fuel the ongoing conflict. of public infrastructure and services and employment opportunities by balancing social diversity. Addressing Participatory and inclusive approaches can maximize existing imbalances in access (distance) to services, markets the conditions to repair social divisions.182 Supporting and economic opportunities across different socio- joint social, planning, and development initiatives economic and demographic groups (division) can have between displaced and host communities can help reduce significant implications on employment, poverty and stigma and mistrust. Locally specific projects—that take welfare. Community-driven development mechanisms into account the circumstances of vulnerable groups— can also be a useful step toward repairing service delivery and conflict-sensitive programming help mitigate further in remote, conflict-affected regions where the state is violence. Well-known and trusted strategies to rebuild absent and/or lacks capacity. social capital include supporting and rebuilding local 179 UNHCR and World Bank (2016). 180 UNHCR and World Bank (2016). 181 Magrin and Perouse de Montclos (2018). 182 UNHCR and World Bank (2016). 183 UNHCR and World Bank (2016). 184 United Nations and World Bank (2018). 60 1.6 Policy Options Part I: Overview of the Lake Chad Regional Economic Memorandum Institutions and social relations (including between rural electrification, taking advantage of solar energy the government and the governed) need to be rebuilt where possible.188 Other priority activities include alongside physical infrastructure, with the engagement education adapted to mobile populations and health of local communities. Greater engagement of citizens initiatives, such as local health stations; construction in planning, budgeting and service delivery can help of regional hospitals, epidemics prevention, and family promote accountability and transparency. Ensuring planning support.189 that historically marginalized groups are represented in discussions on local development decisions would help Improved governance and transparency can contribute address existing divisions, instead of entrenching them. to garner local resources toward public investment. Local governments have a crucial role to play. Central The decline in oil revenues in addition to the negative governments can help create conditions for effective impact from the violent conflict and climate change have local governance, including through the transfer of weakened resources in the region, already experiencing responsibilities and regular financial resources to local weak fiscal management. In addition to support from the governments, and through a more efficient distribution international community, local resources can contribute of roles between local government and government to the sustainability of recovery efforts. Strengthened agencies.185 The consolidation of oversight and check- governance and the provision of services can improve and-balance mechanisms, at both central and local levels, government legitimacy, encouraging citizens to support can help reduce corruption and improve the quality of local development through cofinancing and the joint public services. More transparent and more legitimate management of local investments and the payment of local governments can also be more accountable for their local taxes. budgets and activities.186 Enhancing fiscal space can help support social Public investment in core infrastructure and basic protection efforts. Social protection is important to public services can be an engine for inclusive growth. addressing the need of inhabitants living in poverty. In Evidence from this report shows that access to electricity parallel to creating fiscal space to support social safety in the Lake Chad region is lower than in the rest of the nets (see Box 1.3), priorities for social protection include respective countries, and the gap is widening both for establishing a fiscally sustainable social assistance system access to improved sanitation and electricity. The lack of and leveraging existing partner-financed programs. quality infrastructure and basic public services makes the This could be achieved through better channeling fiscal Lake Chad region less competitive and an unattractive revenues; strengthening coordination and alignment destination for firm entry and job seekers. The low level of across the regional, federal, state, and local levels (for service provision is further compounded by the conflict, example, by leveraging data collection efforts, including which has driven people away from the region. Investing registry databases); building local capacity for program in core services and infrastructure—including, but not delivery; and developing a common delivery platform limited to, roads, water and sanitation services, and digital for programs implemented by different ministries and technology—is critical to unleashing the agglomeration agencies and at different levels of government. Well- potential of the region.187 Public investments can improve designed targeted safety net programs could address the rural and urban water supply and sanitation, as well the specific vulnerabilities of excluded groups, such 185 Magrin and Perouse de Montclos (2018). 186 Magrin and Perouse de Montclos (2018). 187 World Bank (2003). 188 LCBC (2015). 189 LCBC (2015). 1.6 Policy Options 61 Lake Chad Regional Economic Memorandum  |  Development for Peace as adolescent girls out of school, youth, and newly challenges and opportunities of the Lake Chad region poor affected by violent conflict and climate change. remain inadequately studied and are most often looked In the context of the Lake Chad region, improving at through a national lens, whereas effective and the performance of social assistance programs would durable solutions tend to be regional and spatial. Data require specific design and implementation efforts collection and analysis are insufficiently harmonized and to gather and use credible, up-to-date, and relevant coordinated, and subnational data on key socioeconomic information to deliver well-targeted benefits, as well as and governance aspects are often lacking. Backing existing to link cash-transfer and youth employment programs regional initiatives that support better access and quality with other programs for nutrition, education and life of development data, local research capacity, and regional skills, and health services, including at the community policy dialogue would promote evidence-based policy level. Complementarity between health and education making. services and social protection can enhance the impact of interventions. For example, health care, education, and Given the shared and interlinked challenges and social protection services that are effectively combined opportunities across boundaries in the region, can serve as a stepping stone for rapid and successful coordinated approaches and regional bodies can urbanization.190 enable the emergence of a common vision for the development and stability of Lake Chad. Shared Subnational governments are responsible for delivering strategies, with equitable cost-sharing, hold great basic services; yet, they are highly dependent on fiscal potential to address the interlinked security, economic transfers from the national governments to finance and climatic challenges in the lake basin. Under the these services. Box 1.3 shows the case of Nigeria. At the supervision of the African Union (AU), two regional national level, Nigeria, like the other three countries of consortia have been tasked with counterinsurgency and the Lake Chad region, struggles to mobilize domestic regional development, and made mutually accountable. revenues. As a result, there are limited resources to On the security side, the Multinational Joint Task Force transfer to subnational governments. Moreover, because was authorized by the African Union to combat Boko Nigeria depends on volatile oil revenues, fiscal transfers Haram in 2014, under the civilian oversight of the Lake to local governments tend to be not only low but also Chad Basin Commission (LCBC) (see Box 1.3).191 On unstable, to the detriment of basic services. Mobilizing the development side, the LCBC was initially formed domestic revenues and advancing fiscal decentralization, in 1964 to oversee and coordinate national decisions underpinned by enhanced public financial management, affecting the shared transboundary water resources—the is thus a critical priority for national and subnational lake, its tributaries and groundwaters. It was later tasked governments in the region. with security oversight, hence its supervision of the Multinational Joint Task Force today. Given the region’s Investing in data collection and analysis is a tense political economy and history of fractious inter- recommendation that cuts across all policy areas. state relations, translating the aims of these two regional This report highlights the value of data and analysis to institutions into reality is a work in progress. Coordinated inform policy making and development programming, and jointly executed action—for example, border especially disaggregated data that highlight differences cooperation—remains one of the main cornerstones for across groups and territories and that help identify stabilization and economic recovery. patterns of social marginalization and exclusion. The 190 World Bank (2009). 191 Eight member states are represented in the LCBC: Algeria, Cameroon, the Central African Republic, Chad, Libya, Niger, Nigeria, and Sudan. Parties commit to a shared use of the basin's natural resources. 62 1.6 Policy Options Part I: Overview of the Lake Chad Regional Economic Memorandum  he importance of fiscal transfers for subnational governments in the Lake Chad region: the Box 1.3: T case of Nigeria State governments in Nigeria are responsible for basic service delivery. Together with their respective local governments (774 in total), the 36 Nigerian state governments are responsible for basic education, as well as adult and vocational education, health services, agricultural development, and basic physical infrastructure (sanitation, roads, and other public facilities). The majority of revenues received by the Nigerian state governments (about 70 percent in 2018–2019) come from federally collected oil and nonoil revenues, distributed based on a formula. These revenues originate from customs, corporate taxes, and value-added taxes. They are distributed based on a revenue-sharing formula across the three tiers of government (federal, state, and local). These ‘gross statutory allocations’ are often volatile due the dependence on oil-revenues, which are sensitive to global price fluctuations. States can collect internally generated revenues, which include personal income, property, and road taxes, as well as other fees and levies. These internally generated revenues contribute, on average, about 30 percent of states’ government revenue envelope. States can also borrow, including externally, with a federal government guarantee. Adamawa, Borno, and Yobe—the three Nigerian Figure B1.3.1: N  igerian states in the Lake Chad states in the Lake Chad region—have below-average region have lower revenues and expenditures per person than the total revenues per person, depending thus heavily average Nigeria state on revenue transfers from the federal government. Revenues and expenditures, US$ per capita, 2019 These three states collect less than half the national 70– 66 average in independently generated revenues per 60– 61 capita. As a result, they are more dependent on federal 50– revenue transfers than the national average. Borno, 51 for example, relies on federal transfers for more than 40– 43 80 percent of its revenues. The total annual revenue 30– per capita is equivalent to US$34 in Borno, US$43 20– in Adamawa, and US$52 in Yobe. These figures are between 16–45 percent below the Nigerian 10– state average of about US$60. Consequently, Yobe, 0– Revenue per capita Expenditure per capita Adamawa, and Borno have below-average public J Lake Chad states J All 36 states spending per capita despite the high development Source: World Bank calculations based on data from Nigerian authorities. needs and security issues in these states. A weighted average nondebt public spending per person across Nigerian state government (excluding local governments due to lack of data) is US$66 per year (2019). In contrast, per capita spending in Adamawa (US$49) and Borno (US$40) is well below the national average. The budgetary state spending in Yobe, at US$64 per person per year, comes just below the national average. Insecurity in the Lake Chad states in Nigeria is potentially influencing the composition of state public spending. Yobe, Adamawa and Borno allocated relatively more budgetary resources to recurrent spending components. Although the three states allocated a relatively higher proportion of their scarce budget resources to education and health in 2021 than the average state in Nigeria, they also allocated below average resources for expenditures 1.6 Policy Options 63 Lake Chad Regional Economic Memorandum  |  Development for Peace Box 1.3 continued in the economic affairs segment (which includes agriculture, transport, and other core physical development components), which may undermine their long term economic growth prospects. All Lake Chad states are making efforts to improve their fiscal sustainability. Notably, they are participating in the Federal Government’s States Fiscal Transparency, Accountability, and Sustainability Program for Results, which is supported by the World Bank. This program rewards (through grants) substantive improvements in states’ fiscal and financial management, including revenue and debt management, procurement, and citizen engagement. In fact, Yobe is the top performer across all 36 participating states in Nigeria since the inception of the program, achieving the highest results. All three Lake Chad states also achieved the new COVID-responsive results introduced in 2020 to help marshal fiscal resources to the states amidst the pandemic. 1.6.4 Natural Resource Management Expanding support for producers—in the forms of credit, inputs, extension services as well as investment Strengthening the sustainability of food systems is in infrastructure—is essential to the productivity and a priority. Interventions at the regional level can help resilience of food production systems.194 In addition, strengthen the capacity of food systems to ensure food securing the access of vulnerable populations to land, security. Three areas of focus, identified by a World Bank pasture, and fishing resources (in an inclusive way, and FAO report on West Africa, refer to strengthening promoting coexistence with other producers in the area) the sustainability of the food system’s productive base; can prevent conflict and enable intensification. At the promoting an enabling environment for intraregional same time, initiatives to support agricultural production value chain development and trade facilitation; and may benefit from explicitly recognizing the coexistence of enhancing regional risk management architecture and different—and, at times, competing production models— farmer decision support tools.192 On this last element, such as those of farmers and herders. Agriculture is not risk management tools—such as improved information a homogeneous sector, and understanding the potential and crop and rainfall insurance—can help people tensions between modes of production can shed light on mitigate risks.193 This ability, in turn, can allow people, a core issue of conflict dynamics. particularly the poor, to be more willing to take on risk in search of higher yields and productivity. At the same Securing land rights in the Lake Chad region may time, social protection programs and safety nets can help enhance productivity as well as stability in the help reduce target populations’ vulnerability in hotspot region. The formalization of land rights has the potential areas. Notwithstanding the importance of these tools, the to improve agricultural productivity by incentivizing implementation of these interventions in the Lake Chad farmers to make long term investments.195 Formalizing region needs to be evaluated in the context of limited land ownership may also help reduce friction and conflict fiscal space and considering the time dimension, as well between farmers, pastoralists and fishers vying for limited as—in the case of safety net programs—their potential access to land and water resources in and around the lake implications and interactions relative to the armed basin. This can be particularly important in a context conflict. where increasingly erratic climate has introduced a greater 192 World Bank and FAO (2021). 193 World Bank (2013b). 194 LCBC (2015). 195 World Bank and FAO (2021). 64 1.6 Policy Options Part I: Overview of the Lake Chad Regional Economic Memorandum degree of uncertainty to the availability of such land and matching mechanism between farmers and agricultural water resources.196 inputs adapted to their climatic and social context.198 Setting up a knowledge dissemination campaign in local There are substantial expected gains from context- languages can raise awareness among local producers of specific natural resource management interventions the potential climatic risks and novel agricultural inputs that take into account the specific circumstances of and techniques available.199 a given population or territory. A key aspect of these interventions is taking into account the cases for which Preventive rather than reactionary policies can more place-based policies—i.e. territorial development—are successfully mitigate risks stemming from climate likely to have a positive outcome, and in which cases change and build local adaptive capacity. Shifting people-based policies—more focused on efforts in urban from ex-post responses to proactive, ex-ante, sustained, areas to better absorb migrants—can be a better alternative. and integrated risk management is no easy feat. Yet, it In the case of the latter, coordinated efforts to strengthen is well documented that the benefits of proactive actions services and employment opportunities in urban areas far outweigh the cost of “risk inaction.” Facilitating an can help ensure that poverty is not merely being displaced environment for coordinated action and risk-sharing in from rural to urban areas. In the case of the former, efforts the region can enable this process while ensuring that to support producers, including vulnerable groups, vulnerable stakeholders are not overlooked. Knowledge considering local tensions and dynamics can bring about sharing and dissemination can help reduce the sustainable productivity improvements, as mentioned uncertainties faced by people living near Lake Chad, for above. Context-specific discussions are thus essential to example, by setting up a regional early warning system inform effective natural resource management. to better cope with natural disasters, such as floods and droughts.200 Overreliance in reactionary policies Investing in sustainable agricultural management discourages investments in adaptive capacity across through technological innovations can help increase poorer households, making them more vulnerable to output and harness existing natural resources. future climate-related shocks, perpetuating the current Technology and innovation can reduce climate conflict-poverty trap. uncertainty among farmers and enable better decision- making, increase yields and reduce waste.197 The optimal Water stress and climate vulnerability validate the use of natural resources driven by technology can be key continued engagement of the LCBC on shared water in reducing environmental degradation and mitigating management, while enhanced participation may be risks stemming from volatile temperature and water needed. Development partners can invest strategically levels. The support from governments in the Lake and ensure a higher standard of donor coordination and Chad region to facilitate this transfer of technology, in harmonization at the regional and basin level, particularly tangent with the international community, can help as climate finance increasingly comes into play (Box 1.4). enable vulnerable populations to benefit from access Member states actively promote and seek funding for to technology. Efforts could include bringing together regional infrastructure for an interbasin transfer, yet lag agricultural research centers and setting up an optimal on the more basic levels of regional cooperation. External 196 See more discussion on the linkage between land rights (or lack thereof ) and conflict in the Lake Chad Basin: https://climate-diplomacy.org/case-studies/ local-conflicts-over-resources-around-lake-chad. 197 World Bank (2019b). 198 LCBC (2020). 199 LCBC (2020). 200 LCBC (2020). 1.6 Policy Options 65 Lake Chad Regional Economic Memorandum  |  Development for Peace support needs to follow the logic of domestic incentives, commitment at the highest level. The priorities identified and design aid so that it promotes—when possible— in this Regional Economic Memorandum seek to help long-term development and conservation focusing on guide policy for breaking this cycle and bridging the gap the southern tributaries of the lake. Examples from other between potentials and actuals. regions suggest that technical cooperation can, in the long run, incentivize member states to take water cooperation more seriously. Strengthening the administrative and institutional capacity of the LCBC could help the organization more effectively manage water resources and climate- response policies. An insufficient clarity of roles and competencies, as well as a lack of investment and interest by member states, emerge as some of the current institutional constraints faced by the commission and the Multinational Joint Task Force (see Box 1.4).201 Enhancing the operational capacity of the LCBC could include regular meetings, data- and information-sharing, and sustainable financing. Establishing viable systems for information and data collection and exchange may pave the way for gradual buy-in and trust-building in the future. Reliable data and hydrological modeling are an urgent concern, especially as plans for major infrastructure works, including those for an interbasin transfer remain on the agenda. National statistical offices could facilitate the standardization of agricultural data collection and set up a readably available database that feeds into early warning forecasting models. The Lake Chad region has vast development potential; unlocking this potential will foster the creation of greater opportunities for its citizens. The region has a young population, is rich in natural resources, and in the past has seen important trade flows. Yet, it is also a region facing long-term and pressing challenges, particularly a self-reinforcing vicious cycle between suboptimal territorial development and FCV. Throughout discussions with stakeholders in the region, there was broad consensus on the need to break the cycle. Doing so will require sustained implementation of a holistic agenda and thus broad societal consensus and a long-term political 201 Assanvo, Abatan, and Sawadogo (2016); Galeazzi et al. (2017). 66 1.6 Policy Options Part I: Overview of the Lake Chad Regional Economic Memorandum Box 1.4: Transboundary water management in Lake Chad Transboundary water management may serve to consolidate regional interests and prevent resource-related tensions from turning violent. In the Lake Chad region, effective water management of the lake and its tributaries can help foster greater coordination among the four basin countries. While the Lake Chad Basin Commission (LCBC) has thus far prevented nonconsensual action by a member state, such as upriver damming, it scores relatively low among other African transboundary water agreements. The efficacy score is based on the degree of transboundary cooperation, or water cooperation quotient, an indicator combining criteria, such as the existence of river basin agreements, a river basin authority, current and planned investment in water infrastructure, political commitment, economic cooperation, and so forth.a As assessed by the Strategic Foresight Group (2017), Senegal, the Gambia, and the Niger river basins ranked highest, meeting 100 percent of the criteria, among 231 transboundary watercourses. In contrast, the LCBC scored 53 percent. The LCBC was initially formed in 1964 to oversee and coordinate national decisions affecting the shared transboundary water resources, including the lake, its tributaries, and groundwaters. Eight member states are represented in the LCBC: Algeria, Cameroon, the Central African Republic, Chad, Libya, Niger, Nigeria, and Sudan. Parties commit to shared use of the basin's natural resources. The multidonor joint fund, the Sahel Alliance, has undertaken an economic recovery program covering conflict-affected regions of the Lake Chad Basin, though most of its investments are concentrated in the Western Sahel. The Lake Chad Basin Authority’s charter was developed in 2012 to foster the shared management and sustainable exploitation of Lake Chad. As with other progressive water agreements and regional charters, it has not yet entered into force. In 2015, faced with increasing and new forms of insecurity and the absence of a dedicated regional bloc, the LCBC’s mandate increased to include oversight of regional security cooperation through the task force. Yet, in its transboundary water management capacity, LCBC’s leverage over member state interests to deliver coordinated water management is limited. The performance of LCBC is mixed not least because mechanisms and tools to monitor and control the use of water resources are not fully operational. This partly derives from the insufficient clarity of roles and competencies, but also from an apparent lack of political interest and investment among member states. The main players, including Nigeria, have invested some political capital in the organization, but tend to favor more politically visible interventions. For example, the massive proposed transnational inter-basin investment to transfer water from the Congo River Basin to Lake Chad is favored over structural interventions to address the environmental decline and agricultural transformation in the wider basin area, particularly around the southern tributaries of the lake. While technically feasible, the massive infrastructure project is estimated to have an extremely high cost. It has been criticized for potential adverse effects on the ecosystems of both basins as well as possible negative effects on the flow of the Congo basin. 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Appendix 77 Lake Chad Regional Economic Memorandum  |  Development for Peace Table A1.1: Socioeconomic Outcomes in the Lake Chad Region and Other Regions Cameroon Chad Niger Nigeria Lake Chad Lake Chad Lake Chad Lake Chad National National National National country country country country Rest of Rest of Rest of Rest of region region region region Poverty and Human Capital (percent) Poverty 26.0 18.8 58.8 38.1 39.8 30.7 45.4 43.4 51.6 39.1 37.7 72.3 Literacy (15+) 77.8 83.7 47.1 41.6 45.5 21.0 33.0 32.8 34.0 71.9 72.4 58.7 Primary Completion 72.3 79.0 39.4 29.5 32.8 12.2 25.4 27.8 17.4 78.2 79.0 60.0 (14–25) Child stunting 28.9 26.9 37.3 39.9 37.0 51.0 43.9 41.7 52.2 36.8 35.8 48.0 Employment (percent) Agriculture 45.9 39.0 78.0 76.2 77.0 72.2 74.7 75.5 68.5 43.2 42.2 43.2 Industry 15.6 17.1 8.7 7.0 6.9 10.2 7.9 7.2 7.5 9.4 9.5 9.4 Service 31.0 35.3 10.9 13.6 12.8 17.0 15.6 15.2 20.4 37.1 37.7 37.1 Access to Public Services (percent) Piped Water 35.6 39.6 14.8 15.9 16.4 13.8 31.8 34.7 23.5 11.2 10.4 20.7 Improved Sanitation 61.1 66.9 30.8 14.1 16.2 5.7 24.8 28.5 14.3 56.3 56.4 55.1 Electricity 62.2 70.4 19.6 7.7 9.0 2.4 14.4 16.0 10.0 59.4 61.3 38.4 Source: World Bank calculations based on data of the national authorities. Note: Data on education (literacy and primary education), and employment are based on the latest household surveys conducted in Cameroon (2014), Chad (2018), Niger (2018), and Nigeria (2018). Job category by industry includes only working-age individuals (ages 15–65). Data on poverty are based on the latest harmonized household surveys conducted in Cameroon (2014), Chad (2011), Niger (2014), and Nigeria (2018). Poverty rates are based on the US$1.90 international poverty line (2011 purchasing power parity). Data on child health (child stunting) and access to public services are drawn from the latest Demographic and Health Surveys available in each country: Cameroon (2018), Chad (2018), Niger (2012), and Nigeria (2018). Rest of country = outside the Lake Chad region; LCB = within the Lake Chad Basin region. 78 Appendix Part I: Overview of the Lake Chad Regional Economic Memorandum nfrastructure Investment Scenarios Appendix 1.B: I Explored in the Technical Paper “Infrastructure and Structural Change in the Lake Chad Region” New transport infrastructure in the Lake Chad region New rail line in Cameroon:  The renovation of the rail line between Ngaoundéré, Yaoundé and Douala in Cameroon is going through several steps. The World Bank participates in the financing of the southern part of the project for the segment between Douala and Yaoundé, while the EU and European Investment Bank finance the northern part. We assume that the two rehabilitations will happen at the same time; so we consider the whole segment. The government is currently planning to renovate the most used segment between Yaoundé and Douala, the condition of which has deteriorated in the last years. The northern segment between Ngaoundéré and Yaoundé is the most deteriorated. We assume the speed is low on the whole line in the baseline. New road corridors in Chad:  There are several historical corridors between Cameroon and Chad. Tensions in the Far North Region have closed the corridors passing by the Northern part of Cameroon and opened the possibilities for other corridors to develop. The World Bank is currently assessing the possibility to invest in a new corridor in Chad. The proposed corridor links the capital of Chad with Moudoun, the second most important city in Chad, which increases the relevance of the project as it increases domestic connectivity between the main two cities and the regional/ international connectivity of Moudoun. Complementary policies:  Border frictions We assume that trade across locations from a same country only face transport costs while traders across countries have to wait an additional 30 hours to be able to cross the borders. Give the lack of data, we assume a level of 30 hours by default. In the forthcoming counterfactuals, we add a reduction of half border time to the transport investments. Appendix 79 Lake Chad Regional Economic Memorandum  |  Development for Peace Appendix 1.C: List of Technical Papers Seven original technical papers were produced to inform the preparation of this report. Title: “Socioeconomic Trends in the Lake Chad Region” Authors: Takaaki Masaki (World Bank) and Carlos Rodríguez-Castelán (World Bank) Abstract: This paper offers a descriptive snapshot of recent socioeconomic trends in the Lake Chad region. It finds that areas around the lake exhibit significantly higher poverty rates compared with other parts of the corresponding countries. The region presents chronic human capital deficits, a historical lack of access to basic services and infrastructure, and— particularly since the onset of the crisis—limited access to large markets. The study also highlights how the level of economic density is especially low in the Lake Chad region relative to other areas, while a chronic lack of connective infrastructure (large distance) and perpetuation of conflict (wide divisions) may delay regional economic progress. Title: “Climate Change, Rural Livelihoods, and Urbanization: Evidence from the Permanent Shrinking of Lake Chad” Authors: Remi Jedwab (George Washington University), Federico Haslop (George Washington University), Takaaki Masaki (World Bank), and Carlos Rodríguez-Castelán (World Bank) Abstract: Many of the world’s lakes are disappearing. Despite an extensive literature on the economic consequences of climate change, the economic effects of diminishing lakes have not been widely investigated. We focus on Lake Chad, a vast African lake that lost about 90 percent of its surface area between 1965 and 1985. For Cameroon, Chad, and Niger, we construct a novel dataset tracking total and urban population patterns at a fine spatial level from the 1950s to the 2010s. We then exploit a difference in differences strategy to estimate the causal effects of the shrinking of Lake Chad between the 1960s and the 1990s on nearby communities. We find relatively slower total population growth in the proximity of the lake, but only after the lake started shrinking. We also find nonnegative effects of the lake shrinking on city population growth nearby, which suggests that climate change might induce refugee urbanization locally. Title: “Estimating the Spillover Economic Effects of Foreign Conflict: Evidence from Boko Haram” Authors: Remi Jedwab (George Washington University), Brian Blankespoor (World Bank), Takaaki Masaki (World Bank), and Carlos Rodríguez-Castelán (World Bank) Abstract: What are the spillover effects of foreign terrorism and conflict on regional economies? Adopting a difference in differences framework to leverage the unexpected rise of the Boko Haram insurgency in Nigeria’s North East in 2009, we study its effects in neighboring areas in Cameroon, Chad, and Niger. We find strong negative effects on regional economic activities (proxied by reductions in nighttime lights), particularly among areas within 200 kilometers of the Boko Haram area. Our findings suggest that this negative impact is concentrated in urban areas and is pronounced among those areas that were initially less developed, for example, in infrastructure, and less well connected to other markets (indicating a lack of trade diversification). We also find that the rise of Boko Haram results in more agricultural burning, a local agricultural practice that is profitable in the short term, but typically leads to long- term environmental and economic losses. Overall, these findings attest to both the short-term and long-term negative impacts of foreign conflicts on regional economies. 80 Appendix Part I: Overview of the Lake Chad Regional Economic Memorandum Title: “Infrastructure and Structural Change in the Lake Chad Region” Authors: Mathilde Lebrand (World Bank) Abstract: Access to infrastructure supports economic development through structural transformation. Roads provide access to markets, while electricity and internet allow for modern production technologies. This paper investigates the links between investments in electricity, internet, and road infrastructure, in isolation and bundled, and economic development in the Lake Chad region. Using data on the expansion of the road, electricity, and internet networks, we provide reduced-form estimates of the impacts of infrastructure investments on the sectoral composition of employment. Using a series of instruments, we estimate a large impact of infrastructure investments, especially from the combination of paved roads and electricity. We then use a spatial general equilibrium model, based on Moneke (2020), to quantify the impacts of future regional transport investments and trade facilitation on economic development. Better regional transport connectivity along the Douala-N’Djamena corridor will bring relatively large welfare gains for the Lake Chad area and lead to increased specialization in manufacturing in southern Cameroon and in agriculture or nontradable services elsewhere. Title: “Conflict and Climate in the Lake Chad Region” Authors: Peter Fisker (University of Copenhagen) Abstract: This paper investigates determinants of conflict across districts and grid cells in the Lake Chad region, which covers parts of Cameroon, Chad, Niger, and Nigeria. Information on conflict incidence and intensity is combined with remote sensing data on greenness, temperatures, rainfall, and the standardized precipitation-evapotranspiration index (SPEI) in all years between 2001 and 2018. The results indicate that conflict in the Lake Chad region is affected by climate anomalies: higher-than-usual temperatures lead to an increase in conflict activity measured at the district and grid cell levels. Greenness anomalies also affect conflict negatively, but more strongly if one focuses on the growing season in cropland areas. However, rainfall and the SPEI do not exhibit similar relationships with conflict. Possible reasons for this may be that (a) temperature anomalies are more important than agricultural drought as predictors of conflict or (b) measurement errors in the rainfall and SPEI data under analysis. Title: “Building Rural Development in the Lake Chad Region” Authors: Brian Blankespoor (World Bank) Abstract: Agriculture is the main sector of economic activity among individuals and households in the Lake Chad region. However, limited market accessibility and, more recently, conflict hinder agricultural activity and therefore pose major challenges to the economic recovery and development of the region. This paper uses panel methods to examine the relationship between access to markets and land cultivation in the region over the past three decades using recent satellite and spatial data following the framework of Berg, Blankespoor, and Selod (2018). The results provide evidence that an increase in market access is associated with an increase in cultivated land and is positively associated with an increase in local agricultural gross domestic product (GDP). Even so, conflict because of the rise of Boko Haram in the past decade may attenuate gains because the proximity to conflict events in the previous year is associated with less cropland across the entire region and less nighttime lights for a panel of 104 local markets near Lake Chad. Title: “Trade Patterns and Trade Networks in the Lake Chad Region” Authors: Peter Walkenhorst (American University of Paris) Abstract: This paper synthesizes existing evidence on trade patterns and trade networks in the Lake Chad region and on the significant disruptions encountered by trade flows in the region. It argues that conflict and the corresponding mitigation measures have affected trade flows in multiple ways. First, they affect important local production and markets, such as lake and river fish (Maiduguri is a hub of the trade), and food staples, such as sesame, onion, and Appendix 81 Lake Chad Regional Economic Memorandum  |  Development for Peace pepper. Second, they also impact significant trade flows passing through the region. From the north to the south, the cattle trade that historically passed through the region on both the northern and southern shore of the lake now heads eastward toward Central Africa instead. From the south to the north, important transit trade, such as along the Douala-N’Djamena corridor, is now diverted through Moundou. Third, they affect trade with the two large economies, Cameroon and Nigeria, which has relocated from the conflict-ridden northern regions to safer border areas. 82 Appendix Lake Chad Regional Economic Memorandum  |  Development for Peace Part II: Technical Papers Lake Chad Regional Economic Memorandum  |  Development for Peace Technical Paper 1. Socioeconomic Trends in the Lake Chad Region Takaaki Masaki (World Bank) and Carlos Rodríguez-Castelán (World Bank) 83 Lake Chad Regional Economic Memorandum  |  Development for Peace 2.1 Introduction The Lake Chad region—which is an economically- main correlates of the long-term transformation of the and socially-integrated area spanning across four region? countries of Chad, Cameroon, Niger, and Nigeria in north-west Africa—has been trapped in a vicious To answer these questions, we draw on the analytical circle of suboptimal territorial development and framework developed in WDR2009 which focuses on fragility. People in the region are confronted with three dimensions of economic geography—namely, multidimensional development challenges ranging from density, distance and division. First, density refers to the limited economic opportunities, poor governance, lack of economic mass per unit of land area, or the geographic basic access to services, among others. These challenges compactness of economic activity. It is shorthand for also have fueled violence and conflicts in the region. the level of output produced—and thus the income Ten years of conflict, mainly driven by the Boko Haram generated—per unit of land area. It can, for example, be insurgency, have left an estimated 12.8 million people measured as the value added or gross domestic product in need of humanitarian assistance in the Lake Chad (GDP) generated per square kilometer of land. Second, region, 2.7 million of whom are people displaced by the distance refers to the ease or difficulty for goods, services, conflict.202 labor, capital, information, and ideas to traverse space. It measures how easily capital flows, labor moves, goods Despite the salience of the Lake Chad region as a hub are transported, and services are delivered between two for regional stability and growth, there is a lack of data locations. Distance, in this sense, is an economic concept, and evidence on the socio-economic landscape of the not just a physical one. Lastly, division, by contrast, refers region. Identifying opportunities for inclusive growth to any restrictions on the mobility of people, goods and in the region entails understanding its current status in services due to border restrictions, territorial disputes, terms of its economic activities/trends, access to services, civil wars, and conflicts between regions and countries, FCV (fragility, conflict, and violence) challenges and among others. human development as well as its status vis-à-vis other areas of the countries.  igure 2.1 graphically shows how this territorial F development perspective fits in the overall conceptual The main objective of this note is to fill in the knowledge framework for the Lake Chad Regional Economic gap on the socio-economic trends of the Lake Memorandum. Chad region by providing a descriptive snapshot of economic activities, poverty, and human development This note shows that the Lake Chad region lags behind in the Lake Chad region. The main questions that this in multiple dimensions of development ranging from note seeks to answer are: (i) what are the current levels poverty, human capital, and access to services. A of economic activity and social inclusion in the region poverty rate in the Lake Chad region is found to be much compared with other regions in the bordering countries?; higher than other parts of the countries surrounding the (ii) how do these socio-economic outcomes change lake. The regional poverty rate in the Extreme North within the region and over time?; and iii) what are the region of Cameroon (59 percent) is three times higher 202 Of the 12.8 million people in need of humanitarian assistance, 10.6 million are from northeastern Nigeria’s three most-affected states: Adamawa, Borno, and Yobe (USAID, 2020). 84 2.1 Introduction Technical Paper 1. Socioeconomic Trends in the Lake Chad Region Figure 2.1:  Conceptual Framework Highlighting Opportunities to Strengthen Territorial Development and Addressing Fragility in the Lake Chad Region Policies to improve territorial development • Supporting higher densities and agglomeration • Ensuring shorter economic and physical distances • Reducing divisions: (social, cultural, ethnic—thick borders) to facilitate regional convergence Suboptimal Territorial Fragility, Violence & Dimensions Development Link between challenges deviates Conflict Challenges of economic lagging regions from their long • Lack of economic term economic potential: • Violent conflict geography: agglomeration Lower: • Ineffective institutions • Density • Limited flow of factors • Climate change/harsh • growth • Distance of production environmental • poverty reduction human • Division • Lack of coverage development outcomes conditions (WDR 2009) (WDR 2010, 2011) Policies to reduce FCV • Service delivery (WDR 2004) • Risk management (WDR 2014) • Governance (Cooperation, Coordination, Commitment)(WDR 2017) Source: World Bank elaboration based on World Bank 2003, 2009, 2010, 2011, 2013b, 2017. that of the rest of the country (19 percent). In Nigeria, the 2014, its Lake Chad region experienced a slight increase Lake Chad region203 has a poverty rate (72 percent) nearly in poverty from 48 percent to 52 percent. The analysis of twice as high as in the rest of the country (38 percent). nighttime light also shows no sign of convergence in the Chad is the only exception, where the poverty rate in the level of economic activities between the Lake Chad and country’s Lake Chad region (31 percent) is lower than rest of the countries. Overall, there is little indication that the rest of the country (40 percent).204 This is explained such spatial gaps in poverty and economic development by the fact that the Chad region around the lake lies near are narrowing. the capital of the country, with a consequently higher urbanization rate and a relatively high population density. One of the key drivers for regional growth lies in improving connectivity to large markets. A large swath There is little sign that the spatial gap between the Lake of rural areas in the Lake Chad region still have limited Chad and other parts of the countries is narrowing access to large markets and, as highlighted earlier, these over time. In Cameroon, for instance, poverty declined areas are typically characterized by slower growth in by 4 percent in the Extreme-North region compared to a economic activities. Our estimate suggests that about 6 percent decrease in the rest of the country between 2007 60 percent of rural population in the Lake Chad region and 2014. While Niger as a whole saw a reduction in live farther than 2km away from all-season roads (proxied poverty from 51 percent to 45 percent between 2011 and by OpenStreetMap), while this rate is much lower in 203 The country’s Borno state is excluded from the analysis given that there is no representative household survey for that state. 204 Mahmood and Ani (2018). 2.1 Introduction 85 Lake Chad Regional Economic Memorandum  |  Development for Peace other parts of the countries, at about 30 percent. Poor The note is organized as follows. Section 2.2 provides road infrastructure undermines intra- and inter-regional key statistics on poverty, sector of work, and human connectivity across the Lake Chad Region, thereby capital indicators in the Lake Chad region vis-à-vis other limiting economic opportunities for people in the region. parts of the country and examine how the Lake Chad lags On the other hand, areas proximate to population centers behind in different dimensions. Section 2.3 provides a tend to have greater market accessibility due to a wider diagnostic of economic geography with a focus on three and dense road network system, which allows people dimensions of density, distance and division. Section living near the city to benefit from its agglomeration 2.4 identifies a set of structural factors, aggregate shocks economies. Our analysis of nighttime light also reveals and selected policies that might be associated with the that areas with greater market access experience a faster dynamics of economic activity and social inclusion across local economic growth, attesting to the important role the region. that road infrastructure and access to markets play in driving regional growth. Larger urban agglomerations continue to expand their economies while leaving smaller ones behind. Our analysis shows that after accounting for various other geographic and socio-economic factors, larger urban agglomerations tend to grow faster economically than smaller ones. In fact, vibrant economic dynamics measured by changes in nighttime light luminosity are spatially concentrated in areas that are already highly populated initially while those sparsely populated areas have continued to see little economic progress over time. This attests to a potential widening gap in major cities vis-à-vis smaller periphery towns or rural areas. Climate and conflict risks also play a role in determining the trajectory of regional growth. Our econometric findings reveal that agrarian areas that experienced favorable weather conditions experienced a faster rate of growth in economic activities compared to less favorable weather conditions. Given that climate change has made weather increasingly more erratic within the Lake Chad and also in the surrounding countries, the economic implications of such climate shocks need to be evaluated carefully depending on local contexts. Another significant economic threat comes from the highly volatile security situation created by the Boko Haram. The Boko Haram activities are also negatively associated with the pace of local economic growth and mitigating security risks should remain among the top priorities for ensuring the sustainable growth of the region. 86 2.1 Introduction Technical Paper 1. Socioeconomic Trends in the Lake Chad Region 2.2 Recent Socio-economic Trends in the Lake Chad The Lake Chad region is an economically- and An estimated 30 million people live in the Lake Chad socially-integrated area in north-west Africa that has region206 and they are primarily involved in agriculture development potential. The Lake Chad region comprises and fishing activities. Agriculture and fishing generate a set of administrative areas across Cameroon, Chad, significant indirect employment in related activities such Niger, and Nigeria that surround the lake (Map 2.1). as food processing, trade, transport, and production of Throughout this note, the boundaries of the Lake Chad crafts. These economic activities contribute to the food region are defined by ten different regions/states: the and job security of people in its hinterlands, including its Chari Baguirmi, Kenam, Lac, and Hadjer Lamis regions two regional metropolises with seven-figure populations: in Chad; the Diffa and Zinder regions in Niger; the Far N’Djaména, the Chadian capital, and Maiduguri, the North region in Cameroon; and Borno, Adamawa, and capital of the Nigerian State of Borno.207 Linkages with Yobe states in Nigeria (Map 2.2).205 neighboring areas suggest that the livelihoods of as many Map 2.1: Map of the Lake Chad  dministrative definition of the Lake Chad Map 2.2: A region N’guigmi C H A D Northern basin N I G E R r r rie Bol Ba at re Southern basin G N I G E R I A Guitté CAMEROON Chari-Logone River N’Djaména Source: Magrin, Lemoalle, Pourtier, 2015. Atlas du lac Tchad. Source: World Bank’s Lake Chad Region Recovery and Development Project (PROLAC). Source: Authors’ elaboration. The shapefiles of the boundaries of the subnational areas are taken from GADM3.6. 205 The proposed administrative definition for the Lake Chad region is consistent with the one used in the World Bank’s Lake Chad Region Recovery and Development Project (PROLAC). 206 Authors’ calculations based on remote-sensing data from WorldPop (2020) (database) and using the proposed administrative definition of the Lake Chad region for this activity. The population estimate was calibrated using the latest census data available from: Thomas Brinkhoff: City Population, http://www. citypopulation.de. 207 See Magrin and Perouse (2018). 2.2 Recent Socio-economic Trends in the Lake Chad 87 Lake Chad Regional Economic Memorandum  |  Development for Peace as 50 million people are linked to economic activities  overty is more severe in the Lake Chad Figure 2.2: P basin vis-à-vis in the rest of the countries based on the Lake Chad region.208 Poverty headcount rate (US$1.90 per day), percent 100– The region’s population is growing at a rapid pace. 90– High fertility rates are the main factor explaining high 80– population growth levels in Cameroon, Chad, Niger, 70– 72.3 and Nigeria. In the four countries, the population could 60– double in the next 25 years. In the Lake Chad region 58.8 50– 51.6 itself fertility rates are very high, which means that the 40– 45.4 43.4 39.8 39.1 population could grow faster than other parts of the 38.1 37.7 30– 30.7 countries it belongs to. The population in the Lake Chad 20– 26.0 18.8 region increased by almost 4 million people between 10– 2000 and 2015. The total fertility rate (TFR) in the 0– Cameroon Chad Niger Nigeria region is higher in the administrative areas of Cameroon J Country J Lake Chad J Rest of country (estimated at 6.8 children per women) and Nigeria Source: Data on poverty based on the latest household surveys conducted in Cameroon (2014), Chad (2011), Niger (2014) and Nigeria (2018). (5.8 children per women) compared to other parts of Notes: Rest of country = outside the Lake Chad region; Lake Chad = within the Lake Chad Basin region. the countries (averaging 4.8 children per women in the rest of Cameroon, and 5.3 children per women in the country’s Lake Chad region (31 percent) is lower than rest of Nigeria). In Niger’s Diffa and Zinder regions, the rest of the country (40 percent). This is explained by fertility rates are also high at 8.2 children per woman the fact that the areas around the lake in Chad lie near (7.5 in other parts of the country). In the Lac and Hadjer the capital of the country, with a consequently higher Lamis regions in Chad, the average fertility rate is high urbanization rate and a relatively high population density. at 6.2 children per woman, albeit slightly lower than the average of 6.5 children per woman in other parts of the There is also a significant spatial gap in poverty within country. the Lake Chad region. Poverty is most prevalent in the parts of the Lake Chad region that lie within the boundary of Nigeria. The poverty rates in Adamawa and 2.2.1 Trends in poverty reduction Yobe States reach as high as 74 percent and 70 percent, which are significantly higher than the national average Given its high poverty rate, low human capital and of 38 percent (Map 2.3, Panel B). These regions also poor access to key services, the Lake Chad region is are home to the largest number of the poor in the Lake characterized as a lagging region. An analysis of the Chad region (Map 2.3, Panel C). On the other hand, most recent household surveys available for each country Kanem Region in Chad has the lowest poverty rate (of 19 shows that households in the Lake Chad region are poorer percent) across the Lake Chad region. compared to households in neighboring regions (Figure 2.2). The regional poverty rate in the Extreme North Not only is the level of poverty relatively high in region of Cameroon (59 percent) is three times higher the Lake Chad region versus that in the rest of the that of the rest of the country (19 percent). In Nigeria, the countries but the pace of poverty reduction in the Lake Chad region has a poverty rate (72 percent) nearly region is also slow. In fact, there is little sign that the twice as high as in the rest of the country (38 percent). spatial gap in poverty between the Lake Chad region Chad is the only exception, where the poverty rate in the and neighboring regions is narrowing over time. In 208 Adelphi (2019). 88 2.2 Recent Socio-economic Trends in the Lake Chad Technical Paper 1. Socioeconomic Trends in the Lake Chad Region Map 2.3: Poverty in the Lake Chad region  overty rates in Chad, a. P  overty rates in the Lake Chad b. P  umber of poor in the Lake c. N Cameroon, Niger, and Nigeria region Chad region Source: Based on the latest household survey in Chad (2011), Cameroon (2014), Niger (2014) and Nigeria (2018). Notes: Poverty rates calculated at USD 1.90 per day (2011 PPP). The Borno state is excluded given that there is no representative household survey for that state due to security reasons. Cameroon, for instance, poverty declined by 4 percent  sset deprivation in the Lake Chad basin Figure 2.3: A versus the rest of the countries in the Extreme-North region compared to a 6 percent decrease in the rest of the country between 2007 and Percent of bottom 40 percent in the wealth index 100– 2014. While Niger as a whole saw a reduction in poverty 90– from 51 percent to 45 percent between 2011 and 2014, its 80– 83.3 82.4 Lake Chad region experienced a slight increase in poverty 70– from 48 percent to 52 percent. This pattern of non- 60– 64.1 convergence in welfare is also corroborated considering 50– 53.3 52.6 household assets across different regions in each country. 40– 46.7 44.2 41.9 The percent of households that are relatively asset-poor— 30– 35.7 38.2 37.9 34.1 31.3 31.9 or in the bottom 40 percentile of asset wealth distribution 20– in a given survey year/country209—shows no clear sign 10– of convergence between the Lake Chad and non-Lake 0– Chad areas of each country (Figure 2.3). For instance, in CMR '11 CMR '18 NER '06 NER '12 NGA '13 NGA '18 TCD '14 J Lake Chad J Rest of country Niger and Nigeria, the percent of asset-poor households Source: Based on the latest two rounds of Demographic and Health Survey (DHS) in each increased in the Lake Chad region over time, while in country. Notes: The x-axis in the figure includes country names (CMR=Cameroon; NER=Niger; NGA=Nigeria; TCD=Chad) as well as year in which DHS was conducted. Cameroon, this share remained almost unchanged between the two latest rounds of DHS. These findings suggest that wealth gaps between the Lake Chad region and the rest of the countries may have worsened over time. 209 We constructed the wealth index for the latest two DHS surveys in each of the LCB countries. Our wealth index is a composite measure of various household assets, including housing materials, access to electricity, cooking fuel, access to improved water, as well as ownership of various items such as televisions and bicycles. We applied a principal component analysis to generate the composite index. To make our wealth index comparable over time within the same country, we applied the same coefficients for use as weights across the two latest surveys. “Asset-poor” households refer to those households whose wealth index score is in the bottom 40 percent of distribution for the given survey country/year. 2.2 Recent Socio-economic Trends in the Lake Chad 89 Lake Chad Regional Economic Memorandum  |  Development for Peace 2.2.2 Local economic dynamics 2.2.3 Human capital outcomes and access to basic services In addition to lagging behind in terms of core poverty and socioeconomic indicators, the Lake Chad region In addition to monetary poverty indicators, the has experienced little economic progress over the past Lake Chad region lags in terms of key human capital three decades. An analysis of local economic growth indicators. The literacy rate (15 years-old and older) and based on nighttime light intensity—which serves as a the completion rate for primary education (ages 14–25) are useful proxy for capturing both the size of local economic significantly lower in the Lake Chad region compared to activities and its change over time210—shows that the the national average (Figure 2.4). Child health conditions intensity of nighttime light is strongly correlated with the in the region are also grim. For instance, child stunting distribution of people and economic activities (Map 2.4, in the Lake Chad region is roughly 10–15 percent higher Panel A). Overall, nighttime light grew faster in areas that in the Lake Chad compared to the rest of the countries appear to be more densely populated or characterized (see Table A2.1). These results, based on original analysis by higher levels of economic activities (as indicated by performed for this report, are consistent with other nighttime light)—particularly in the Northwest and studies. For example, according to the International Southern parts of Nigeria (Map 2.4, Panel B). Crisis Group (ICG), the gross school enrolment rate in the Chadian lake area is below 30 percent, and, Seen from space, the regions near Lake Chad in ‘community teachers’ (largely pupils’ parents) generally Cameroon and Nigeria exhibits a relatively low level stand-in in place of trained teachers.211 In the Chadian of luminosity and lower rates of growth. The gaps in part of the lake, there is only one doctor for every 140,000 the intensity of nighttime light between the Lake Chad inhabitants, that is, a quarter of the national average.212 region and the rest of the countries are particularly stark The low access and quality of education, health and other in Cameroon and Nigeria whereas in Chad and Niger, services in the region has been aggravated by the erosion the average intensity of nighttime light is slightly higher of infrastructure, both public and private, resulting from in the Lake Chad region (Map 2.4, Panel C). The annual the conflict.213 rate of growth in nighttime light are also slower in the Lake Chad region compared to the rest of the countries Access to core public services in the Lake Chad basin in Cameroon and Nigeria. This implies that there has is also lower than in the rest of the countries.. For been no substantial regional growth in the areas around instance, the national average rate of access to electricity the lake. In Nigeria, in particular, increases in intensity in Cameroon, Chad, Niger, and Nigeria is 62 percent, of nighttime light between 1992 and 2013 are much 8 percent, 14 percent and 59 percent, compared to an slower in the Lake Chad region compared to the rest of estimated 20 percent, 2 percent, 10 percent and 38 percent the country (Map 2.4, Panel C and D). in the Lake Chad region, respectively. In terms of access to improved water and sanitation facilities, the Lake Chad areas of Cameroon and Chad suffer from lower levels of access compared to the rest of the country (Figure 2.5). 210 The analysis of nighttime light relies on Defense Meteorological Satellite Program (DMSP) OLS data that are inter-calibrated by Li et al. (2020), allowing for a better comparison over time. The intensity of nighttime light is measured in a digital number (DN) ranging from 0 and 63 that represents an average of lights in all nights after sunlight, moonlight, aurorae, forest fires, and clouds have been removed algorithmically, leaving mostly human settlements. 211 ICG (2017). 212 Ibid. The figure for Chad is much lower than in Cameroon’s Far North region (1/52,000) or Niger’s Diffa region (1/24,500), both close to the lake. 213 It is reported that, during the armed group’s eight-year rebellion, almost 1,400 schools have been destroyed in Borno and more than 57 percent of schools are unable to open because of damage or being in areas that remain unsafe (Al Jazeera 2017). Regarding health facilities: “Insurgents have destroyed about 788 health facilities in the region. In Borno 48 health workers have been killed and over 250 injured. The state has lost up to 40 percent of its facilities and only a third of those left in Borno state remain functional,” (Obi and Eboreime 2017). 90 2.2 Recent Socio-economic Trends in the Lake Chad Technical Paper 1. Socioeconomic Trends in the Lake Chad Region This gap is particularly pronounced in Cameroon, where There are also signs of a widening gap between the the rate of access to improved water and sanitation in the Lake Chad and the rest of the surrounding countries in Far North region is, on average, about 36 percent lower terms of access to improved sanitation and electricity. than the rest of the country. In Cameroon, the share of households with access to improved sanitation in the Lake Chad region declined  idening gap in economic dynamics between the Lake Chad region and other parts of the countries, Map 2.4: W 1992–2013 a. Nighttime light intensity, 2013  nnual rate of change in nighttime lights, 1992– b. A 2013  ighttime light intensity in comparison between c. N  hange in nighttime light in comparison between d. C the Lake Chad region and other parts of the the Lake Chad region and other parts of the countries countries Annual rate of change, 1992–2013, percent 3– 3– 2.87 2– 2– 1.50 1.38 1– 1– 0.99 0.90 0.87 0.80 0.79 0.78 0.70 0.60 0.63 0.60 0.59 0.43 0.37 0– 0– Cameroon Niger Nigeria Chad Cameroon Niger Nigeria Chad J Lake Chad J Rest of country J Lake Chad J Rest of country Source: Panel A shows the mean of nighttime luminosity for 2013 based on stable DMSP inter-calibrated NTL data (Li et al. 2020) at a spatial resolution of 10km while Panel B shows the annual rate of growth in the mean of nighttime luminosity between 1992 and 2013 in percent. Panel C and D show the mean of nighttime light luminosity and annual rate of change in nighttime light luminosity (in percent) during the same time period. The calculation for Panel C and D was performed only on a subset of grid cells that are lit (with a positive value in digital number at some point between 1992 and 2013) thus excluding areas that are largely rural and unpopulated. 2.2 Recent Socio-economic Trends in the Lake Chad 91 Lake Chad Regional Economic Memorandum  |  Development for Peace  he literacy and completion rates for primary education in the Lake Chad are significantly lower Figure 2.4: T than in the rest of the countries a. Literacy rate (+15) b. Completion rate, primary education, 14–25 Percent Percent 100– 100– 90– 90– 80– 83.7 80– 77.8 79.0 78.2 79.0 70– 71.9 72.4 70– 72.3 60– 60– 58.7 60.0 50– 50– 47.1 45.5 40– 41.6 40– 39.4 30– 33.0 34.0 32.8 30– 32.8 29.5 27.8 20– 20– 25.4 21.0 17.4 10– 10– 12.2 0– 0– Cameroon Chad Niger Nigeria Cameroon Chad Niger Nigeria J Country J Lake Chad J Rest of country J Country J Lake Chad J Rest of country Sources: Based on the most recent household surveys conducted in Cameroon (2014), Chad (2018), Niger (2018) and Nigeria (2018). Figure 2.5: Access to core public services in the Lake Chad region across time a. Access to improved water b. Access to improved sanitation c. Access to electricity Percent Percent Percent 100– 100– 100– 90– 90– 90– 80– 80– 80– 84.8 79.2 76.8 76.3 70– 70– 70– 74.8 74.1 74.0 70.4 68.8 68.4 66.9 66.7 65.5 65.1 60– 60– 60– 62.9 61.9 61.3 57.8 56.6 56.4 55.1 50– 50– 50– 48.9 40– 40– 40– 44.5 44.5 41.7 38.4 30– 30– 30– 30.8 30.2 28.5 20– 20– 20– 23.1 19.6 16.2 16.0 10– 10– 10– 14.3 13.7 12.8 10.0 10.4 2.4 9.0 6.0 5.7 0– 0– 0– '11 '18 6 '12 '13 '18 '14 '11 '18 6 '12 '13 '18 '14 '11 '18 6 '12 '13 '18 '14 '0 '0 '0 R R R R R R A A A D D D A A A R R R R R R CM CM CM NG NG NG NE NE NE NG NG NG CM CM CM TC TC TC NE NE NE J Lake Chad J Rest of country J Lake Chad J Rest of country J Lake Chad J Rest of country Source: Based on the latest two rounds of Demographic and Health Survey (DHS) in each country. Notes: The graph shows the percentage of households with access to improved water and sanitation and electricity from left to right. Data on access to these core public services are taken from the two latest DHS in each country. The x-axis in the figure includes country names (CMR=Cameroon; NER=Niger; NGA=Nigeria; TCD=Chad) as well as year in which DHS was conducted. from 42 percent to 31 percent between 2011 and 2018 66 percent to 56 percent). Progress in expanding access whereas the rest of the country experienced a modest to electricity in the Lake Chad region has also stagnated. improvement (from 62 percent to 67 percent) over the In Niger, the regions of Diffa and Zinder saw access to same period. A similar divergence pattern emerges in electricity improve by four percentage points (from Nigeria, where access to improved sanitation in the 6 to 10 percent) between 2006 and 2012, a slightly Lake Chad area decreased from 74 percent to 55 percent lower increase than in the rest of the country (where between 2013 and 2018—a much faster rate of decline access improved by nearly six percentage points, from than in the rest of the country (where access fell from 10.4 percent to 16 percent) (Figure 2.5). 92 2.2 Recent Socio-economic Trends in the Lake Chad Technical Paper 1. Socioeconomic Trends in the Lake Chad Region 2.3 Spatial Dynamics of Economic Development within the Lake Chad Region 2.3.1 Density 2019).216 In Cameroon, most of the economic activities in the Lake Chad region are clustered in the southern The perpetuation of poverty and slow growth in the part of Extrême—Nord, particularly around the city Lake Chad region is closely linked to its economic of Maroua.217 In Niger and Chad, while the volume of geography (WDR 2009). Indeed, the combination of economic activities in the Lake Chad areas is small, they low economic density as well as high distance and division tend to also cluster around the border areas neighboring coalesces to detail the region from its sustainable growth Nigeria and Cameroon. path. Local agricultural systems have been also disrupted The region is characterized by a low economic density following the destruction of farming and irrigation and a lack of agglomeration economies that hinders facilities. Conflict and violence that escalated since it from reaching its potential. While the Lake Chad 2009 have generated losses equivalent to an estimated region accounts for 17 percent of total areas of the four USD 3.7 billion, including profound loss of fisheries, neighboring countries combined, its economy makes up livestock, and agricultural production, ruined irrigation only 5 percent of GDP.214 Most economic activities in the and farming facilities, and the collapse of extension region are highly spatially concentrated in a few large and services.218 Insecurity is exacerbating the existing secondary cities. Beyond N’Djaména and Maiduguri— challenges faced by vulnerable farmers who were already only two metropolitan cities with a population of facing devastating natural hazards including cyclical over 1 million—there are several secondary cities that droughts and floods. The concentration of herds due support the economy of the region, including Damaturu to changes in transhumance flows as a result of these (Nigeria), Jimeta (Nigeria), Mubi (Nigeria), Maroua climatic conditions is putting pastoral resources under (Cameroon), Zinder (Niger) among others. Estimates of extreme pressure and threatening animal health. Gross National Product (GDP) for the Lake Chad region show that economic activity is spatially concentrated in these few urban centers which are clustered around the 2.3.2 Distance national borders of the neighboring countries (Map 2.5). While leading areas tend to have a high economic Most of the trade between Nigeria and Cameroon density, lagging areas tend to present a long distance- flew through the corridor connecting Maiduguri to-density ratio. Distance refers to the ease or difficulty to Kousseri or Maroua although this trade flow has for goods, services, labor, capital, information and ideas been significantly disrupted by the intensification of to traverse space. It measures how easily capital flows, the Boko Haram conflicts since 2009215 (and more labor moves, goods are transported, and services are recently since Nigeria closed its land borders in August delivered between two locations. In this sense, distance 214 Calculated based on Ghosh et al. (2010). 215 In a study conducted by WFP (2016), only one out of 26 transporters surveyed in Cameroon reported Nigeria as its main supply source of cereals suggesting that agricultural trade flows between Northeast Nigeria and North Cameroon have been reduced. 216 The Nigerian government announced on August 22, 2019 the partial closure of three border sites with Benin and Cameroon. The closure was officially extended to all land border crossings in September 2019. 217 See UNHCR and World Bank (2016). 218 World Bank (2020), PROLAC Program Appraisal Document, Report PCBASIC0089548. 2.3 Spatial Dynamics of Economic Development within the Lake Chad Region 93 Lake Chad Regional Economic Memorandum  |  Development for Peace Map 2.5: Economic activity in the Lake Chad region, 2006  stimated subnational real GDP (2006) in a. E  stimated subnational real GDP (2006) in the Lake b. E Cameroon, Chad, Niger, and Nigeria Chad region Source: Authors’ calculations based on data from Ghosh et al. (2010). is an economic concept not just a physical one, related characterized by slower growth in economic activities. to connectivity and access. An area is more likely to be Poor road infrastructure undermines intra- and inter- lagging the farther away it is from leading areas since regional connectivity across the region, limiting economic greater distance-to density implies a lack of integration opportunities for people. This is further compounded into the economy. It also implies poorer access to the by rising transportation costs in water transportation, “thick” markets of capital, labor, goods, services and partly driven by government interventions limiting ideas, and the spillovers of knowledge and information boat circulation in the lake, and the drying of the lake. they provide. Conversely, areas proximate to population centers tend to have greater market accessibility due to a wider and denser road network system, allowing people living near 2.3.2.1 Physical Infrastructure a city to benefit from its agglomeration economies. Access to connective infrastructure across the Lake Rural people in the Lake Chad region are twice as likely Chad region is very limited, particularly among the to be disconnected from all-seasons roads (motorable rural population. A large swath of rural areas in the Lake all year round), compared to areas in the rest of the Chad region still have limited access to large markets. countries. The Market Access Index–a measure of the These areas—with a long distance-to density ratio—are size of population that can be reached within a certain 94 2.3 Spatial Dynamics of Economic Development within the Lake Chad Region Technical Paper 1. Socioeconomic Trends in the Lake Chad Region Map 2.6: Market and rural access in and around the Lake Chad region a. Market Access Index b. Rural Access Index Source: Calculated by the authors on various geospatial data sources (see Appendix 2.C and 2.D for further details). Notes: The map on the left shows areas that score “very high” (top 20 percentile), “high” (20–40 percentiles), “medium” (40–60 percentiles), “low” (60–80 percentile), and “very low” (bottom 20 percentile) in the Market Access Index. See Appendix 2.C for further details on how the Market Access Index is calculated. The map on the right shows the Rural Access Index or share of rural population who live within 2 km away from all-season roads as proxied by OpenStreetMap. See Appendix 2.D for details on the construction of the Rural Access Index. travel time–is relatively high in the Lake Chad region 2.3.2.2 Digital Infrastructure compared with some other parts of the countries (Map 2.6, Panel A). This indicates that, with proper connective Poor road connectivity in the Lake Chad region is infrastructure, people in the Lake Chad region could further complicated by a lack of digital infrastructure. benefit from economic opportunities that large markets— Cell phone ownership as a share of population in the both within and around the region—can offer. However, areas bordering the lake in Niger stood at 13.4 percent the score of the Rural Access Index—i.e. the share of rural compared to 20 percent for the rest of the country. A population living within 2 km away from an all-season similar pattern can be seen in Nigeria, where cell phone road219—is low for the region (Map 2.6, Panel B). Nearly ownership is 4.7 percentage points lower in the regions two thirds (about 60 percent) of the rural population in bordering the lake. Chad is the only exception, where the Lake Chad region live farther than 2 km away from ownership is higher in areas bordering the lake compared an all-season road (proxied by OpenStreetMap), that is, to the rest of the country (20 versus 15.6 percent). about twice the share in the non-lake parts of the basin However, the share of people who are connected is still countries (about 30 percent). low compared to international standards, translating to roughly 80 percent of the population being disconnected from digital technologies. 219 An “all-season road” is defined as a road that is motorable all year round by the prevailing means of rural transport. Trunk, primary, secondary, and tertiary roads in OpenStreetMap are used as a proxy for all-season roads following the methodology by Azavea: https://rai.azavea.com/. 2.3 Spatial Dynamics of Economic Development within the Lake Chad Region 95 Lake Chad Regional Economic Memorandum  |  Development for Peace The lack of digital infrastructure and low levels population, above the regional Sub-Sahara African of cellphone ownership hinder the adoption and average of 27.7 percent. However, the share of unique usage of novel digital technologies. While digital mobile internet subscribers in the Lake Chad countries infrastructure in Sub-Saharan Africa as a whole is remains substantially below regional leaders, such as lagging behind compared to the rest of the world,220 South Africa (52 percent). Chad registered a unique the Lake Chad countries have a particularly low level of mobile internet subscription rate of 17.1 percent of the internet penetration. Approximately 11.8 percent of the population in 2020, compared with 34 percent in Nigeria population in countries bordering Lake Chad reported and 33.8 percent in Cameroon. On the other hand, Niger using the internet, compared to 18.7 percent across Sub- has the lowest mobile internet penetration rate across the Saharan Africa, on average.221 There is heterogeneity Lake Chad region, and among the lowest in Sub-Saharan within the region. Chad lies among the countries with Africa. It is important to identify the main constraints the lowest internet penetration rates in the world, at to adopt internet services faced by individuals to fully 6.5 percent of the population, compared to Cameroon, harness the potential benefits of digital technologies in which at 23.2 percent ranks above the regional average. the region. A similar pattern can be seen regarding mobile internet penetration—measured by unique mobile internet The Lake Chad region is largely disconnected from subscribers222—which is the main mechanism of access to the digital world.223 A large swath of areas in the Lake the internet in Sub-Saharan Africa (as opposed to fixed- Chad region has very little connectivity to fiber optics broadband subscriptions). transmission nodes224 or 3G technology225 except for the Extreme North region of Cameroon where there appears Mobile internet in the LCB countries has undergone to be more comprehensive coverage (Map 2.7).226 Access a rapid expansion, although its pace still lags regional to the internet (either through fixed broadband or mobile leaders like South Africa. Unique mobile internet broadband) can serve as a catalyst for poverty alleviation,227 subscribers across the Lake Chad region increased almost improved labor outcomes228 and the functioning of rural twofold as a share of the population between 2014 and markets,229 specifically regarding price information, 2020. In 2020, this figure stood at 31.1 percent of the access to inputs and consumers230 and access to capital 220 World Bank (2019). 221 Data of 2017, WDI (World Development Indicators) (database) (accessed on 04/07/2021), World Bank, Washington, DC, https://datatopics.worldbank.org/ world-development-indicators/. Internet users are individuals who have used the internet (from any location) in the last 3 months. The internet can be used via a computer, mobile phone, personal digital assistant, games machine, digital TV etc. 222 Given that consumers may use multiple SIM cards to take advantage of discounts or to avoid high charges for off-network calls, market penetration in terms of unique subscribers may provide a better picture of the degree of access to mobile services. GSMA defines mobile internet as the use of internet services by unique users on mobile devices at the end of a given period. Mobile internet services are defined as any activity that uses mobile data (that is, excluding SMS, multimedia messaging services, and cellular voice calls). See GSMA Intelligence (database), Global System for Mobile Communications (GSM Association), London, https://www.gsmaintelligence.com/. Accessed on April 7 2020. 223 Hjort and Poulsen (2019). 224 These nodes correspond to add or drop points (entrance or exit) in the long-haul fiber networks. It is useful to think of long-haul fiber networks as motorways that have junctions (on and off ramps that is, add and drop points) that feed smaller class roads (access fiber, wireline, and wireless networks). In the motorway scenario, even if a household is located close to the motorway, it may be a long drive to the nearest junction. The same applies to fiber-optic networks, in which the speed of fixed broadband Internet is determined by proximity to the transmission nodes rather than the network lines connecting the nodes. 225 While second-generation (2G) technologies enable voice, SMS, and limited Internet access, third-generation (3G) technologies enable more rapid Internet browsing and data downloading. 226 The 2G/3G coverage data should be treated with caution, however, because the Collins Bartholomew coverage maps do not necessarily include all network providers in each country and comparing coverage across these countries may be problematic due to uneven reporting of coverage by country. Overall, this coverage map should be treated as a lower bound of 2G/3G availability. 227 See Bahia et al. (2019) and Masaki et al. (2020). 228 See Hjort and Poulsen (2019); Paunov and Rollo (2014); Fernandes et al. (2019); Chun and Tang (2018); Viollaz and Winkler (2020). 229 See Kaila and Tarp (2019); Goyal (2010); Ritter and Guerrero (2014); Salas-Garcia and Fan (2015). 230 See Aker and Mbiti (2010); Aker (2011); Debo and Van Ryzin (2013). 96 2.3 Spatial Dynamics of Economic Development within the Lake Chad Region Technical Paper 1. Socioeconomic Trends in the Lake Chad Region markets.231 Poor digital connectivity around Lake Chad is trade and the flow of factors of production. Interstate thus another important source of distance that prevents conflict creates the thickest borders. While borders in the region from tapping its full economic potential. the rich world have become increasingly thin, hereby facilitating trade and the movement of people and capital, Map 2.7:  Digital connectivity in and around the Lake borders in many developing countries remain thick, as Chad region (2018–2019) is generally the case in the Lake Chad region. At the same time, borders in the areas around Lake Chad have historically been characterized as relatively porous—with trade and social ties permeating borders. This mobility, however, has subsided over the last decade with the hardening of borders and counterinsurgency measures as a response to the Boko Haram insurgency. 2.3.3.1 Ethnolinguistic and religious divisions The roots of conflict and intercommunal violence in the Lake Chad region are found in multi-faceted factors ranging from competition over resources, local tensions and differences between ethnic groups in the Lake Chad region, as well as climate shocks. As shown by the ethno-linguistic boundaries mapped Source: Data on 2G/3G coverage maps from Collins Bartholomew coverage maps; data on the locations of operational fiber optics nodes from Africa Bandwidth Maps http://www. below (Map 2.8, Panel A) the Lake Chad region presents africabandwidthmaps.com/. Notes: Mobile coverage corresponds to 2018. Fiber optics correspond to 2019. The 2G/3G a wide ethnic heterogeneity.233 The basin has also been coverage data should be treated with caution, however, because the Collins Bartholomew coverage maps do not necessarily include all network providers in each country. Thus, this coverage map should be treated as a lower bound of 2G/3G availability. subject to tensions stemming from wide religious diversity. Different religious groups concentrate in the area, ranging from the predominantly Muslim-majority 2.3.3 Division northern Basin in Niger, to a less concentrated Muslim majority in northeast Nigeria and Kanem in Chad, to Together with density and distance, the third important a Christian majority in the Extreme–North region of geographic dimension for territorial development is Cameroon and the Hadjer Lamis and Chari Baguirmi division. It applies at both national and international regions in Chad (Map 2.8, Panel B). Some of the Boko scales. At the national scale, nations can be internally Haram violent activities may be linked with pre-existing divided across linguistic, ethnic, religious, and/or cultural tensions between specific local communities or ethnic lines. At the international level, divisions mainly arise groups.234 What may be referred to as ‘another attack by from so-called thick borders, i.e., the many restrictions Boko Haram’ in Lake Chad in the international media, countries impose on other countries regarding the flow may instead be a set of reprisals among the Kuri, livestock of goods, capital, people and ideas.232 Thick borders limit farmers, and fishermen.235 Changes in land use and 231 See Hasbi and Dubus (2019); Alibhai et al. (2018). 232 Fratianni and Kang (2006). 233 Vedeld (1999). 234 Cohen (2015). 235 Ibid. 2.3 Spatial Dynamics of Economic Development within the Lake Chad Region 97 Lake Chad Regional Economic Memorandum  |  Development for Peace Map 2.8: Ethnolinguistic and Religious Groups in the Lake Chad region A. Ethno-linguistic boundaries B. Religious boundaries Source: Elaboration based on Ethnicity Felix 2001 and World Religion Map from Harvard Worldmap. water resource management since the 1980s, coupled has been aligned with the Islamic State of Iraq and the with ineffectiveness in the fragile local institutions have Levant since 2015.239 It is not a unified group; in 2016 led to heightened competition among farmers, herders it split into two factions: the Islamic State’s West Africa and fishers along social fault-lines of ethnicity, religion, Province (ISWAP) and Jama’atu Ahl al-Sunnah lil-Dawa gender, and class.236,237 wal-Jihad (JAS).240 At its peak—that is between 2010 and 2015—the group seized a large swath of territories in Northeastern Nigeria, including major cities, pushing the 2.3.3.2 Boko Haram Conflicts Government of Nigeria to declare a state of emergency, (an action that was later followed by other governments The intensification of conflict in the Lake Chad region in the region). While most of the attacks between 2009 since the rise of Boko Haram in 2009 has been a large and 2013 were geographically concentrated in a few states source of division driving the leggedness of the region. in the Northeastern corner of Nigeria, the terrorist group While the group was fist founded in 2002, the insurgency moved some of its activities to the neighboring areas of is considered to have begun in full in 2009 in Nigeria Cameroon, Chad and Niger (Map 2.9). Vigilante groups with bases in neighboring countries. In 2014–2015, it have been created in response to the insurgency, which expanded into northern Cameroon, Niger and Chad. are becoming increasingly violent. Since then, the group has retreated into inaccessible areas, mainly along the borders, but has continued to carry out The ethnolinguistic divisions exacerbated with the more frequent and sophisticated attacks.238 Boko Haram crisis are associated with social exclusion. For example, 236 Onuoha (2010), Béné et al. (2003), Ahmadu (2011). 237 Smith and Walters (2017). 238 Magrin and Perouse de Montclos (2018). 239 Vivekananda et al. (2019). 240 The indiscriminate targeting of civilians appears to have been a major point of disagreement. The extremist group ISWAP avoids harming civilians, focusing mainly on military and government targets (Samuel 2019). 98 2.3 Spatial Dynamics of Economic Development within the Lake Chad Region Technical Paper 1. Socioeconomic Trends in the Lake Chad Region  he evolution of the number of Boko Haram violent events from 2009–2020 Map 2.9: T Sources: Blankespoor (2021). technical paper for this report. The elaboration is based on ACLED (Armed Conflict Location and Event Data Project) (dashboard), Robert S. Strauss Center for International Security and Law, Austin, TX, http://www.acleddata.com/. Kanuris, who are viewed as Boko Haram sympathizers, 2.3.3.3 Cross-border trade have increasingly become the subject of discrimination in Cameroon’s Far North region. Anecdotal evidence Cross-border trade has declined as a result of the suggests that the ethnic group is targeted both by security insurgence. Conflict has affected production and trade forces as well as by local militias groups, or vigilantes, for directly, as well as indirectly, through the counter- their perceived connection to the Boko Haram insurgency. insurgency measures that restrict movement and put In turn, this has been associated with social exclusion and bans on farming and trade.241 Transit flows of livestock marginalization of the group, affecting individuals’ ability seem to be declining. The transit of cattle to Nigeria from to participate in economic activities. On the other hand, Chad and Cameroon decreased by 39 percent between the conflict has also had an impact on social cohesion 2015 and 2016–2017, as shown by customs data from within communities. For example, individuals forcibly the Yagoua livestock crossing point.242 The deteriorating displaced in host communities in Cameroon live together impact that the conflict has had on Chad’s livestock but compete for the same services, which are already exports to Nigeria is even more poignant considering that strained in terms of both access and quality. The conflict these exports are the country’s second source of foreign has also led to distrust among communities in connection revenue after oil.243 In Cameroon, estimates suggest with former fighting. that Boko Haram has stolen USD 6 million dollars’ worth of cattle, sheep and goats since 2013.244 Market infrastructure has also been subject to physical damage, e.g. in Damaturu in Yobe, Nigeria, over 650 shops have been reported as damaged.245 241 UNDP, OCHA (2016). 242 World Bank (2018). 243 World Bank (2015). 244 World Bank (2018). 245 Mercy Corps et al. (2017). 2.3 Spatial Dynamics of Economic Development within the Lake Chad Region 99 Lake Chad Regional Economic Memorandum  |  Development for Peace 2.4 Determinants of regional growth There is a multitude of structural factors and aggregate be statistically significant and positive (or negative), it shocks that could affect a trajectory of territorial shows that areas in the Lake Chad region experienced development in the Lake Chad region. As discussed faster (or slower) growth in nighttime light vis-à-vis earlier, not only does it fall behind in terms of its core other parts of the countries surrounding the lake. Xjrct poverty and socio-economic indicators compared to other contains a wide range of conditional variables that seek parts of the countries, the Lake Chad region also has seen to capture various potential factors that could affect the very little economic progress over the past three decades trajectory of local economic growth. More specifically, it (see Section 2.2). This section seeks to identify these includes population, weather shocks, conflicts, market factors that might be associated with the dynamics of accessibility, as well as various other geographical economic activity across the region using an econometric features, including the density of cropland (as a proxy for approach. agricultural production) and grazing land, access to on- grid electricity, elevation and terrain constraints.246 Lastly, The analysis employs multivariate regression to tease the model controls for region (or ADM1-level) fixed out which of these factors contribute to regional effects Cr to ensure that our results are not confounded by growth. More formally, following Barro and Sala- time-invariant regional characteristics as well as longitude I-Martin’s and Bairro et al.’s (1995), the following and latitude of each grid to account for other geographical convergence model is estimated: confounders. Gjrct1-t0 = α + β1 ln (Lightjrct0) + β2 Lake Chad regionjrc T  o better understand which factors contribute most + β3Xjrct + Cr + εjrct (1) significantly as drivers for local economic growth, we report the results of a Shapley decomposition from those  here Gjrct1-t0 corresponds to annual growth rate in w regressions. nighttime light intensity between year t0 and year t1 in 0.1 degree (≈11 km × 11 km) grid cell j in region r in country c. More formally: 2.4.1 Data Gjrct1-t0 = ln (Lightjrct1/Lightjrct0) / (t1-t0) (2) Given the dearth of data, we turn to various geospatial datasets to capture a multitude of structural factors that may drive local economic growth. Our full sample  here Lightjrct0 denote the initial level of nighttime light w consists of 32,097 0.1×0.1 grid cells defined over the at t0 and β1 essentially captures the rate of convergence four countries of Cameroon, Chad, Niger and Nigeria. after accounting for other confounding factors Xjrct We then look at a subsample of cells that exhibited some There is conditional convergence (divergence) if β1 level of luminosity at some point between 1992 and is statistically significant and negative (positive). Also 2013—the period for which nighttime light data are included in this regression is a dummy variable coded 1 available and comparable over time—and we refer to this if a given grid cell lies within the boundary of the Lake subsample as an “intensive” margin sample. The intensive Chad region, 0 otherwise. In essence, if β2 turns out to margin sample can be considered as a set of cells that 246 See Appendix 2.B for descriptive statistics of variables used in the regression. 100 2.4 Determinants of regional growth Technical Paper 1. Socioeconomic Trends in the Lake Chad Region exclude uninhabited areas or largely rural areas with no by Vicente-Serrano et al. (2010). SPEI takes into account luminosity observed from space. The intensive margin both precipitation and potential evapotranspiration or sample includes 5,211 cells. the ability of the soil to retain water, which depends on temperature, latitude, sunshine exposure, and wind Nighttime light speed. SPEI data are drawn from the Global SPEI O  ur proxy measure for local economic growth comes Database (https://spei.csic.es/). SPEI is expressed in units from satellite data on light emitted into space at night. of standard deviation from the cell’s historical average and Meteorological Satellite Program (DMSP) have been thus has mean 0 by construction in the historical sample. recording data on lights at night using their Operational Linescan System (OLS) sensor since the mid-1960s, with S  ince the impact of rainfall on local economy—and a global digital archive beginning in 1992. DMSP-OLS agriculture for that matter as the entire economy of the nighttime light data are available on an annual basis for region relies heavily on the agricultural sector—is most the period of 1992–2013 and at a resolution of roughly likely much larger during the growing season, we consider 1km (30-arcsecond pixel). The strength of luminosity at SPEI specifically for growing periods in each cell. To night is measured by a digital number (DN), an integer identify a cell-specific growing period, we follow Harari between 0 and 63, which represents an average of lights in and La Ferrara (2018) and rely on the MIRCA 2000 crop all nights after sunlight, moonlight, aurorae, forest fires, calendars data set (Portmann et al. 2010). This dataset and clouds have been removed algorithmically, leaving offers harvest areas by crop and start and end months mostly human settlements. Given that the original DMSP of growing seasons for each crop (available at a spatial NTL time series data are not comparable across years due resolution of 5 arc-minute or roughly 9km at equator). to the lack of on-board calibration, varied atmospheric We first identify the main crop for each cell based on conditions, satellite shift, and sensor degradation, we rely harvested areas according to the MIRCA 2000 crop on inter-calibrated DMSP NTL time series data from Li data and then match with the growing month calendar et al. (2020). for those cell-specific major crops. Finally, we average monthly SPEI values for the growing season months of Population a cell’s main crop in a given year. Higher values of this  ur grid-level population data derives from the Global O variable correspond to more favorable conditions for local Human Settlements (GHS). GHS use satellite data to agriculture. For areas that are considered to be largely obtain for each cell built-up land area over time, more non-agricultural or pastoral, we use the annual average precisely circa 1975, 1990, 2000 and 2013/14, which SPEI. nicely coincides with the end of our period of study. Furthermore, GHS reconstructs grid-level populations Access to gridded electricity circa 1975, 1990, 2000 and 2015, using population D  ata on gridded electricity comes from GridFinder, an levels at a relatively low administrative level circa these open source tool for predicting the location of electricity years and then allocating the population within these network lines.247 Arderne et al. (2020) constructed the administrative areas depending on the distribution of composite map of the global power grid by applying built-up land area. multiple filtering algorithms to night-time light imagery to identify locations most likely to be producing light Climate data from electricity. These light sources (target-locations) are  ur main climate indicator is the Standardized O then connected to known electricity networks through a Precipitation-Evapotranspiration Index (SPEI), developed 247 Data can be downloaded from https://gridfinder.org/ 2.4 Determinants of regional growth 101 Lake Chad Regional Economic Memorandum  |  Development for Peace least-cost routing algorithm following roads and known 2.4.2 Results distribution lines (adopted from OpenStreetMap). Table 2.1 presents the main results and Table 2.2 Conflict data reports the results from a Shapley decomposition C  onflict data is from the Armed Conflict Location and of the regressions. We find clear evidence that overall Event Data Project (ACLED) (Raleigh et al., 2010). We there is a sign of conditional convergence in terms of categorize the conflict data by actor into "Boko Haram" economic activities as captured by nighttime light. More and "non-Boko Haram" observations.248 Using the data, substantively, the level of economic activities grew more we construct the cell-specific number of conflict events quickly in less-developed areas by an annual convergence and number of fatalities. rate of 1 percent between 1992 and 2013 after accounting for other potential confounders including population size Market access and population growth. It is worth highlighting that the  e construct the index of market accessibility, which is W coefficient for the Lake Chad dummy is close to zero and the weighted sum of population in all the major markets far from significant. What this implies is that there is little or urban agglomerations, which are weighted by travel sign of divergence or convergence between the Lake Chad time/distance. See Appendix 2.C for details on data region and rest of the countries overall conditional on sources and methodology used to construct this index. the initial level of development and other demographic, geographic and socio-economic factors. Within the Lake Cropland and grazing land Chad region, we did not see any sign of convergence. D  ata on cropland and grazing land derive from the HYDE 3.2 panel dataset (Goldewijk, 2017), which provides a The growth of nighttime light is strongly driven by spatial estimation of cultivated land (excluding urban population density and its growth over time both areas and pasture land) for each of our grid cells. The across the four countries and within the Lake Chad. HYDE 3.2 data on land classification is generated based This perhaps does not come as a surprise because on satellite imagery of land use and is available at a spatial nighttime lights are both a function of population density resolution of five arc-minute or 10 km by 10 km for the as well as economic activities.249 Indeed, the initial level period between 10 000 before Common Era (BCE) to of nighttime light luminosity and population altogether 2015 Common Era (CE). explains roughly 15–20 percent in the intensive margin and full samples covering the four countries though their Elevation and terrain slope constraints explanatory power is much smaller within the Lake Chad D  ata on elevation and terrain constraints for farming region. This finding accords with other studies250 showing come from SRTM data Version 4 (Jarvis et al. 2008) and that the locations of urban agglomerations remain the Global Agro-Ecological Zoning (GAEZ) database. persistent over time even after controlling for other factors Elevation data are available at a spatial resolution of 90m. that led to their establishments in the first place. These GAEZ data on terrain slope constraints classifies the urban agglomerations continue to grow faster compared level of constraints to a given area or grid cell into seven to more sparsely populated areas and have important different categories from 0 (no constraints) to 7 (severe implications for widening spatial gaps between those core constraints) and distribution of these classes were defined cities and the rest of the countries. for each 30 arc-second grid cell (or about 1km). 248 Boko Haram conflict includes any violent incident where an actor includes: Islamic State (West Africa) and/or Boko Haram - Jamatu Ahli is-Sunnah lid- Dawatai wal-Jihad or Boko Haram - Jamatu Ahli is-Sunnah lid-Dawatai wal-Jihad. 249 Henderson et al. 2018. 250 See Henderson et al. 2018; Jedwab et al. 2017. 102 2.4 Determinants of regional growth Technical Paper 1. Socioeconomic Trends in the Lake Chad Region Market accessibility is positively correlated with the annual rate of economic growth and this relationship is statistically significant. Indeed, besides the initial level of nighttime light and population size, market access has one of the highest contributions to explaining variation in the annual rate of growth in nighttime lights, accounting for 6 percent of variation in the dependent variable. As discussed above, there remains a large number of people in the region who are left disconnected from other potential markets due to poor road networks and infrastructure in and around the Lake Chad region. To better enhance the natural and human potential of the Lake Chad region, better connectivity and mobility within the Lake Chad region and also between the region and other areas of the countries will improve the living conditions of the population and can lead to a catalytic effect where development benefits in other sectors, such as basic services and livelihoods, can be maximized. Climate conditions play an integral role in determining local economic growth particularly in largely agricultural lands. The positive effect of favorable weather conditions during the growing seasons on local economies increases in more agrarian economies, as indicated by a statistically significant positive interaction term between average SPEI for 1992–2013 during the growing seasons and cropland density. These findings suggest that the impact of climate shocks is not spatially uniform and assessing the potential risks that erratic weather conditions may pose to local agricultural economies should be carefully evaluated. Lastly, the incidence of Boko Haram conflicts is negatively correlated with local economic growth. More substantively, a one percentage point increase in the number of BH-related conflicts is associated with the slower annual rate of growth in nighttime lights by 0.4 percent. As discussed above, Boko Haram conflicts have been a major threat to local economies by disrupting regional trade and imposing immeasurable humanitarian costs. Our results seem to corroborate this. On the other hand, it is worth noting that non-BH conflicts are positively correlated with local economic growth. 2.4 Determinants of regional growth 103 Lake Chad Regional Economic Memorandum  |  Development for Peace 2.5 Conclusion The notes has presented an analysis of core development challenges that detail the Lake Chad region from the path of sustainable economic growth. The findings highlight the laggedness of the region compared to the rest of each respective country in multiple dimensions— including poverty, human capital outcomes, access to public services, among others. The Lake Chad region is characterized by a combination of low density as well as high distance/division, which coalesces to present constraints to its regional growth. Due to a lack of vibrant agglomeration economies, the region fails to unleash scale economies that could spur job creation, improve access to core services, and generate new economic opportunities for the poor. Low density is further compounded by high distance that characterizes the economic geography of the region. Due to the poor quality of road infrastructure—in combination with the landlocked geography of the region and ongoing conflict—a large number of people in the region remain disconnected from large markets within their own respective country or in the neighboring countries. That said, simply investing in connective infrastructure does not necessarily yield expected economic benefits unless such investment is combined with complementary policies to mitigate the negative impact of high division rooted in pre-existing ethnolinguistic cleavages and ongoing conflicts. 104 2.5 Conclusion Technical Paper 1. Socioeconomic Trends in the Lake Chad Region Table 2.1: Main correlates with local economic growth: Regression analysis Model (1) (2) (3) (4) Sample Intensive Full Intensive margin Full sample margin sample Within Lake Chad Within Lake Chad -0.010*** -0.006*** -0.007 -0.006 Nighttime light in 1992 (ln) (0.002) (0.002) (0.005) (0.006) 0.000 -0.000 Lake Chad region (0.010) (0.001) 0.003*** 0.002*** 0.002*** 0.002*** Population in 1990 (ln) (0.000) (0.000) (0.001) (0.000) Annual growth rate of population 0.083*** 0.022*** 0.116* 0.025 (1990–2015) (0.018) (0.007) (0.060) (0.016) 0.003*** 0.002*** 0.005 0.002 Access to gridded electricity (0.001) (0.000) (0.004) (0.001) 0.002*** 0.001*** 0.000 0.000** Market accessibility (0.000) (0.000) (0.000) (0.000) 0.006 0.002** -0.008 -0.000 SPEI in 1992 (0.005) (0.001) (0.016) (0.001) 0.000 -0.000 -0.000** -0.000** Cropland density in 1990 (0.000) (0.000) (0.000) (0.000) -0.000 -0.000 0.000 0.000 SPEI in 1992 × Cropland density in 1990 (0.000) (0.000) (0.000) (0.000) -0.019** -0.003** -0.002 -0.003 Avg. SPEI (1992-2013) (0.008) (0.001) (0.033) (0.003) Avg. SPEI (1992-2013) × Cropland density 0.001** 0.000** 0.000 0.000 in 1990 (0.000) (0.000) (0.001) (0.000) -0.004* -0.003** -0.001 -0.002** Number of BH conflicts (ln) (0.002) (0.001) (0.001) (0.001) 0.001 0.002** 0.003 0.005*** Number of non-BH conflicts (ln) (0.001) (0.001) (0.003) (0.001) 0.003* 0.004** -0.005 -0.006 Number of civilian protests/riots (ln) (0.002) (0.002) (0.005) (0.004) 0.000 -0.000 -0.000 -0.000 Grazing land density (0.000) (0.000) (0.000) (0.000) 0.000 -0.000 0.000 0.000 Elevation (0.000) (0.000) (0.000) (0.000) -0.001 -0.000 -0.003** -0.000 Terrain constraints (0.001) (0.000) (0.001) (0.000) Observations 5,211 32,097 663 5,369 R-squared 0.393 0.317 0.254 0.097 Standard errors clustered by ADM1 regions. All the regressions include ADM1 regional dummies and fixed effects for major crops. Note that the intensive margin sample only includes cells that are ever lit at some point between 1992 and 2013 whereas the full sample includes all cells. *** p<0.01, ** p<0.05, * p<0.1. 2.5 Conclusion 105 Lake Chad Regional Economic Memorandum  |  Development for Peace Table 2.2: Shapley decomposition on select indicators Intensive margin Full sample Model Intensive margin Full sample Within Lake Chad Within Lake Chad Shapley Shapley Shapley Shapley Factor Percent Percent Percent Percent value value value value Nighttime light in 1992 (ln) 0.14346 36.53 0.07396 23.33 0.00713 2.81 0.00201 2.07 Population in 1990 (ln) 0.04657 11.86 0.07722 24.36 0.02161 8.52 0.03775 38.88 Annual growth in population 0.00685 1.75 0.0054 1.70 0.01248 4.92 0.00671 6.91 Avg. SPEI (1992–2013) 0.01611 4.10 0.001 0.32 0.01827 7.21 0.00257 2.64 Avg. SPEI (1992–2013) X 0.00636 1.62 0.00273 0.86 0.0192 7.57 0.00338 3.48 Cropland 1990 # of non-BH conflicts 0.00356 0.91 0.00721 2.28 0.00544 2.14 0.00654 6.74 # of BH conflicts 0.00103 0.26 0.00055 0.17 0.00519 2.05 0.00134 1.38 # of civilian protests/riots 0.0061 1.55 0.01012 3.19 0.00273 1.08 0.00207 2.13 Market access index (ln) 0.06337 16.14 0.0276 8.71 0.00901 3.55 0.00561 5.78 TOTAL 0.39271 100.00 0.31696 100.00 0.25351 100.00 0.09709 100.00 106 2.5 Conclusion Technical Paper 1. Socioeconomic Trends in the Lake Chad Region References Ahmadu, H. J. (2011). Farmer-Herder Conflict: Exploring the Causes and Management Approaches in the Lake Chad Region Nigeria [Phd, Universiti Utara Malaysia]. http://etd.uum.edu.my/3399/ Aker, J. C. 2011. “Dial ‘A’ for Agriculture: A Review of Information and Communication Technologies for Agricultural Extension in Developing Countries.” Agricultural Economics 42 (6): 631–47. Aker, J. C. and I. M. 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References 109 Lake Chad Regional Economic Memorandum  |  Development for Peace Appendix 2.A: Supplementary Information Table A2.1: Socioeconomic Outcomes in the Lake Chad Region and Other Regions Cameroon Chad Niger Nigeria National National National National country country country country Rest of Rest of Rest of Rest of LCB LCB LCB LCB Poverty and Human Capital (percent) Poverty 26.0 18.8 58.8 38.1 39.8 30.7 45.4 43.4 51.6 39.1 37.7 72.3 Literacy (15+) 77.8 83.7 47.1 41.6 45.5 21.0 33.0 32.8 34.0 71.9 72.4 58.7 Primary Completion 72.3 79.0 39.4 29.5 32.8 12.2 25.4 27.8 17.4 78.2 79.0 60.0 (14–25) Child stunting 28.9 26.9 37.3 39.9 37.0 51.0 43.9 41.7 52.2 36.8 35.8 48.0 Employment (percent) Agriculture 45.9 39.0 78.0 76.2 77.0 72.2 74.7 75.5 68.5 43.2 42.2 43.2 Industry 15.6 17.1 8.7 7.0 6.9 10.2 7.9 7.2 7.5 9.4 9.5 9.4 Service 31.0 35.3 10.9 13.6 12.8 17.0 15.6 15.2 20.4 37.1 37.7 37.1 Access to Public Services (percent) Piped Water 35.6 39.6 14.8 15.9 16.4 13.8 31.8 34.7 23.5 11.2 10.4 20.7 Improved Sanitation 61.1 66.9 30.8 14.1 16.2 5.7 24.8 28.5 14.3 56.3 56.4 55.1 Electricity 62.2 70.4 19.6 7.7 9.0 2.4 14.4 16.0 10.0 59.4 61.3 38.4 Source: World Bank calculations based on data of the national authorities. Note: Data on education (literacy and primary education), and employment are based on the latest household surveys conducted in Cameroon (2014), Chad (2018), Niger (2018), and Nigeria (2018). Job category by industry includes only working-age individuals (ages 15–65). Data on poverty are based on the latest harmonized household surveys conducted in Cameroon (2014), Chad (2011), Niger (2014), and Nigeria (2018). Poverty rates are based on the US$1.90 international poverty line (2011 purchasing power parity). Data on child health (child stunting) and access to public services are drawn from the latest Demographic and Health Surveys available in each country: Cameroon (2018), Chad (2018), Niger (2012), and Nigeria (2018). Rest of country = outside the Lake Chad region; LCB = within the Lake Chad Basin region. 110 Appendix Technical Paper 1. Socioeconomic Trends in the Lake Chad Region  escriptive Statistics and Sources of Data Appendix 2.B: D Used in the Multivariate Regression Variable N mean sd min max Annual rate of growth in NTL (1992–2013) 32097 0.001 0.01 -0.148 0.15 Nighttime light in 1992 (ln) 32097 0.063 0.372 0 4.156 Lake Chad dummy 32097 0.167 0.373 0 1 Population in 1990 (ln) 32097 1.387 1.386 0.693 9.299 Annual growth rate of population (1990–2015) 32097 0.011 0.022 -0.194 0.244 Access to gridded electricity 32097 0.211 0.408 0 1 Market accessibility 32097 8.062 4.87 0.889 31.963 SPEI in 1992 32097 0.32 0.463 -0.889 1.265 Cropland density in 1990 32097 11.566 16.59 0 68.939 Avg. SPEI 1992–2013 32097 -0.226 0.187 -0.688 0.422 Number of BH conflicts (ln) 32097 0.005 0.095 0 5.568 Number of non-BH conflicts (ln) 32097 0.03 0.223 0 5.333 Number of civilian protests/riots (ln) 32097 0.01 0.136 0 4.883 Grazing land density in 1992 32097 23.55 26.694 0 76.83 Elevation 32097 473.007 263.173 1.339 3015.201 Terrain constraints 32097 2.439 1.029 0 7 Appendix 111 Lake Chad Regional Economic Memorandum  |  Development for Peace Appendix 2.C: Market Access Index Definition  n this report, we define market access as a measure of accessibility from one origin to all destinations based on travel I distance (or travel time). More formally, market access for a given location (or origin) i can be expressed as follows: –θ MAot = ∑ Pdtτodt d  here Pd refers to the population of a location (or destination) d, τodt is travel time from cell o to destination d, and w θ is a trade elasticity or decay parameter measuring how trade volumes fall as travel times increase. We set ϴ at 3.8 following Jedwab and Storeygard (2020) Destinations that are considered in the construction of this index include all urban agglomerations with a population greater than 100,000.251 In other words, market access is the weighted sum of population in all the destinations, which are weighted by travel time/distance. Travel time is computed based on the friction map generated by Weiss et al. (2015). In this study, destinations are defined as all major population centers in those four countries and origins are points on the road network that are closest to the centroid of each village. Data  e calculation of market access requires the following information: 1) census population and geographical coordinates Th (e.g., longitude and latitude) of all population centers; and 2) road network data. Population centers are defined as those half-degree grids with more than 300,000 inhabitants. For road network information, we rely on OpenStreetMap. 251 We used grid-level population data (at a resolution of 1km) from the Global Human Settlements (GHS) to identify urban agglomerations. We first generated a boundary shapefile of urban agglomerations which correspond to all adjacent grid cells with a population size greater than 5,000. We then computed travel time from each grid cell to the centroid of those urban agglomerations. 112 Appendix Technical Paper 1. Socioeconomic Trends in the Lake Chad Region Appendix 2.D: Rural Access Index  e Rural Access Index (RAI) measures the share of rural population living within 2km away from all-season roads. Th To construct this index, we rely on three sources of data: OpenStreetMap, WorldPop 2015 population estimates, and GRUMP Global Rural-Urban Mapping Project, Version 1 (GRUMPv1) (CIESIN, Columbia University, CUNY, CIDR, IFPRI, and CIAT 2017). We apply the following methodology as laid out in https://rai.azavea.com/: • Select commonly used tags from OpenStreetMap (Trunk, Primary, Secondary, Tertiary) that serve as an approximation for all-season roads • Create a mask based on 2 km buffer on these roads • Create a mask based on urban areas as defined by GRUMP urban extents polygons • Summarize the population remaining on the 100 metre raster dataset from WorldPop 2019 Appendix 113 Lake Chad Regional Economic Memorandum  |  Development for Peace Technical Paper 2. Climate Change, Rural Livelihoods, and Urbanization: Evidence from the Permanent Shrinking of Lake Chad Remi Jedwab (George Washington University), Federico Haslop (George Washington University), Takaaki Masaki (World Bank), and Carlos Rodríguez-Castelán (World Bank) 114 Technical Paper 2. Climate Change, Rural Livelihoods and Urbanization: Evidence from the Permanent Shrinking of Lake Chad 3.1 Introduction There is a vast economic literature studying the effects Other major examples of drying lakes include the Aral of climate change on long-run growth, migration, Sea (Kazakhstan and Uzbekistan), formerly the fourth urbanization and human capital, among several other largest lake in the world, and Lake Urmia (Iran), formerly outcomes. A sizable portion of this literature has been the largest lake of the Middle East. Both shrunk to less dedicated to the study of weather trends and shocks, and than 10 percent of their former size. However, the reasons droughts in particular—an area of research of increasing for their aridification differ. For Lake Chad, aridification importance in a world that is projected to become came from long-term climate change. For the two other considerably drier by the end of the century (see C.-E. lakes, human actions were responsible. First, the Aral Sea Park et al. 2018; S. Hsiang and Kopp 2018). dried up because its feeding rivers were diverted by Soviet irrigation projects. Second, Lake Urmia dried up because Nevertheless, very little attention has been paid in the its feeding rivers were dammed. In contrast, as explained literature to how aridification can impact livelihoods below, Lake Chad dried up for mostly geographical—and through the disappearance of lakes and other water locally exogenous—reasons. resources. Lake Chad, once the second largest wetland in Africa (Hutchinson et al. 1992), lost about 90 percent of Understanding the local economic effects of drying its surface water area—around 23,000 sq km—between lakes is not straightforward, as lake recessions can the mid-1960s and the mid-1980s. This is equivalent to have ambiguous effects. On the one hand, a receding the total area of 4,200 American football stadiums, in just lake frees up arable land that can be used for farming. 20 years. Alternatively, 23,000 sq km is about 10 percent On the other hand, a receding lake can negatively impact more than the total area of El Salvador, Israel or Slovenia. fishing communities, farmers that rely on the lake’s While its water level has been slightly recovering since the waters for their irrigation needs, and cattle herders who mid-1990s, it is still on average 80 percent less than in the need the lake’s waters and the vegetation around it so mid-1960s. The resultant increasingly harsh environment, that their cattle can drink and eat enough. In poor and in the absence of climate change adaptation measures, has poorly connected countries, urban communities may also led to the development of self-serving political elites in rely on the lake for transporting goods. Furthermore, as northern Nigeria and furthered the eruption of the Boko a lake keeps drying, the arable land that was originally Haram conflict (Onyia 2015). freed up may also aridify. All these factors may result into intensified competition over limited resources, potentially It is all the more important to study this research feeding into conflicts. At the same time, in the longer question as lakes are important economic assets for run, residents of lake shore areas can potentially adopt various developing regions and countries of the world, adaptation strategies that help them mitigate the impact such as the Caspian Sea in Eastern Europe, Central Asia, of lake recessions. The short and long run effects of lake and Western Asia, or Lake Victoria, Lake Tanganyika, recessions might thus differ. Lake Malawi, Lake Bangweulu and Lake Turkana in East Africa. Importantly, Africa has ten of the fifty largest lakes In this paper we analyze how the shrinking of Lake in the world.252 Before shrinking, Lake Chad was the 11th Chad affected local economic development—as proxied largest lake in the world and the 4th largest lake in Africa. by local population growth in the absence of better 252 1Other large lakes are usually found in North America, Russia or Central Asia. 3.1 Introduction 115 Lake Chad Regional Economic Memorandum  |  Development for Peace data—and urbanization—city population growth—in Figure 3.1:  Evolution of Lake Chad’s Total Surface Water Area (sq km), 1950–2020 the already vulnerable sub-Saharan African region of the Sahel, trying to understand the economic consequences Total surface water area (sq.km.), in thousands 30– Large Lake of a geographical phenomenon that may become more Chad Phase Shrinking Lake Chad Phase Recovered Lake Chad Phase and more common as the world becomes drier and drier. 25– We focus our analysis on three low-income countries 20– whose territory borders Lake Chad: Cameroon, Chad 15– and Niger  (see Map 3.1). In the three countries, the 1960s marked the beginning of a crisis for the lake. Figure 10– 3.1 presents the evolution of the lake’s total surface water 5– area from 1950 to 2020, showing an enormous decrease in size between 1965 and 1985 and partial recovery after 0– 1995. In our analysis, we thus divide the full period into 1950 1960 1970 1980 1990 2000 2010 2020 Notes: Total surface water area was obtained from the following sources: Olivry et al. 1996, three subperiods: pre-1965 (Large Lake Chad), 1965– Sédick n.d., FAO 2009, Comission du Bassin du Lac Tchad 2015, Okpara, Stringer, and Dougill 2016 and Ighobor 2019. 1995 (Shrinking Lake Chad), and post-1995 (Recovering Lake Chad). Next, we treat the shrinkage of the lake as Map 3.1: Location of Lake Chad and Subdistrict Boundaries for the Three Countries of Study Notes: This figure shows consistent reconstructed subdistrict boundaries for the three countries of study for the period circa 1950s–2010s. Cameroon, Chad and Niger are divided into 113, 138 and 119 subdistricts, respectively. Lake Chad is shown in the center of the map. We also show the location of the capital (and most populated city) of Niger (Niamey) and Chad (N’Djamena). For Cameroon, we show its capital city (Yaoundé) as well as its most populated city (Douala) today. Finally, we indicate the location of Lake Fitri (in Chad). 116 3.1 Introduction Technical Paper 2. Climate Change, Rural Livelihoods and Urbanization: Evidence from the Permanent Shrinking of Lake Chad an ”exogenous” shock, as the shrinkage was not driven by decline observed in the area. Cities might then have acted local economic or geographical conditions but reduced as a safety valve sector for economic refugees from the rainfall in a fourth country, the Central African Republic Lake Chad area. We observe different population growth (CAR) (see Map 3.1), thus assuaging reverse causality patterns for smaller (5K+) and larger (20K+) cities in the concerns. Indeed, the Logone and Chari rivers flow three countries, possibly due to different initial urban from the CAR through Chad into Lake Chad. Once one conditions. For example, in Niger, the disaster led to controls for proximity to these rivers, the shrinkage of the urban concentration in 20K+ cities. Finally, only in Niger lake could thus be considered “exogenous”. Alternatively, did the government disproportionately build higher- one can focus on Niger, the country most distant from quality roads towards Lake Chad. Yet, it does not appear the CAR. As such, the shrinkage of Lake Chad offers a that such investments mitigated the impact of the shock natural experiment that helps us examine how long- term on the total population. lake drying can affect both rural and urban communities. Our paper contributes to the literature on the socio- To conduct our analysis, we construct a novel data economic and demographic impact of climate change. set tracking total population patterns at a fine spatial Previous works have focused on the effects of rainfall or —113, 138 and 119 subdistricts in Cameroon, level droughts on a wide range of development outcomes, Chad and Niger, respectively—and city population such as migration (Gray and Mueller 2012; Rosenzweig patterns—166, 179 and 100 cities in Cameroon, Chad and Udry 2014), urbanization (Barrios, Bertinelli, and and Niger, respectively—from the 1950s to the 2010s. Strobl 2006; Henderson, Storeygard, and Deichmann We then use (relative) total population growth as our 2017), civil conflict (Harari and Ferrara 2018) and main outcome of interest, finding in a panel-difference- education (Maccini and D. Yang 2009; Shah and in-difference (DiD) framework for the three countries: Steinberg 2017). Other studies have also examined how (i) no differential effect of proximity to the lake before increases in temperature may drive rural-to-urban or 1965 (Large Lake Chad period); (ii) a substantial negative within-country migration (Bohra-Mishra, Oppenheimer, effect of proximity to the lake in 1965–1995 (Shrinking and S. M. Hsiang 2014; Partridge, Feng, and Rembert Lake Chad period); and (iii) an effect that remains 2017), international migration (Beine and Parsons strongly negative post-1995, despite the slow recovery 2015; Cattaneo and Peri 2016; Baez et al. 2017; Jessoe, of the lake’s water level (Recovering Lake Chad period). Manning, and Taylor 2017; Peri and Sasahara 2019), Our results suggest that fishing communities, farmers conflict (Eberle, Rohner, and Thoenig 2020), agricultural and cattle herders were negatively impacted by the lake output (Schlenker, Hanemann, and Anthony C. Fisher receding. As incomes probably decreased in the area, 2005; Schlenker, Hanemann, and Anthony C. Fisher households likely outmigrated to other areas. 2006; Deschénes and Greenstone 2007; Anthony C Fisher et al. 2012; Burke and Emerick 2016; Aragón, In addition, we study how the shrinkage of the lake Oteiza, and Rud 2021; S. Chen and Gong 2021; Steve impacted nearby urban communities. Using the same Miller et al. 2021), economic growth (Dell, Jones, and panel-DiD framework but studying city population Olken 2012), exports (Jones and Olken 2010; Kalemli- growth instead of total population growth, we find that Özcan, Nikolsko–Rzhevskyy, and Kwak 2020), mortality city population sizes increased (however, not significantly (Deschénes and Moretti 2009; Deschénes and Greenstone so) or remained stable in the long run. Hence, it is 2011; Barreca et al. 2015), and birth weight (Deschénes, suggested that (relative) rural population decline has been Greenstone, and Guryan 2009).253 the main component of the (relative) total population 253 See Tol 2009 and Dell, Jones, and Olken 2014 for a review of the literature on the impacts of climate change. 3.1 Introduction 117 Lake Chad Regional Economic Memorandum  |  Development for Peace Our paper is also related to the literature on natural The findings of our paper are also relevant to disasters and their impact on development. There understanding the economic effects of natural is already a well-established body of literature on resources. The literature has shown that the presence— how natural disasters may affect various development or discovery—of natural resources can be a blessing outcomes, including international migration (Mahajan (Aragón and Rud 2013; Arezki, Ramey, and Sheng 2016; and D. Yang 2020; Spitzer, Tortorici, and Zimran 2020; Allcott and Keniston 2017) or a curse for development Beine and Parsons 2015), domestic migration (J. J. Chen (Torvik 2002; Ploeg 2011; Venables 2016, Armand et et al. 2017; see Gröger and Zylberberg 2016 for Vietnam; al. 2020) depending on local contexts. Natural resources Bohra-Mishra, Oppenheimer, and S. M. Hsiang 2014, can also be a source of conflict and instability (Berman Kirchberger 2017, and Kleemans and Magruder 2017 for et al. 2017), even destabilizing the security situation of Indonesia; and Boustan, Kahn, and Rhode 2012 for the neighboring regions (Caselli, Morelli, and Rohner 2015; US), human capital outcomes (G. Caruso and Sebastian Adhvaryu et al. 2021). Our study sheds a new light on Miller 2015; G. D. Caruso 2017) and urban activity the nexus between natural resources (or lack thereof ) (Gallagher and Hartley 2017; Brooks and Donovan and development by studying how the withdrawal of 2020; Kocornik-Mina et al. 2020) among others. water resources due to lake shrinkage may disrupt local economies in areas near the lake and thereby hamper What sets our work apart from these existing studies urban growth. on the socio-economic impact of climate change or natural disasters is that we study the shrinkage of a Finally, we focus our analysis on three countries that lake as another important natural disaster shock are among the poorest in the world. Understanding the that explains long-term urbanization patterns in its effects of climate change and natural disasters in such neighboring regions. Lake disappearances are interesting, contexts is particularly important. Chad and Niger are and important, cases to study in and of themselves. Most then two Sahelian countries and are as such likely to be existing studies have examined the effects of climate very negatively impacted by climate change in the future, change by investigating the local economic effects of hence the need for more research on the effects of “past” weather-related shocks, in particular rainfall, temperature climate change events on their economies and societies.254 and humidity shocks. While weather-related shocks are most often locally exogenous, they are often temporary The paper is structured as follows: Section 3.2 dives shocks. It is much more difficult to find cases of permanent into some of the physical characteristics of Lake Chad shocks, such as a lake almost entirely drying over a period and its water sources. Section 3.3 introduces our novel of 20 years. To some extent, our shock resembles much data. Section 3.4 presents the hypothesis and empirical more the main object of such studies, i.e. climate change, strategy behind our analysis. Sections 3.5, 3.6 and 3.7 a permanent change in climate conditions. In addition, present results on total population, cities and roads, unlike existing studies on coastal flooding, which typically respectively. Finally, section 3.8 concludes. leads to crop losses and/or destruction in cities, we study the effects of lake recessions. Lake recessions have in theory more ambiguous effects, because some valuable land may become newly available. 254 The only few studies regarding the local effects of a smaller Lake Chad are (non-economics) articles that rely on contemporary small-sample village surveys to provide very detailed, but also very local, analyses of the situation (see, for example, Sarch and Charon Birkett 2000; Okpara, Stringer, and Dougill 2016, Luxereau, Genthon, and Karimou 2012). Despite the importance of these studies to understand how a smaller lake has affected households in the area, these analyses have many shortcomings that our paper addresses (despite the limitations of our own analysis). To the best of our knowledge, this is the first (economics) paper that identifies the short and long-term causal effects of a shrinking lake on local economic development, both in rural and urban settings. 118 3.1 Introduction Technical Paper 2. Climate Change, Rural Livelihoods and Urbanization: Evidence from the Permanent Shrinking of Lake Chad 3.2 Background: The Lake Chad and Its Tributaries About 90 percent of Lake Chad’s water comes from The fact that the Lake’s water level is primarily the Chari-Logone river system  (see Map 3.2). The determined by rainfall in another country south of our river system then primarily originates from rainfall in region of study provides reassurance that the results the mountainous areas of the Central African Republic will not be explained by reverse causality. Nonetheless, (CAR) (Hutchinson et al. 1992). Rainfall in the Adamawa this does not rule out other potential sources of bias. Highlands of Cameroon also somewhat contribute to the Because the Logone-Chari river system goes through the system. Because the water inflow of the lake depends territory of Cameroon and Chad, outcomes in the Lake’s almost exclusively on the Logone-Chari system, lack of surroundings may not be independent of outcomes rainfall over the CAR was by far the main reason behind upriver. Indeed, the same shock that affected the lake’s the large drop in water area observed after 1965 (Figure residents—dryer rivers due to lower rainfall in CAR— 3.1). may have also affected other households along the river Map 3.2: Major and Minor Rivers of the Chari-Logone River System Feeding Lake Chad Notes: The Chari River and its tributary, the Logone, provide almost all of Lake Chad’s water. The Chari River flows from the Central African Republic (shown in the map) through Chad into Lake Chad. We show in bold the main rivers of the Logone-Chari system (Shapefiles obtained from the Landscape Portal). In grey, we show other streams associated with the Logone-Chari system (Shapefiles obtained from FAO/GeoNetwork). We also show Lake Fitri. 3.2 Background: The Lake Chad and Its Tributaries 119 Lake Chad Regional Economic Memorandum  |  Development for Peace system. In that case, and in the case of Chad in particular, water (CM Birkett 2000). We will exploit this fact when areas farther away from the Lake are also directly affected. studying the effects for Chad, the only country where the If the Lake areas—i.e., the “more treated” group— two pools are present, thus expecting stronger effects for and the river areas—i.e., the “less treated” group—are the northern pool. similarly affected—either positively or negatively—then the magnitude of the estimated effect will likely be under- estimated. For these reasons, we will control for proximity to the Logone-Chari river system. In addition, the fact that the river system is not present in Niger implies that this country presents the “cleanest” environment to test our hypothesis, as the shock was more “exogenous” there than anywhere else. Furthermore, because the Logone- Chari system occupies a smaller share of Cameroon’s territory than Chad’s territory, Cameroon provides a more “exogenous” setting than Chad. However, we will find relatively similar results for the three countries, at least when studying total population levels. This gives us confidence that we are effectively controlling for any potential bias generated by the river system. This also ensures that we are not picking up an effect due to country-specific institutions or spatial policies. Finally, this reinforces the external validity of our results, especially considering that Cameroon is wealthier than Chad and Niger. Another characteristic of Lake Chad that must be considered is the heterogeneous degrees of dryness that were experienced over its different regions. Cutting Lake Chad in half lies what is called the Grande Barrie`re, an elevated area that in dry years divides the lake in a southern pool and a northern pool. Because the majority of the lake’s water enters through the south (via the Logone-Chari river system), it is only when the water level of the southern pool is high enough that water crosses the Grande Barrie`re to replenish the northern pool. During the Large Lake Chad era (pre-1965), this geological feature remained submerged, rendering it irrelevant. However, as the Logone-Chari river’s discharge rate declined, the Grande Barrie`re created a northern sink that dried almost completely in the 1980s (Okpara, Stringer, and Dougill 2016), and a southern sink that, although smaller in size, always retained an area of open 120 3.2 Background: The Lake Chad and Its Tributaries Technical Paper 2. Climate Change, Rural Livelihoods and Urbanization: Evidence from the Permanent Shrinking of Lake Chad 3.3 Data for the Reduced-Form Analyses For our analysis, we use subdistrict- and district-level (often administrative censuses). Values for the years 1988, data for Cameroon, Chad and Niger, some of the 2001 and 2012 come from the population censuses that poorest countries in the world. Unfortunately, data took place those years.257 availability is extremely scarce. However, any analysis of the impact of the lake shrinking demands localized data The Cameroon dataset includes the years 1963, 1967, for the period 1965–1995 (shrinking Lake Chad phase) 1976, 1987 and 2005. Information for 1963 and 1967 and the pre-1965 period (large Lake Chad phase). Due to comes from administrative sources. Population figures for this, total and urban population figures are the best (and the years 1976, 1987 and 2005 are based on population only) measures available.255 census counts. Unfortunately, no census has taken place since 2005. For example, the 2018 population census was postponed indefinitely. 3.3.1 Total Population Levels for the Subdistrict Samples The Chad dataset includes the years 1948, 1953, 1965, 1993 and 2009. Population measures for the years 1948, Few population censuses took place in the three 1953 and 1965 are based on administrative sources. countries and when population data is available, it is For the year “1965”, we use information from the 1962 not at a fine spatial level like say counties in the U.S. administrative census and 1964 demographic survey as Typically, the sources that we were able to get ahold of our baseline. When needed, we adjust the population report population data at the regional or district level, and levels that we obtain using information from the 1968 sometimes at the “subdistrict” level. However, subdistrict administrative census. We call this year “1965” because boundaries are rarely consistent across years. As such, we 1965 is the mid-year between 1962 and 1968. Lastly, had to reaggregate subdistricts in order to reconstruct a set we use census population figures for the years 1993 and of consistently defined subdistricts over periods spanning 2009. Next, we excluded Nigeria from our analysis due more than 50 years. Overall, our reconstructed subdistrict to a long history of disputed census results. In fact, the dataset contains 119 units for Niger (1951–2012), 1962 and 1973 results were never officially validated 113 for Cameroon (1963–2005), and 138 for Chad and published due to various controversies surrounding (1948–2009). These subdistricts correspond to third- their reliability and accusations of political manipulation level administrative units, in particular arrondissements (Ahonsi 1988). in Cameroon, sous-prefectures in Chad and communes in Niger. More details on the sources and the assumptions Finally, Map 3.1 shows the boundaries of the made can be found in the Web Data Appendix.256 In the reconstructed subdistricts. As seen, subdistricts are of a case of Niger, we have total population data for the years similar size across the three countries. Mean area is 9.1, 1951, 1956, 1959, 1962, 1969, 1988, 2001, 2012, 2013 10.6 and 4.2 thousand sq km in Cameroon, Chad and and 2017. Data for the years 1951, 1956, 1959, 1962, Niger, respectively. In comparison, the mean U.S. county 1969, 2013 and 2017 come from administrative sources is 2.8 sq km. 255 The Demographic and Health Surveys of USAID and national household or labor force surveys are typically not available before the 1990s. Likewise, only the 1976, 1987 and 2005 population censuses of Cameroon are available on the website of IPUMS International. By 1976, the lake’s level was already quite low. We are thus missing a year of data before the lake started shrinking. Finally, nighttime lights are only available from the year 1992. 256 The name of the third-level administrative units is also not constant over time in each country. The names referred here are the ones used by each country in the reports of their latest population census. 257 Administrative censuses are population counts that rely on official registers and other national and local files. 3.3 Data for the Reduced-Form Analyses 121 Lake Chad Regional Economic Memorandum  |  Development for Peace 3.3.2 District Samples 1960). Post-1968, we rely on reports of the population census (1977, 1988, 2001, 2012). Next, while we know In the case of Cameroon, we only have subdistrict the population size of almost all cities and for almost all population data for one year (1963) before the lake years in 1977–2012, information for the years 1900– started shrinking. As such, we cannot investigate whether 1968 is more patchy. In particular, when Niger was the parallel trends assumption holds for Cameroon. As a still a colony as well as in the early years of the post- solution, we verify that it holds if we use instead total independence period, no census was conducted. Instead, population data at the district level. More precisely, administrators would sequentially visit various regions of we reaggregate the 113 Cameroonian subdistricts into the country to proceed with administrative population 47 districts, which allows us to add one year of pre-1965 counts, as in 1955–1962 and 1965–1968. As such, for data (1956; source = administrative census). Next, in our 16 localities that already had more than 5,000 inhabitants econometric analysis we will also include district-specific before 1968, population is typically available for different linear trends. years for different cities. To create a consistent population series for the pre-1968 period, we use exponential While we use the same 47 districts for Cameroon, we interpolations. use 31 districts for Niger and 36 districts for Chad. Note that the distribution of districts does not reflect the There are then a few cities for which we know their distribution of districts in any particular year. Indeed, population before the 1940s and in the late 1950s for district boundaries and subdistrict boundaries to be but not in-between. In order to better predict their consistent, and in order to also preserve consistency over population circa 1950 (we indeed focus on the post-1950 time, some aggregations had to be made. However, our period in our analysis), we also consider their pre-1950 boundaries more or less correspond to district boundaries population. in the 1960s.258 Next, for later years, there are a few cities for which the first population estimate available exceeds 5,000 3.3.3 City Population Sizes by several thousands. As a result, these cities might have exceeded 5,000 in the previous years of data as well but we To study urbanization, we need a consistent definition cannot be sure. To allow for this possibility, and for each of cities across the three countries and for all years city without any early population estimate, we assume available. As in many studies in the urban literature, we that their 1945 population one inhabitant and then define as a city any locality with at least 5,000 inhabitants. use exponential interpolation to fill the missing years. We thus focus our data compiling efforts on localities that As such, this increases the likelihood that a city exceeds reached the threshold of 5,000 inhabitants at any point 5,000 if its value is well above 5,000 the following year during our period of study. of data. For Niger, 166 localities reached 5,000 inhabitants at Overall, for city-years where the obtained population least once in 1900–2012.259 For the pre-1968 period, we is not above 5,000, we are confident based on our rely on colonial and post-colonial administrative reports analysis that population is indeed below that number. of city population sizes (Niger became independent in 258 Districts correspond to departements or prefectures in the three countries 259 In particular, we have city population estimates for the following years: 1900, 1905, 1910, 1921, 1926, 1931, 1934, 1936, 1945, 1948, 1951, 1955–1962, 1965–1968, 1977, 1988, 2001, and 2012. 122 3.3 Data for the Reduced-Form Analyses Technical Paper 2. Climate Change, Rural Livelihoods and Urbanization: Evidence from the Permanent Shrinking of Lake Chad Our methodological choices should also not affect the administrative counts (Chad became independent in results as few city-years are ultimately concerned.260 1960). For the years 1993 and 2009, we use reports of the population census. For the years 1975 and 2000, we We then proceed similarly for both Cameroon and use administrative population count estimates provided Chad. For Cameroon, 186 localities reached 5,000 at by Chad’s Institute of Statistics. any point in 1932–2005.261 For the pre-1976 years, we use colonial and post- colonial administrative counts (Cameroon became independent in 1960–1961). For 3.3.4 Geographical Proximity to Lake the years 1976, 1987 and 2005, we use reports of the Chad population census. For Chad, 100 localities reached 5,000 at any point in the period 1937–2009.262 For We obtain from the RCMRD Geoportal of the World the pre-1968 years, we use colonial and post-colonial Bank a shapefile of the full (pre-shrinking) Lake Chad Map 3.3: Location of the Selected Country-Specific Centroids of Lake Chad Notes: This figure shows the centroids of Lake Chad considered for each country. 260 For a limited sample of the cities, we know their exact population when it is below 5,000. However, we do not make use of that information due to possible endogenous selection issues in why an estimate is available or not. 261 The data set covers the years 1932, 1939, 1941, 1945, 1950, 1953, 1956, 1958-1968, 1970, 1976, 1987, and 2005. 262 The data set covers the years 1937, 1939–1951, 1954–1956, 1961, 1964, 1968, 1975, 1993, 2000, and 2009. 3.3 Data for the Reduced-Form Analyses 123 Lake Chad Regional Economic Memorandum  |  Development for Peace area. We then construct for each subdistrict/district centroid the Euclidean distance to various “centroids” in the Lake Chad polygon. In Niger, residents only have access to the northern pool of the Lake. Thus, the centroid that we consider is the centroid of the section of the northern pool that is within the territory of Niger (see Map 3.3). In Cameroon, residents only have access to the southern pool of the Lake. Thus, the centroid that we consider is the centroid of the section of the southern pool that is within the territory of Cameroon (ibid.). In Chad, residents have access to both pools. We thus consider: (i) The centroid of the section of the northern pool that is within Chad’s territory; (ii) The centroid of the section of the southern pool that is within Chad; and (iii) The centroid of the section of the full Lake Chad area that is within Chad. Next, we also consider the centroid of the full Lake Chad area, thus abstracting from country boundaries. Finally, our main measure of proximity to Lake Chad is the negative of the logged Euclidean distances from these centroids to the subdistrict/district centroids. 124 3.3 Data for the Reduced-Form Analyses Technical Paper 2. Climate Change, Rural Livelihoods and Urbanization: Evidence from the Permanent Shrinking of Lake Chad 3.4 Main Hypothesis and Specification 3.4.1 Main Hypothesis “It’s difficult to determine boundaries on water, yet the gendarmes [from Cameroon and Chad] always come The historical drop in water levels starting circa 1965 after us and seize our fishing nets and traps and we have and the relative recovery of the lake after 1995 allow us to pay heavily to get them back.” (Murray 2007). to examine how the shrinking of a lake affects nearby communities. To do so, we exploit a simple difference- 3.4.2. Baseline Specification in-difference framework and study the effect of proximity to the lake on total population patterns. In particular, For subdistricts s and years t and each country at a we expect proximity to the lake to have no effect on time, we estimate the following model: (relative) population growth before the shock (pre-1965) and possibly some effects during the main shock period ln(Total Pop.)s,t = α + ∑ βv × Prox. Lakes × Iv=t v (1965–1995) and the slow recovery period (post-1995). + λs + θt + Ds × t + XsBs,t + μd,t (1) A priori, the effects of a lake shrinking on nearby  here ln(Total Pop.)s,t is the log of total population in w populations can be ambiguous. On the one hand, the subdistrict s in year t and our variables of interest are shrinking of Lake Chad made available arable land that the interactions between the (time-invariant) measure of was unclaimed before, allowing villagers to switch at least proximity to the lake and year dummies (we omit the first part of their activities from fishing to farming (Sarch and year of data so the effect is estimated relative to it). We Charon Birkett 2000). However, this coping strategy may add subdistrict (λs) and year (θt) fixed effects, as well as have not been made available to all villages. Furthermore, district-specific linear trends (Ds × t) to control for local as the lake kept shrinking, land that became available patterns of economic development at the district level in the early years of the lake shrinking became farther over time. To account for spatial auto-correlation, we use and farther away from the lake shore, which increasingly Conley standard errors (distance cut-off of 100 km).263 limited irrigation possibilities. A smaller lake also reduces incomes in fishing communities. It can also impact cattle Furthermore, our specification includes several time- herding, an important sector in the Lake Chad region invariant controls (XsBs,t) that we interact with year (herders typically sell their cattle to urban markets in effects to flexibly allow them to have a different effect Nigeria). Indeed, herders require the lake’s water and the over time. We first add the logged Euclidean distances vegetation that grows around it. Finally, conflict within to the largest city as well as the capital city and their and between villages may also be a negative consequence square.264 Doing this allows us to flexibly control for of a smaller lake: as the lake dried and people moved spatial patterns of economic development that may closer to its shores, increased competition for resources be related to economic or political centralization (or could have led to social conflict (Okpara, Stringer, and decentralization). This is important in the case of Chad, Dougill 2016). The fact that four different countries as N’Djamena, its capital and largest city, is near the Lake share ownership over portions of the lake makes things Chad area. even more complicated. As put by a local fisherman: 263 With few years of data pre-shrinking, subdistrict-specific linear trends ask too much of the data. 264 The largest city (Douala) is indeed not the capital city (Yaoundé) in Cameroon. 3.4 Main Hypothesis and Specification 125 Lake Chad Regional Economic Memorandum  |  Development for Peace For historical reasons, northern areas are less developed, and have been growing slower, than southern areas in the three countries. Geographical differences are also correlated with latitude, with declining vegetation density as one moves north and, in the case of Chad and Niger, desertification in the Sahel and Sahara zones. To control for this North-South gradient, we include the latitude of the subdistrict’s centroid which we interact with year fixed effects. We add two dummies for whether the subdistrict is crossed by a river of the main Logone- Chari river system or a river of the extended Logone-Chari river system, which we both interact with year fixed effects. Doing so controls for local effects of changes in the discharge rate of the Logone-Chari river system. As discussed previously, decreases in the discharge rate that eventually led to the shrinking of Lake Chad might have also led to differential patterns of development along the streams of the river system, in both Cameroon and Chad. The river flow may be associated with local economic development via changes in vegetation or irrigation. Finally, classical measurement error in the dependent variable, for example due to issues with the reporting of population levels in the original sources and/or the reaggregation process that we submit the underlying data to, should only affect standard errors. If anything, precision should be reduced, especially for earlier years where population data might be less reliable. 126 3.4 Main Hypothesis and Specification Technical Paper 2. Climate Change, Rural Livelihoods and Urbanization: Evidence from the Permanent Shrinking of Lake Chad 3.5 Reduced-Form Effects on Total Population We first study the effects of Lake Chad shrinking on data, especially pre-1965. More precisely, we have 119 subdistrict total population. As seen in Figure 3.1, the subdistricts x 17 years = 2,023 observations. lake’s water level dramatically dropped between 1965 and 1985. While residents might have initially expected Table 3.1 presents the results. In col. (1), Lake the “shock” to be temporary, it became clear over time proximity is defined using the centroid of the section that the shock was permanent. Residents’ economic of the northern pool that is contained with Niger’s and migratory responses to the aridification of the lake territory. We see no effect in 1956–1962 (the omitted may have thus evolved over time. Effects observed in year is 1951), suggesting parallel trends. In 1969, we the later period then capture the realization that the see a large negative effect of -0.31**. Relative to the year shock was permanent but also adaptation strategies 1962, the last year of available data before 1965, this that households may have adopted. In addition, post- effect is -0.23**. This implies that halving the distance 1995, the lake started recovering, albeit slowly (and from the lake is associated with a 23 percent relative erratically). Next, we assume that (relative) population decline in population. By then, the full Lake Chad, not growth is a good proxy for (relative) economic growth just its area contained within Niger, had shrunk by about patterns. Within a same country, and abstracting from 22 percent. This effects becomes even more negative in worker heterogeneity, the spatial equilibrium hypothesis 1988, at -0.41*** relative to the year 1962, implying that implies that spatial population growth patterns are halving the distance from the Lake is associated with a mainly explained by differential evolutions of nominal 41 percent relative decline in population. The Lake water wages, prices and quality-of-life amenities (Topel 1986, levels had then collapsed by 91 percent. Furthermore, in Gollin, Kirchberger, and Lagakos 2017 and Chauvin et terms of standardized effects, a one standard deviation in al. 2017). However, at (very) low income levels as in our proximity to the lake is associated with a 0.27 and 0.48 context, amenities not directly related to prolonging life standard deviation decrease in log population by 1969 expectancy should matter little (Duranton 2016, Chauvin and 1988, respectively. et al. 2017 and Jedwab and Vollrath 2019). Thus, by measuring population growth patterns, we should be The effects remain negative after 1995. However, one capturing mainly an effect on real wages. In other words, should be cautions when interpreting the effects after a (relative) population increase in one location should 2009, since that year marks the start of the Boko Haram indicate (relative) real wage growth. Population is then insurrection in Northeastern Nigeria. This could have the most reliable measure to capture economic growth (or affected local development. However, Blankespoor et al. decline) around Lake Chad, as consistent information on 2020 show that Boko Haram had an impact on night real wages or employment at a fine spatial level does not lights in 2009–2012 but did not affect population levels exist in our context for most of the period of study. by 2012. In addition, our 2001 and 2012 estimates are similar, suggesting a lack of population recovery after the lake regained some of its past water levels. In the post- 3.5.1 Effects on Total Population for 1995 period and relative to the year 1962, the relative Niger, 1951–2017 decrease in population was about 36 percent. In the same period, Lake Chad’s level was still, on average, about Niger possibly offers the best environment for our 20 percent of its pre-1965 level. analysis. Its territory does not contain any river belonging to the Logone-Chari system and we have more years of 3.5 Reduced-Form Effects on Total Population 127 Lake Chad Regional Economic Memorandum  |  Development for Peace Table 3.1: Effect of Proximity to the Lake, Total Population, Niger 1950s–2010s Dependent Variable: Log Subdistrict Population in Year t Lake Centroid: North NER Full Lake North NER Full Lake Omitted Year = 1951 (1) (2) (1) Cont’d. (2) Cont’d. -0.01 -0.02 -0.41* -0.64* Proximity to Lake (log) 1956 Proximity to Lake (log) 2012 [0.03] [0.04] [0.24] [0.36] -0.05 -0.07 -0.41* -0.65* Proximity to Lake (log) 1957 Proximity to Lake (log) 2013 [0.04] [0.05] [0.24] [0.36] -0.06 -0.09 -0.42* -0.66* Proximity to Lake (log) 1958 Proximity to Lake (log) 2014 [0.04] [0.06] [0.24] [0.37] -0.07 -0.11 -0.42* -0.67* Proximity to Lake (log) 1959 Proximity to Lake (log) 2015 [0.05] [0.07] [0.25] [0.37] -0.08 -0.12 -0.43* -0.68* Proximity to Lake (log) 1960 Proximity to Lake (log) 2016 [0.06] [0.08] [0.25] [0.38] -0.08 -0.13 -0.44* -0.69* Proximity to Lake (log) 1961 Proximity to Lake (log) 2017 [0.06] [0.09] [0.25] [0.38] -0.08 -0.13 -0.23** -0.29** Proximity to Lake (log) 1962 β31969–β31962 [0.07] [0.09] [0.09] [0.14] -0.31** -0.42** -0.41*** -0.59*** Proximity to Lake (log) 1969 β31988–β31962 [0.13] [0.19] [0.11] [0.17] -0.49*** -0.72*** -0.36* -0.56* Proximity to Lake (log) 1988 β32017–β31962 [0.15] [0.22] [0.21] [0.32] -0.40** -0.61** Subdistrict (119) FE, Year (17) FE Y Y Proximity to Lake (log) 2001 [0.20] [0.30] District (31) Trends; Controls Y Y Notes: 119 subdistricts x 17 years = 2,023 obs. “North NER” is the centroid of the Northern section of Lake Chad that is within the territory of Niger (NER). “Full Lake” is the centroid of the full Lake Chad area. Conley SEs (100 Km). Next, Figure 3.2a shows the effects when omitting Finally, in col. (2), we show the effects when proximity 1962 instead of 1951 (95 percent confidence intervals to the Lake is calculated using the Euclidean distance are also reported). As seen, while the effects are strong to the centroid of the whole Lake Chad area, not just in the sense that their magnitude is high, standard the area within Niger. If anything, the effects are now errors are high as well. If anything and relative to the stronger.265 Because the “Full Lake” centroid is located point estimates, the standard errors increase in the later more southern than the Niger-specific centroid, it gives period when population censuses became more, not more weight to subdistricts at the border with Nigeria. less, reliable. As such, the wide confidence intervals in One possibility is that the shrinkage of Lake Chad also the shrinking and post-shrinking periods imply that the had negative effects in Northeastern Nigeria (before Boko observed average effects hide heterogeneous effects across Haram), which then impacted subdistricts in Niger. subdistricts. If we study the effects in 1988, the average effect is about -40 percent and the corresponding lower- bound and upper-bound effects are about -20 percent and -60 percent respectively. This will led us to investigate subdistrict-specific factors that may have driven the heterogeneity in the effects. 265 In terms of standardized effects, a one standard deviation in proximity to the lake is associated with a 0.50 and 0.85 standard deviation decrease in log population by 1969 and 1988, respectively (vs. 0.37 and 0.58 in col. (1)). 128 3.5 Reduced-Form Effects on Total Population Technical Paper 2. Climate Change, Rural Livelihoods and Urbanization: Evidence from the Permanent Shrinking of Lake Chad Figure 3.2: Total Population Effect of Proximity to the Lake Chad, 1940s–2010s a. Niger Subdistricts (N=119) (1951–2017) b. Cameroon Subdistricts (N=113) (1963–2005) Relative effect in year t (omitted year=1962) Relative effect in year t (omitted year=1963) 0.2– 0.1– 0– 0– -0.1– -0.2– -0.2– -0.3– -0.4– -0.4– -0.5– -0.6– -0.6– -0.8– -0.7– 1950 1960 1970 1980 1990 2000 2010 2020 1950 1960 1970 1980 1990 2000 2010 2020 Q Districts (47) Q Subdistricts (N=113) c. Chad Subdistricts (N=138) (1948–2009) d. Water Loss and Post-1965 Effects (1967–2012) Water level loss of Lake Chad since 1965, Post-1965 effect Relative effect in year t (omitted year=1965) percent (percent, relative to latest pre-1965 year) 0– –-10 -20– -0.1– -0.2– –-20 -40– -0.3– –-30 -0.4– -0.5– -60– –-40 -0.6– -0.7– -80– –-50 -0.8– -0.9– -100– –-60 1950 1960 1970 1980 1990 2000 2010 2020 1970 1975 1980 1985 1990 1995 2000 2005 2010 Q Water level loss Q Effect in Niger ´ Cameroon J Tchad Notes: Subfigures (a)-(c) show for vairous samples the effects of proximity to Lake Chad (relative to the omitted year shown at left). For subfigures (a), (b) and (c), the specifications are similar to Table 1 col. (1), Table 2 col. (1) and Table 2 col. (3), and Table 3 col. (1), respectively. However, the omitted year is the latest year available before 1965 (incl.) instead of the first year available as in the tables. The dashed vertical lines show the years the lake started to decline (c. 1965) and recover (c. 1995). We report 95 percent confidence intervals. Conley SEs (100 Km). In subfigure (d), we plot the estimated water level loss ( percent) of Lake Chad relative to the year 1965 and the estimated post-1965 effects ( percent) for the three countries in 1967–2012 (relative to the latest year available in each country). 3.5.2 Effects on Total Population for In Col. (1), lake proximity is defined with respect to Cameroon, 1963–2005 the centroid of the section of the southern pool that is contained within Cameroon’s territory. In 1967, we For Cameroon, we have 113 subdistricts x 5 years = 565 observe a negative effect of -0.19**, implying that halving observations. The results are presented in Table 3.2. The the distance from the lake is associated with a 19 percent effects are estimated relative to the omitted year (1963). relative decline in population. By then, the lake had Unfortunately, the second year of data is 1967. We have shrunk by 22 percent. In 1976, the effect is -0.27**, and thus only one pre-shock year and cannot examine parallel the lake had shrunk by 77 percent. In 1987, when the trends. Lake’s size had collapsed to about 10 percent of its pre- drought size, the effect is -0.40***. Alternatively, a one 3.5 Reduced-Form Effects on Total Population 129 Lake Chad Regional Economic Memorandum  |  Development for Peace Table 3.2: Effect of Proximity to the Lake, Total Population, Cameroon 1960s–2010s Dependent Variable: (1)–(2): Log Subdistrict Population in Year t; (3)–(4): Log District Population in Year t South CMR South CMR South CMR Lake Centroid: Full Lake Full Lake Full Lake Omitted Year = 1963; 1956 (3) (4) (1) (2) (3) (4) Cont’d. Cont’d. 0.27* 0.38* Proximity to Lake (log) 1963 [0.14] [0.20] -0.19** -0.36*** 0.03 0.02 -0.24*** -0.36*** Proximity to Lake (log) 1967 β31967 –β31963 [0.08] [0.13] [0.15] [0.23] [0.09] [0.12] -0.27** -0.55** -0.08 -0.16 -0.35* -0.55** Proximity to Lake (log) 1976 β31976 –β31963 [0.12] [0.22] [0.22] [0.31] [0.20] [0.26] -0.40*** -0.80*** -0.12 -0.23 -0.39** -0.61** Proximity to Lake (log) 1987 β31987 –β31963 [0.14] [0.27] [0.16] [0.23] [0.19] [0.26] Proximity to Lake (log) 2005 -0.36** -0.72** [0.16] [0.34] Unit (113; 47) FE, Year (5; 6) FE Y Y Y Y District (47) Trends; Controls Y Y Y Y Notes: (1)–(2): 113 subdistricts*5 yrs = 565 obs. (3)–(4): 47 districts * 6 yrs = 282 obs. South CMR = centroid of the Southern section of the lake that is within Cameroon’s territory. Full Lake = full lake’s centroid. Conley SEs (100 Km). standard deviation in proximity to the lake is associated 1963 (relative to 1956). If we omit 1963 instead of 1956, with a 0.68 and 1.01 standard deviation decrease in log we then observe very negative and significant effects post- population in 1976 and 1987, respectively. 1965 (last two columns). The effects are similar to the effects at the subdistrict level (first two columns). Figure In the post-1995 period (year 2005), when the lake had 3.2b then shows these results graphically. partially recovered from its size reduction (82 percent of its pre-1965 size), the negative effect of being close the lake still exists (-36 percent). The results from 3.5.3 Effects on Total Population for Col. (1) can also be seen graphically in Figure 3.2b. As Chad, 1948-2009 seen, standard errors increase over time, which suggests heterogeneity in the effects. Col. (2) then presents the For Chad, we have 138 subdistricts x 5 years = 690 results when lake proximity is constructed using the observations (the omitted year is 1948). Chad contains Euclidean distance to the centroid of the whole lake area. in its territory portions of both the northern and southern Results are now stronger, for possibly the same reasons as pools of Lake Chad. Because of the presence of the Grand in Niger. Barrie`re, the northern pool was particularly vulnerable to droughts. We thus expect strong effects for areas Because we only have one pre-1965 year, we cannot test close to the northern pool. Furthermore, households for parallel trends in the subdistrict dataset. Relying on who relied on resources in the northern pool area could districts instead, we add the year 1956 to the analysis (47 have migrated south closer to the southern pool, whose districts x 6 years = 282 observations). We then use the more eastern areas in Chad were never completely dry. same specification as for the subdistrict analysis except Negative population growth effects in the southern pool the omitted year is now 1956. However, since district- area could be thus partially, or more than, compensated specific trends are included, one of the interacted effects by migration from the northern pool area. In contrast, in cannot not estimated (we omit the year 2005). As seen in Niger and Cameroon where residents only had access to cols. (3)–(4), a positive, not negative, effect is observed in one pool, between-pool migration was not possible. 130 3.5 Reduced-Form Effects on Total Population Technical Paper 2. Climate Change, Rural Livelihoods and Urbanization: Evidence from the Permanent Shrinking of Lake Chad Table 3.3: Effect of Proximity to the Lake, Total Population, Chad 1948–2009 Dependent Variable: Log Subdistrict Population in Year t Lake Centroid in Chad: North Full South North Lake Fitri South North Omitted Year = 1948 (1) (2) (3) (4) (5) -0.03 -0.01 -0.06 0.07 -0.15* 0.00 0.08** Proximity to Lake (log) * 1953 [0.04] [0.05] [0.07] [0.06] [0.08] [0.04] [0.04] 0.23*** 0.18** 0.25** 0.24* -0.03 0.19** -0.13 Proximity to Lake (log) * 1965 [0.09] [0.09] [0.12] [0.14] [0.15] [0.09] [0.09] -0.29*** -0.03 0.10 -0.46** 0.17 -0.28** 0.03 Proximity to Lake (log) * 1993 [0.09] [0.12] [0.09] [0.23] [0.23] [0.11] [0.15] -0.37*** -0.14 -0.09 -0.22 -0.30 -0.36*** 0.02 Proximity to Lake (log) * 2009 [0.12] [0.17] [0.18] [0.17] [0.27] [0.13] [0.18] -0.52*** -0.22 -0.15 -0.70** 0.21 -0.47*** 0.16 β1993 – β1965 [0.14] [0.19] [0.11] [0.32] [0.23] [0.15] [0.12] -0.60*** -0.32† -0.35** -0.46*** -0.27 -0.55*** 0.15 β2009 – β1965 [0.15] [0.21] [0.16] [0.12] [0.20] [0.15] [0.13] Subdistrict (138) FE, Year (4) FE Y Y Y Y Y District (36) Trends, Controls Y Y Y Y Y Notes: 138 subdistricts x 5 years = 690 obs. “North TCD” = centroid of the Northern section of Lake Chad that is within the territory of Chad. “Full TCD” = centroid of the Lake Chad area that is within the territory of Chad. “South TCD” = centroid of the Southern section of Lake Chad that is within the territory of Chad. “Lake Fitri” = centroid of Lake Fitri (fully contained within Chad). Conley SEs (100 Km). † p<0.15, * p<0.10, ** p<0.05, *** p<0.01. In col. (1) of Table 3.3, proximity to Lake Chad is in population. By 2009, this decline was 60 percent. Now, defined using the logged Euclidean distance to the in terms of standardized effects, a one standard deviation centroid of the northern pool area that is within in proximity to the lake is associated in 1993 with a 0.94 Chad’s territory. In col. (2) we use the centroid of the standard deviation in log population. Finally, the effects whole lake area that is contained within Chad’s territory. when omitting the year 1965 are represented visually in In col. (3) we use the centroid of the southern pool area Figure 3.2c. that is within Chad’s territory. Lastly, in col. (4), we simultaneously consider the northern pool centroid and If we consider instead the centroid of the whole lake the southern pool centroid. area within Chad (col. (2)), the post-1965 effects are still negative, but not significant. If we only consider As seen in col. (1), there is no effect in 1953 (relative the centroid of the southern pool area within Chad (col. to 1948) but there is a positive effect by 1965, thus (3)), only the 2009 effect is negative and significant indicating a positive pre-trend. If anything, households (relative to the year 1965). Lastly, if we simultaneously were disproportionately settling close to the lake before consider the northern and southern pool effects (col. (4)), it started shrinking.266 We then observe a strong negative we find very negative post-1965 effects for the northern effect in 1993 which became even more negative by 2009. pool and a positive, but not significant, effect for the In 1993 (when the lake was 92 percent smaller), the effect southern pool in 1993, suggesting that some areas closer is -0.29***. Relative to the year 1965, the effect is even to the southern pool may have indeed received migrants stronger, at -0.52***, implying that halving the distance from the northern pool. In 2009, both effects are negative to the lake is associated with a 52 percent relative decline (however, not significantly so for the southern pool), 266 Recall that population data circa the year 1965 uses population data from the years 1962–1964 as a baseline. For about half of the country, information from 1968 is also used, hence the need to always include as a control a dummy if 1968 information was ever used to recreate subdistrict population, which we interact with year fixed effects. 3.5 Reduced-Form Effects on Total Population 131 Lake Chad Regional Economic Memorandum  |  Development for Peace possibly because households realized that the southern the water level loss ( percent) of Lake Chad relative to pool was on its way to become as permanently affected as the year 1965 as well as the post-1965 effects ( percent) the northern pool. of the three countries in 1967–2012, the effects are also relatively similar between Cameroon and Niger. The long- Next we utilize Lake Fitri as a placebo check of our term effects are then stronger in Chad, which contains a analysis of the effects of Lake Chad shrinking. The larger share of the lake than the other two countries. In location of Lake Fitri can be seen in Map 3.1. According the late 1980s, and using 1990 country populations as to R. Hughes, J. Hughes, and Bernacsek 1992, the lake is weights, we find an average relative population decline located in a seasonally inundated plain that is fed by the of 43 percent. Circa 2010 (thus using 2010 populations Batha river that carries water all the way from the East as weights), the average decline is almost unchanged at of the country and the Ouaddai massif in particular. The 41 percent. size of Lake Fitri thus depends on rainfall at the border between Chad and Sudan. While Lake Fitri’s water levels have changed over time, it has not shrunk like Lake 3.5.4 Alternative Analysis Using Distance Chad. Because Lake Fitri provides rural households with Bins and Population Reallocation similar livelihood possibilities as Lake Chad does (e.g., fishing, farming, and cattle herding), it provides a good For a given country-year, our baseline specification placebo test of whether the effects observed in Lake Chad allows us to compare population growth patterns for are a consequence of changes in lake-related economic locations closer vs. farther away from the lake. As activities for the whole region instead of local economic such, it has the advantage of making us estimate only effects limited to the Lake Chad area. one coefficient per country-year, which facilitates the exposition of the results. However, it does not tell us how In col. (5), we report results when simultaneously the effect varies with proximity to the lake. In particular, including the Lake Chad variables (based on the we could imagine different scenarios with population centroid of the northern pool) and year fixed effects reallocating to non-shore areas located not too far from interacted with proximity to Lake Fitri (the negative of the lake or non-shore areas located far away from the lake. the logged Euclidean distance to Lake Fitri’s centroid). As seen, no effects are observed for Lake Fitri. If anything, We thus use the model of eq. (1) but instead of having a positive and significant effect is observed in 1948–1953, only one variable capturing proximity to the lake hinting that populations were moving closer to this lake we now use several dummies based on the Euclidean before 1953. However, the 1965, 1993 and 2009 effects distance between a subdistrict’s centroid and the are similar to the 1953 effect, indicating stable local selected lake centroid. More precisely, the mean land population patterns after 1953. Thus, the effects observed area of the 113 Cameroonese subdistricts, 138 Chadian for Lake Chad are specific to the Lake Chad region. subdistricts and 119 Nigerien subdistricts is about 9.1, 10.6 and 4.2 thousand sq km, respectively. Were these To summarize, we find strong negative effects of subdistricts shaped like a circle, their diameter would be proximity to the lake during the shrinking period 108, 116 and 72 km, respectively. Thus, the distance- and limited recovery post-shrinking. The effects appear based bins cannot be too small (e.g., 0–100 and 100– causal as no negative pre-trends are observed and no 200 km), otherwise each bin would include very few negative effects are found for Lake Fitri, another important subdistricts, which would lead to less precisely estimated lake. Finally, the effects are strong in the three countries, effects. At the same time, if the bins are too large (e.g., despite these countries having different geographies and 0–250 and 250–500 km), we could miss local effects of institutions, which strengthens the internal and external the lake shrinking. validity of our results. As seen in Figure 3.2d that shows 132 3.5 Reduced-Form Effects on Total Population Technical Paper 2. Climate Change, Rural Livelihoods and Urbanization: Evidence from the Permanent Shrinking of Lake Chad For each country, if we restrict the sample to and 2010 (2012, 2005 and 2009, respectively)—after subdistricts whose Euclidean distance to the lake is which the lake had started recovering. More precisely, for below the median, we find that the 5th percentile value subdistricts s and years t and each country at a time, the in the distance to the lake is 157, 196 and 125 km for model is as follows: Niger, Cameroon and Chad, respectively. We thus use bins of 150 km. More precisely, we create dummies if the ln(Total Pop.)s,t = α + ∑ ∑ βv ,s × Bins × Iv=t s v subdistrict is located within 0–150, 150–300 and 300– + λs + θt + Ds × t + XsBs,t + μd,t (2) 450 km from the lake and interact the dummies with the year fixed effects.267  here ln(Total Pop.)s,t is the log of total population in w subdistrict s in year t and our variables of interest are the We omit the last year of available data before 1965 interactions between the three distance bin dummies (0– (incl.), so 1962, 1963 and 1965 for Niger, Cameroon 150, 150–300 and 300–450 km) and the year dummies. and Chad, respectively. The effects are thus estimated As before, we add subdistrict (λs) and year (θt) fixed relative to the early 1960s, just before the lake began effects, as well as district-specific linear trends (Ds × t) and shrinking. In Table 3.4, we then only report the interacted several time-invariant controls (XsBs,t) interacted with effects for the years closest to 1990 (1988, 1987 and year effects. We then use Conley standard errors (cut-off 1993, respectively)—at the end of the shrinking period— of 100 km). Table 3.4: Effect of Proximity to the Lake, Total Population, Flexible Specification Dependent Variable: Log Subdistrict Population in Year t Niger (North) Cameroon (South) Chad (North) Country (Centroid): Omitted Yr = Early 60s (1) (2) (3) (4) (5) (6) (7) (8) (9) -0.36*** -0.46*** -0.64*** -0.43*** -0.45** -1.22*** -0.56* -0.80** -0.82* 0–150 Km*ca.1990 [0.05] [0.08] [0.08] [0.15] [0.20] [0.23] [0.31] [0.37] [0.44] -0.42*** -0.60*** -0.08 -0.85*** -0.18 -0.19 150–300 Km*ca.1990 [0.09] [0.08] [0.10] [0.13] [0.15] [0.27] -0.07 -0.88*** 0.00 300–450 Km*ca.1990 [0.05] [0.13] [0.16] -0.21** -0.31** -0.63*** -0.45** -0.35 -1.41*** -0.23 -0.98*** -0.99*** 0–150 Km*ca.2010 [0.09] [0.15] [0.15] [0.21] [0.27] [0.27] [0.21] [0.24] [0.29] -0.1 -0.42*** 0.09 -0.98*** -0.95*** -0.96*** 150–300 Km*ca.2010 [0.11] [0.09] [0.06] [0.09] [0.19] [0.24] -0.05 -1.08*** 0.02 300–450 Km*ca.2010 [0.08] [0.06] [0.02] Subdistrict FE, Year FE Y Y Y Y Y Y Y Y Y District Trends, Ctrls Y Y Y Y Y Y Y Y Y Notes: Obs.: Niger (1951–2017): 119 subdist. x 17 yrs = 2,023. Cameroon (1963–2005): 113 subdist. x 5 yrs = 565. Chad (1948–2009): 138 subdist. x 5 yrs = 690. Niger (North) = centroid of the Northern section of Lake Chad that is within the territory of Chad. Cameroon (South) = centroid of the Southern section of the lake that is within Cameroon’s territory. Chad (North): centroid of the Northern section of Lake Chad that is within the territory of Chad. For Niger, Cameroon and Chad, we omit 1962, 1963 and 1965, respectively. We interact the 0–150, 150–300 and 300–450 km dummies with the year fixed effects but only report the interacted effects for the years closest to 1990 (1988, 1987 and 1993, respectively) and 2010 (2012, 2005 and 2009, respectively). Conley SEs (100 Km). † p<0.15, * p<0.10, ** p<0.05, *** p<0.01. 267 In Niger, Cameroon and Chad, these bins correspond to (2,3,14), (1,8,4) and (6,14,10) subdistricts, respectively. 3.5 Reduced-Form Effects on Total Population 133 Lake Chad Regional Economic Memorandum  |  Development for Peace For Niger (cols. (1)–(3)), we find strong negative effects for the 0–150 km bin. Circa 1990, the effect for the 150–300 km bin is then as strong as the effect for the 0–150 km bin. However, in the long run (c. 2010), the 150–300 km effect is smaller than the 0–150 km effect. Therefore, recovery was only partial and only concerned the subdistricts located slightly farther away from the lake. For Cameroon and only including the 0–150 km and 150–300 km dummies ((4)–(5)), we find a strong negative effect for the 0–150 km bin. This effect is then weaker, and not significant, in the long run ((5)). However, if we also include the 300–450 km dummies, then the effects become very negative until 450 km (incl.), both in the short-run and the long-run ((6)). For Chad ((7)–(9)) and the medium run (c. 1990), we find a strong negative and significant effect for the 0–150 km bin only. The effect remains as strong in the long run. By then, the 150–300 km bin effect had also become very negative and significant.268 Lastly, the last spatial lags included do not have positive significant coefficients. Thus, populations did not necessarily “reallocate” to the vicinity of disaster- struck locations. Instead, the populations that would have stayed in/moved to the areas close to the lake in the absence of the shock might have stayed in/moved to other areas of the country somewhat proportionally. 268 For Niger and Chad where we have several years of data before 1965, we also verify that the coefficients of the pre-1965 interactions are never positive and significant, which would suggest negative pre-trends (not shown). Some of the interactions have a negative and significant coefficient, indicating positive pre- trends for a few distance bins, consistent with the pre-trends already observed when using (-) log distance as our measure of proximity to the lake. 134 3.5 Reduced-Form Effects on Total Population Technical Paper 2. Climate Change, Rural Livelihoods and Urbanization: Evidence from the Permanent Shrinking of Lake Chad 3.6 Effects on Cities and “Refugee” Urbanization In the previous sections, we showed how the shrinking For our city population analysis, we use the same bin of Lake Chad negatively impacted total population specification (2) as for our total population estimations levels in the areas close to the lake. Since rural sectors except the unit of analysis is a city, which we define were heavily reliant on the lake’s water level, and since as a locality of at least 5,000 inhabitants. As shown the regions surrounding the lake were little urbanized in by Jedwab and Vollrath 2015, the mean population 1965, our interpretation of the effects is that the effect threshold used in the world to define cities is 4,500. was driven by rural decline, not urban decline. Next, we restrict the analysis to the post-1950 period, to consider the same period as for the total population To test that more formally, we now examine how cities analysis. Finally, we consider three dependent variables: were impacted. In particular, cities in the area might (i) the log of (city population + 1) in year t (cols. (1)–(3) have been negatively affected either directly, due to the of Table 3.5);269 and (ii) two dummies equal to one if the fact that the lake was used for commerce in a context city had already reached 5K (cols. (4)–(6)) or 20K (cols. of high road-based transportation costs and non-existent (7)–(9)) by year t, respectively. Note that we consider railroads in the area, or indirectly, because of the impact 20K to study large cities separately. on the rural sector—via reduced fishing, farming and cattle herding—which then impacted the urban sector For Niger, between 1965 and 2012, the respective via rural—urban linkages. We call this scenario the “the number of 5K+ cities and 20K+ cities increased from rural disaster-led urban underdevelopment scenario.” 14 to 161 and from 4 to 26. For Cameroon and the years 1965 and 2005, the same numbers increased from 51 to At the same time, if individuals see reduced economic 173 and from 10 to 54. For Chad and the years 1964 and opportunities in the rural sector close to the lake, they 2009, the same numbers increased from 11 to 94 and may transition to the urban sector and thus migrate from 4 to 23. Unlike in developed countries, there are to cities, which could spur urbanization. In that case, relatively few 20K+ cities. Their emergence likely captures cities grow because of a natural disaster, not economic local economic development in a different way than 5K+ development per se. We call this scenario the “the rural cities. The growth of 5K+ cities is more likely connected disaster-led urban development scenario.” to rural economic development. First, as rural agro-towns grow, they are more likely to pass the 5,000 threshold. Therefore, the effect of the lake shrinking on city Second, the economic sectors of small cities depend population growth is ambiguous. It could be negative disproportionately more on economic development in (first scenario) or positive (second scenario), for example their surrounding rural areas. For example, fishermen, depending on rural-urban linkages (i.e. how city growth farmers and cattle herders may purchase goods and is affected by rural economic decline) and the absorptive services from local cities, and local cities may serve as capacity of cities there (i.e. how negatively wages respond trading stations for the goods they produce and sell to to increased migration flows and labor supply). larger cities farther away. 269 If the locality’s population is less than 5,000, we replace it by 0. 3.6 Effects on Cities and “Refugee” Urbanization 135 Lake Chad Regional Economic Memorandum  |  Development for Peace Table 3.5: Effect of Proximity to the Lake, City Population, Flexible Specification Log City Population in t Dummy City Pop. ≥5K t Dummy City Pop. ≥20K t Dependent Variable: Omitted Year=Early 60s (1) (2) (3) (4) (5) (6) (7) (8) (9) Panel A: Niger (166 Cities x 17 Years = 2,822 Obs.) 3.34** 3.52** 4.09** 0.35** 0.37** 0.44** 0.13 0.14 0.14 0–150 Km*ca.1990 [1.56] [1.67] [1.77] [0.17] [0.18] [0.19] [0.14] [0.15] [0.15] 1.85 2.37 0.21 0.28 0.14 0.14 150–300 Km*ca.1990 [2.94] [3.02] [0.33] [0.34] [0.15] [0.14] 1.78** 0.22** 0.01 300–450 Km*ca.1990 [0.83] [0.09] [0.02] 0.20 0.18 0.68 -0.07 -0.08 -0.01 0.75** 0.76** 0.71** 0–150 Km*ca.2010 [1.89] [2.04] [2.13] [0.21] [0.23] [0.24] [0.32] [0.35] [0.35] -0.23 0.23 -0.03 0.03 0.10 0.05 150–300 Km*ca.2010 [1.65] [1.74] [0.18] [0.19] [0.31] [0.31] 1.57 0.21* -0.18*** 300–450 Km*ca.2010 [1.03] [0.11] [0.06] Panel B: Cameroon (179 Cities x 18 Years = 3,222 Obs.) 3.43*** 2.94 3.65* 0.34** 0.30 0.42* 0.18* 0.17 0.21** 0–150 Km*ca.1990 [1.24] [2.20] [2.05] [0.13] [0.22] [0.23] [0.10] [0.21] [0.08] -0.15 0.79 -0.01 0.13 0.02 0.05 150–300 Km*ca.1990 [1.27] [1.68] [0.12] [0.20] [0.16] [0.12] 0.34 0.08 0.04 300–450 Km*ca.1990 [2.38] [0.26] [0.23] -0.60 -2.52 0.00 -0.14 -0.33 0.00 0.14 0.08 0.00 0–150 Km*ca.2010 [1.17] [2.47] [0.00] [0.13] [0.24] [0.00] [0.19] [0.43] [0.00] -2.17* 0.65 -0.22 0.14 -0.06 -0.13 150–300 Km*ca.2010 [1.30] [1.69] [0.14] [0.18] [0.29] [0.18] 2.03 0.27 -0.08 300–450 Km*ca.2010 [2.29] [0.23] [0.43] Panel C: Chad (100 Cities x 12 Years = 1,200 Obs.) -1.13 -2.29* -4.26*** -0.10 -0.25* -0.46*** 0.03 0.10 0.16 0–150 Km*ca.1990 [1.46] [1.35] [1.44] [0.15] [0.15] [0.15] [0.02] [0.16] [0.20] -1.48 -3.65* -0.19 -0.41** 0.04 0.12 150–300 Km*ca.1990 [1.78] [2.01] [0.20] [0.21] [0.15] [0.20] -2.55 -0.26 0.09 300–450 Km*ca.1990 [1.58] [0.17] [0.13] -1.28 -1.34 0.21 -0.09 -0.14 0.06 -0.20*** -0.04 -0.26 0–150 Km*ca.2010 [1.20] [2.12] [2.77] [0.13] [0.23] [0.30] [0.06] [0.33] [0.44] 1.39 3.27 0.12 0.35 0.18 -0.07 150–300 Km*ca.2010 [2.00] [3.04] [0.22] [0.33] [0.36] [0.48] 2.14 0.27 -0.29 300–450 Km*ca.2010 [2.36] [0.26] [0.23] Subdistrict FE, Year FE Y Y Y Y Y Y Y Y Y District Trends, Ctrls Y Y Y Y Y Y Y Y Y Notes: For Niger, we use the centroid of the Northern section of Lake Chad that is within the territory of Chad. For Cameroon, we use the centroid of the Southern section of the lake that is within Cameroon’s territory. For Chad, we use the centroid of the Northern section of Lake Chad that is within the territory of Chad. For Niger, Cameroon and Chad, we omit 1965, 1965 and 1964, respectively. We interact the 0-150, 150-300 and 300-450 km dummies with the year fixed effects but only report the interacted effects for the years closest to 1990 (1988, 1987 and 1993, respectively) and 2010 (2012, 2005 and 2009, respectively). Conley SEs (100 Km). † p<0.15, * p<0.10, ** p<0.05, *** p<0.01. 136 3.6 Effects on Cities and “Refugee” Urbanization Technical Paper 2. Climate Change, Rural Livelihoods and Urbanization: Evidence from the Permanent Shrinking of Lake Chad 3.6.1 Effects on City Population Sizes for in the longer run (c. 2010). However, the lack of long- Niger 1951–2012 run effects is misleading because almost all cities were above 5,000 then. Thus, with a dummy almost always For Niger, we have 166 cities x 17 years = 2,822 equal to one, the effect is identified off a very few cities observations. The effects are then estimated relative to only. Instead, it is more relevant to study the effect on 1965, the omitted year.270 As seen in cols. (1)–(3) of Panel 20K+ cities. Indeed, only 16 percent of the 166 cities had A of Table 3.5, positive, not negative, effects are observed reached that threshold by 2010 (in comparison, 8 percent on log city population in the shorter run (c. 1990). The of the 166 cities had already reached 5K by 1965). As short-run effects are especially strong close to the lake (0– seen in cols. (7)–(9), when the dependent variable is 150) and decrease with distance to it. In particular, while a dummy if the city is above 20,000, there is a strong we previously found that subdistricts close to the lake effect in the shorter run that becomes much stronger in grew about 60 percent slower than other locations (cols. the longer run. In particular, the coefficients suggest that, (1)–(3) of Table 3.4), these results suggest that cities close close to the lake, there is a 70 percent higher probability to the lake grew 400 percent faster than other cities on of cities reaching 20K. average. While 400 percent seems high, note that most cities were initially small or non-existent in our three To conclude, in Niger’s case, we find strong positive countries pre-1965. Consistent with an African context effects on urbanization during the shrinking period, of high migration rates and fast demographic growth which led in the longer run to the rise of larger cities (Jedwab, Christiaensen, and Gindelsky 2017), cities in in the area. Thus, in Niger, the results are consistent with our three countries then grew particularly fast during the rural disaster-led urban underdevelopment scenario. the post- 1965 period. For example, Niger’s total urban population had increased by 500 percent by 1988. Which cities in particular did benefit? This can be examined in Map 3.4. Circa 1965, there were no 5K+ In the longer run (c. 2010) and the specification with cities (grey circles) in the East, despite the existence of three distance bins, we still see positive effects but many small settlements close to the lake. The closest these are weaker and not significant. There are several 20K+ city was Zinder, 474 km from the lake. Roads in the possible interpretations for the reduction in the effects. East were then dirt roads. However, since it does not rain First, economic refugees from the Lake Chad area may much in the area, dirt roads are comparable to improved have only temporarily settled in the cities around the lake, (gravel) roads in the south-west of the country (Jedwab the time for them to find the resources to pay the costs of and Storeygard 2020). Assuming driving speeds of 40 km migration to other cities farther away. Second, economic per hour, the driving time from the lake to Zinder must decline in rural areas may have eventually impacted the have been at the very least 12 hours. Two days of driving urban sector in the area, thus causing cities in the area to were more likely, given roads are not straight lines and relatively lose inhabitants post-1990. road conditions more generally. In this context, given the initial lack of cities close to the lake, it is perhaps Now, are the effects driven by smaller or larger cities? If not surprising that two 20K+ cities appeared: Diffa and the dependent variable is a dummy if the city had already N’Guigmi. Diffa was a large village in 1965. Yet, by 2012, reached 5,000 by 1990 ((4)–(6)), we find strong effects it had become Niger’s 11th largest city. N’Guigmi was closer to the lake in the shorter run (c. 1990; a 40 percent historically located on the shore of the lake. As explained higher probability for the 0-150 km bin) and no effect by Geels 2006, the town was before 1965 a center for 270 Given the high number of controls and when estimating the model with several distance bin dummies interacted with year fixed effects, we need to omit one more year. We choose 1962, the second closest year before the year 1965. 3.6 Effects on Cities and “Refugee” Urbanization 137 Lake Chad Regional Economic Memorandum  |  Development for Peace Map 3.4: Evolution of City Population Sizes around Lake Chad, ca. 1965–ca. 2010 Notes: The map shows, for the Lake Chad area, the location of 5K+ and 20K+ urban settlements circa 1965, when the lake started shrinking, and circa 2010, at the end of our period of study. We also indicate regionally important (20K+) cities in the 1960s such as Diffa, N’Guigmi and Zinder in Niger, N’Djamena in Chad, and Maroua and Garoua in Cameroon. Finally, we show paved roads, improved roads, and earthen roads, all circa 1965. fishing communities. During the mid-1970s the lake’s 3.6.2 Effects on City Population Sizes for shore was 85 km away while it was 45 km away in the Cameroon 1951–2012 2000s. Thus, we might have expected N’Guigmi to have been negatively impacted by the shrinkage of the lake. Its For Cameroon, we have 179 cities x 18 years = 3,222 dramatic growth from 3000 people in 1962 to 25,000 observations. The effects are then estimated relative to today must have been driven by the locality functioning 1965, the omitted year. As seen in cols. (1)–(3) of Panel as a “refugee settlement” for individuals who lost their B in Table 3.5, we find in the shorter run (c. 1990) strong rural livelihoods. Finally, since we find significant long- positive effects close to the lake. In the specification with run effects on 20K+ cities but no significant long-run three distance bins (col. (3)), the effect for the 0–150 km effects on overall city population growth, it must be that bin is 3.65. Thus, cities closest to the lake grew 365 percent the shrinkage of the lake increased urban concentration faster than other cities on average. In the longer run in the area. (c. 2010), no clear effect is observed. If we rely on the specification with three distance bins (col. (3)), there is no effect at all for the 0–150 km bin, possibly because of the same reasons as for Niger. 138 3.6 Effects on Cities and “Refugee” Urbanization Technical Paper 2. Climate Change, Rural Livelihoods and Urbanization: Evidence from the Permanent Shrinking of Lake Chad Now, we find relatively similar patterns if the 3.6.3 Effects on City Population Sizes for dependent variable is a dummy equal to one if the city Chad 1950–2009 has reached 5K (cols. (4)–(6)). The shorter-run effects for 20K cities are then positive and relatively similar to For Chad, we have 100 cities x 12 years = 1,200 what we found for Niger (cols. (7)–(9)). However, in the observations. We use 1964, the first year before 1965, longer run, the effects have disappeared, unlike what we as the omitted year.272 As seen in Panel C of Table 3.5, found for Niger. To conclude, in Cameroon’s case, we also and unlike what we found for Niger and Cameroon, find positive effects on urbanization during the shrinking strong negative effects can be observed in the shorter run period. Thus, in Cameroon, the results are consistent with (c. 1990). However, these negative effects have disappeared the rural disaster-led urban underdevelopment scenario, in the longer run (c. 2010). In the specification with at least during the disaster period. However, in the longer three distance bins (col. (3)), no effect is observed within run, no clear effect is observed. 150 km and positive effects are observed for the 150–300 and 300–450 km bins (much like what we found for For the areas closest to the lake, why are the shorter- other two countries). run effects overall weaker in Cameroon than in Niger and why have these effects disappeared in the longer Likewise, in the shorter run, we find positive but run, unlike what we saw for Niger? These results make not significant effects if the dependent variable is a sense when visually inspecting how many 5K+ and dummy if the city has reached 20 km (cols. (7)–(9)). 20K+ cities existed in 1965 vs. emerged between 1965 In the longer run, we actually find negative effects but and circa 2010 (we use 2005 for Cameroon). As can be they are also not significant. Overall, in Chad and in the seen in Map 3.4, the Cameroonian areas close to the longer run, the shrinkage of the lake did not reduce city Lake had no cities in 1965. The closest city was Maroua, population sizes. However, given the possibly negative which was already larger than 20K in 1964. Maroua was extensive margin effects for larger cities, it must be that 252 km from the lake, so closer to the lake than Zinder small cities grew relatively fast. was in Niger. Garoua, farther away (407 km), was also larger than 20K in 1964.271Then, as can be seen, many The lack of a positive effect for 20K+ cities is not small cities eventually emerged close to the lake and a surprising given the presence of N’djamena, Chad’s few 20K+ cities also emerged close to Maroua. Thus, the largest city, 230 km away from the lake. As can be seen existence of Maroua and Garoua, two cities that were in Map 3.4, only one 20K+ city appeared in the vicinity already economically important in the 1960s, might have of the northern part of the lake. There were then more prevented other 20K+ cities from emerging closer to the 5K+ cities close to the former shore of the lake. Thus, it is lake (or at least at a higher rate than observed elsewhere). If possible that lake “refugees” with skills that allowed them anything, relying on the specification with three distance to be absorbed by more urban sectors disproportionately bins (col. (3)), we see positive (but not significant) effects went to the region of N’djamena instead of joining the for the 150–300 km bin (close to Maroua) and the 300– ranks of smaller cities that might have otherwise passed 450 km bin (Garoua). the 20K threshold. 271 Ndjamena, the capital and largest city of Chad, is not far, but on the other side of the border, and while borders are usually porous in the region, Cameroonians typically do not migrate to Chad, a significantly poorer country. 272 Given the high number of controls and when estimating the model with several distance bin dummies interacted with year fixed effects, we need to omit one more year. We choose 1961, the second closest year before the year 1965. 3.6 Effects on Cities and “Refugee” Urbanization 139 Lake Chad Regional Economic Memorandum  |  Development for Peace To conclude, across the three countries and focusing on the specification with three distance bins (col. (3)), the long-run effects on city population sizes are positive, however never significantly so. Therefore, some cities grew as a result of the shock and the observed (relative) population decline observed close to the lake must have been driven by rural population. We test this more formally by using the specification with three distance bins (eq. (2)) and studying how their shorter and longer run effects on log (total population) in year t vary when also controlling for the log of (total urban population + 1) in year t (total urban population is the total population of cities above 5K in t, which is sometimes equal to 0). The regressions are thus the same as in Table 3.4 except that we control for urban growth. When doing so, the effects are either unchanged or become even more negative (not shown, but available upon request), thus confirming that the observed relative decline in total population is driven by population decline. Depending on the initial economic geography of the country, we then find different responses for small cities vs. larger cities. In Niger, we find strong effects for 20K+ cities, hence urban concentration in the lake area. In both Cameroon and Chad, we find nil or negative (but not significant) effects for 20K+ cities. Already existing 20K+ cities such as Maroua and Garoua in Cameroon and N’djamena in Chad must have acted as a pull factor for lake refugees, thus preventing the emergence of medium-sized cities close to the lake. As a result, slower rural in-migration to the area or faster out-migration of rural residents from the area must have accelerated urbanization, in many cases away from the areas close to the shore of the lake. 140 3.6 Effects on Cities and “Refugee” Urbanization Technical Paper 2. Climate Change, Rural Livelihoods and Urbanization: Evidence from the Permanent Shrinking of Lake Chad 3.7 Governmental Responses to the Crisis One important question is whether governments, 4 times more “expensive” to build than improved roads, observing the increasingly negative impacts of the lake which are in turn 15 times more “expensive” to build during the shrinking period, used public infrastructure than earthen roads (Jedwab and Storeygard 2019). investments as a way to mitigate the effects of the shock or actually under-invested in the areas. Unfortunately, As seen when comparing Maps 3.4 and 3.5, Niger’s for most African countries, there is limited data on public government built between 1965 and 2014 paved investments over such a long period of time. roads all the way to the lake. The question is whether subdistricts close to the lake received relatively more road However, and for Kenya in 1964–2002 only, Burgess investments than other subdistricts, hence the need to et al. 2015 construct localized measures of road examine this econometrically. As seen in Panel A of Table investment that come from Michelin maps. They then 3.6, in Niger we see positive shorter run (c. 1990) and use this data to show how politically connected districts longer run (c. 2010) effects on paved road construction, disproportionately receive roads in more autocratic implying that lake areas indeed received more paved roads regimes.273 Jedwab and Storeygard 2020 also use the same than other areas on average (see cols. (1)–(3)). The paving type of data but for the whole continent and the period of roads nonetheless came at the expense of improved 1965–2014 to study the effects of roads on urbanization. roads (cols. (4)–(6)). However, lake areas received more We thus rely on their geospatialized data to obtain for paved roads than they “lost” improved roads (cols. (7)– each country-subdistrict and each year available the total (9)). Now, if we examine when lake areas experienced length (km) of paved roads, improved (laterite or gravel) more paved road building than other locations, we find roads and earthen roads.274 that it was in the mid-1970s (not shown), by which the the lake’s water level had already decline by 75 percent. We then use model (2) with the different distance bin The road investments were thus likely a response to dummies to study the effects of proximity to the lake the shrinkage of the lake. However, since the lake areas on road investment. The results are reported in Table experienced slower population growth, it must be that the 3.6. In cols. (1)–(3), (4)–(6) and (7)–(9), the dependent observed road investments had little impact on localized variable is the log of (total length of paved roads + 1), economic development (again, relative to other locations (total length of improved roads + 1) and (total length of in the country). We could then also imagine that roads paved or improved roads + 1), respectively. The effects lowered inter-regional migration costs for lake refugees, are estimated relative to the omitted year, 1965. In the thus accelerating outmigration to other areas in the rest table, we then only report the interacted effects for the of the country. years 1988—to mark the end of the shrinking period— and 2008—to capture the long-term effect of the lake In Cameroon, there were already a few improved roads shrinking.275 Finally, note that paved roads are on average (Map 3.4). By 2014, some of these in the area in 1965  273 As explained by Jedwab and Storeygard 2020, “Michelin uses four sources to create the maps: (i) the previous Michelin map, (ii) government road censuses/ maps, (iii) direct information from its tire stores across Africa, and (iv) correspondence from road users including truckers.” As such, the data is highly reliable for our purpose. 274 The available years are 1965, 1967, 1968, 1969, 1971, 1973, 1976, 1983, 1984, 1985, 1986, 1988, 1990, 1991, 1993, 1996, 1998, 2003, 2008 and 2014. No Michelin map was published for our countries of study before 1965. 275 Note that we have road data up to 2014 and also interact the distance bin dummies with the year 2014. However, to be consistent with our population estimations, we are more interested in seeing the effect circa 2010. 3.7 Governmental Responses to the Crisis 141 Lake Chad Regional Economic Memorandum  |  Development for Peace Table 3.6: Effect of Proximity to the Lake, Road Investments, Flexible Specification Log (Paved Km + 1) t Log (Improved Km + 1) t Log (Paved+Impr. Km + 1) t Dependent Variable: Omitted = 1965 (1) (2) (3) (4) (5) (6) (7) (8) (9) Panel A: Niger (166 Subdistricts x 20 Years = 2,380 Obs.) 0.14 2.75*** 2.33*** -0.06 -3.58*** -3.31*** 0.45 2.39*** 2.32*** 0–150 Km*ca.1990 [0.45] [0.48] [0.53] [0.47] [0.62] [0.73] [0.46] [0.50] [0.56] 3.32*** 2.97*** -3.48*** -3.26*** 2.90*** 2.86*** 150–300 Km*ca.1990 [0.45] [0.46] [0.55] [0.61] [0.49] [0.51] -0.94** 0.62 -0.07 300–450 Km*ca.1990 [0.41] [0.73] [0.55] -1.05** 3.57*** 3.22*** -0.18 -6.74*** -6.63*** -0.77 2.54*** 2.49*** 0–150 Km*ca.2010 [0.53] [0.69] [0.73] [0.67] [0.98] [0.98] [0.59] [0.69] [0.71] 4.12*** 3.82*** -6.41*** -6.32*** 3.04*** 3.00*** 150–300 Km*ca.2010 [0.75] [0.75] [0.87] [0.87] [0.76] [0.77] -0.90* 0.40 -0.00 300–450 Km*ca.2010 [0.47] [0.78] [0.61] Panel B: Cameroon (113 Subdistricts x 20 Years = 2,260 Obs.) -2.60*** -5.35*** -2.12*** 2.19*** 3.46*** -0.26 -0.61 -0.08 -1.19* 0–150 Km*ca.1990 [0.78] [0.76] [0.50] [0.69] [0.86] [0.65] [0.56] [0.77] [0.66] -2.98*** 0.18 1.19** -2.57*** 0.60 -0.58 150–300 Km*ca.1990 [0.33] [0.54] [0.47] [0.47] [0.44] [0.54] 2.66*** -4.13*** -1.70** 300–450 Km*ca.1990 [0.69] [0.53] [0.67] -2.42** -7.00*** 0.26 3.86*** 6.08*** -0.61*** 0.18 0.75 -0.44** 0–150 Km*ca.2010 [0.99] [0.96] [0.51] [0.73] [0.97] [0.22] [0.53] [0.71] [0.20] -4.68*** 2.55** 2.00*** -4.77*** 0.46* -0.78 150–300 Km*ca.2010 [0.44] [1.04] [0.34] [0.72] [0.25] [0.54] 7.03*** -7.30*** -1.70** 300–450 Km*ca.2010 [1.17] [0.89] [0.73] Panel C: Chad (138 Subdistricts x 20 Years = 2,760 Obs.) -0.23** -0.25* -0.23 0.10 0.19 0.25 0.06 0.13 0.15 0–150 Km*ca.1990 [0.11] [0.15] [0.17] [0.07] [0.17] [0.30] [0.06] [0.15] [0.27] -0.00 0.02 0.09 0.15 0.06 0.08 150–300 Km*ca.1990 [0.10] [0.13] [0.13] [0.27] [0.12] [0.24] 0.03 0.10 0.03 300–450 Km*ca.1990 [0.12] [0.24] [0.22] -0.19** -0.22 -0.21 0.11** 0.30 0.24 0.09 0.25 0.18 0–150 Km*ca.2010 [0.08] [0.16] [0.24] [0.05] [0.23] [0.30] [0.05] [0.21] [0.28] 0.02 0.02 0.18 0.13 0.17 0.10 150–300 Km*ca.2010 [0.12] [0.20] [0.17] [0.24] [0.16] [0.23] 0.01 -0.09 -0.09 300–450 Km*ca.2010 [0.09] [0.12] [0.13] Subdistrict FE, Year FE Y Y Y Y Y Y Y Y Y District Trends, Ctrls Y Y Y Y Y Y Y Y Y Notes: For Niger, we use the centroid of the Northern section of Lake Chad that is within the territory of Chad. For Cameroon, we use the centroid of the Southern section of the lake that is within Cameroon’s territory. For Chad, we use the centroid of the Northern section of Lake Chad that is within the territory of Chad. For Niger, Cameroon and Chad, we omit 1965. We interact the 0-150, 150-300 and 300-450 km dummies with the year fixed effects but only report the interacted effects for the years 1988 and 2008. Conley SEs (100 Km). † p<0.15, * p<0.10, ** p<0.05, *** p<0.01. 142 3.7 Governmental Responses to the Crisis Technical Paper 2. Climate Change, Rural Livelihoods and Urbanization: Evidence from the Permanent Shrinking of Lake Chad roads were paved and some earthen roads were improved, did not build better roads to the area. This is confirmed however not in the immediate vicinity of the lake (see econometrically in Panel C of Table 3.6. While the Map 3.5). Econometrically (see Panel of Table 3.6), we coefficients are not significant, we find, if anything, observe lower levels of road investment in the Lake Chad negative effects for paved road construction (col. (3)). area, except maybe farther away for the lake and for paved roads only (col. (3)). For the areas closest to the lake (0– Overall, Cameroon and Chad did not particularly 150 km), negative shorter run and longer run effects are respond to the crisis by building more roads to the observed when combining paved and improved roads Lake Chad area. Niger did respond by building more (col. (9)). Cameroon’s government thus did not appear roads but we know from our population estimations that to respond to the shrinkage of the lake by building more it did not prevent population decline in the area. We roads connecting the immediate lake areas to the rest of nonetheless observed urban concentration in Niger, with the country. a higher likelihood of having larger 20K+ cities. Thus, the roads might have contributed to lake refugees settling In Chad, the areas close to the lake did not have any in these better connected (and possibly diversified) cities paved or improved road in its vicinity in both 1965 rather than staying in smaller cities as in Cameroon or and 2014 (Maps 3.4 and 3.5). Chad’s government thus Chad. Map 3.5: Road Networks in the Lake Chad Area, ca. 2015 Notes: The figure shows for the year 2014 the location of paved roads, improved roads, and earthen roads. 3.7 Governmental Responses to the Crisis 143 Lake Chad Regional Economic Memorandum  |  Development for Peace 3.8 Conclusion and Policy Discussion Many of the world’s lakes are disappearing. Despite in roads that would connect these areas to less exposed an extensive literature on the economic consequences of locations. While roads might help the affected regions climate change, the economic effects of diminishing lakes cushion the shock by diversifying away from lake-related have not been widely investigated. We focused on Lake economic activities, they may also have no impact or even Chad, a vast African lake that lost about 90 percent of a detrimental local impact by accelerating outmigration. its surface area between 1965 and 1985, and recovered Unfortunately, the lack of data prevents us from better some of it post-1985. For Cameroon, Chad and Niger, analyzing which other public investments historically we constructed a novel data set tracking total and city took place in the region and what their mitigation effects population patterns at a fine spatial level from the 1950s were. to the 2010s. We then exploited a difference-in-difference strategy to estimate the effects of Lake Chad’s shrinking on nearby communities. We found relatively slower total population growth in the proximity of the lake, but only after the lake started shrinking. We did not find evidence for population recovery in the long run. We also found in many cases positive effects on the lake shrinking on city population growth nearby, which suggested that climate change might have induced “refugee” urbanization locally. Finally, we found that only Niger disproportionately built higher-quality roads to the Lake Chad area. However, comparing our different results, it did not appear to prevent population decline in the Lake Chad area. More generally, while our work cannot fully answer the question of how governments should respond to shrinking lakes, our results suggest that such natural disasters could have permanent negative localized economic effects in poor agrarian countries. In such countries, rural decline is likely to accelerate structural change and urbanization, in some cases locally. 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Estimating the Spillover Economic Effects of Foreign Conflict: Evidence from Boko Haram Remi Jedwab (George Washington University), Brian Blankespoor (World Bank), Takaaki Masaki (World Bank), and Carlos Rodríguez-Castelán (World Bank) 150 Technical Paper 3. Estimating the Spillover Economic Effects of Foreign Conflict: Evidence from Boko Haram 4.1 Introduction Violent conflicts present a formidable threat to 2019; Trebbi and Weese, 2019). But poor economies and regional economies. Throughout the world, border economic shocks also offer fertile grounds for conflicts regions in many countries are possibly impacted by the (e.g., Miguel et al., 2004; Bazzi and Blattman, 2014; cross-border economic effects of regional insurgencies in Burke et al., 2015).277 neighboring countries or national state failures, i.e. “bad neighbors”. This raises two questions. First, what is the While poverty traps and conflict traps can reinforce magnitude of the spill-over economic effects of foreign each other locally, spatio-dynamic spillovers can also conflict and what are the channels through which they be present  (Berman et al., 2017; König et al., 2017; operate? Second, what policies can governments adopt in Harari and Ferrara, 2018; Melnikov et al., 2020; Eberle the potentially exposed regions to mitigate such spill-over et al., 2020). Conflict in one location can beget conflict effects?276 in other locations, either via a direct expansion in space of conflict factors (e.g., armies) or because conflict in one In this paper, we adopt a difference-in-difference location increases poverty, and lowers the opportunity (DiD) framework leveraging the unexpected rise of cost of conflict labor, in other locations. Due to spill- the Boko Haram insurgency in Northeastern Nigeria overs that reinforce each other across locations, separately in 2009 to study its economic effects in neighboring identifying local and non-local effects is difficult areas in Cameroon, Chad and Niger that were not econometrically (Harari and Ferrara, 2018). directly targeted by Boko Haram activities. We find strong cross-border economic effects that are likely driven Studies on the impact of policies on conflict then focus by reduced trade activities, not the diffusion of conflict. on conflict prevention, management, resolution and/ Factors of local economic resilience to this foreign conflict or reconciliation in the conflict countries themselves shock then include trade diversification and political and (e.g., Nunn and Qian, 2014; König et al., 2017; Chiovelli  economic securitization. More generally, conflicts, if they et al., 2018; Sviatschi, 2018). Less is known about how have regional economic effects, may necessitate regional non-conflict countries can mitigate, in their border responses. regions, the local economic impact of foreign conflicts. The causal identification of the effects of conflict, To address some of these challenges, we exploit the and by extension of the mitigation effects of various exogenous rise of Boko Haram in Nigeria after 2009 locational factors, is complicated by a complex and estimate its local economic effects on neighboring endogenous relationship between conflict and socio- areas within Cameroon, Chad and Niger (CCN), so economic conditions  (Blattman and Miguel, 2010; outside Nigeria. Between 2009 and 2014, Boko Haram Djankov and Reynal-Querol, 2010). Conflicts impose became the world’s deadliest terrorist group ahead of ISIL, large economic tolls (e.g., International Monetary Fund, the Taliban and Al-Shabaab (Institute for Economics 276 Examples of regional insurgencies plausibly affecting other countries include the Cabo Delgado insurgency in Mozambique (Tanzania), the ISIL insurgency in Iraq and Syria (Turkey but also Jordan and Lebanon), the insurgency in the Maghreb (other countries in West Africa), the Taliban insurgency in Afghanistan (Iran, Pakistan, Tajikistan, Turkmenistan and Uzbekistan), etc. Examples of failed states with possible regional impacts include the Central Africa Republic, the Democratic Republic of the Congo, Somalia, South Sudan, Venezuela, Yemen, Zimbabwe, etc. 277 Other studies on the effects of (absolute or relative) poverty or income shocks on conflict or terrorism include, among many others, Krueger and Malečková (2003); Brückner and Ciccone (2010); Besley and Persson (2011); Ciccone (2011); Miguel and Satyanath (2011); Enders and Hoover (2012); Dube and Vargas (2013); Jia (2014); Couttenier and Soubeyran (2014, 2015); Berman and Couttenier (2015); Crost et al. (2016); Harari and Ferrara (2018); Berman et al. (2019);McGuirk and Nunn (2020); Eberle et al. (2020). Typically, poverty and negative income shocks are associated with individual incentives to engage in conflict as well as weakened state and counterinsurgency capacity. 4.1 Introduction 151 Lake Chad Regional Economic Memorandum  |  Development for Peace and Peace, 2012–2020). Until 2014, Boko Haram trade. Indeed, the Boko Haram area historically served concentrated its terrorist activities in the Northeastern as a trade corridor between (relatively wealthier) areas of part of Nigeria close to the border with CCN but did Nigeria and (relatively poorer) Cameroon-Chad to the not enter these countries, mostly to avoid fighting at least East and Niger to the West.278 four government armies instead of one. As such, in CCN until 2014, the estimated effects must be due to the spill- We then use the same econometric framework to over effects described above. identify factors that can help mitigate the effects of foreign conflict shocks. We find stronger mitigation We use a simple DiD framework whereby we compare effects in those areas that were initially better connected to CCN areas “close to” and areas “farther away from” other markets either via trade networks or transportation the Boko Haram region in the years after 2009 versus infrastructure (thus benefiting from a more diversified set before 2009. We find a strong negative effect of Boko of potential trade partners), and more politically and/or Haram on regional economic activities (as proxied by economically “secured” by government consumption via changes in night light intensity)—particularly for areas defense-related facilities (e.g., military headquarters) or within 200 km from the Boko Haram region. More public employment (e.g., social services). precisely, we find an average decline of 10 percent for the post-2009 period, and a decline of about 20 percent for This paper makes four important contributions. First places closer to the shock (within 100 km). For all places of all, various studies show how economic shocks in some within 200 km, we find an overall effect of about 20 locations increase conflict there as well as in neighboring (50) percent by 2013 (2018), that is, 4 (9) years after the locations (Berman et al., 2017; König et al., 2017; Harari shock began. The effects appear to be driven by declines and Ferrara, 2018; Eberle et al., 2020; McGuirk and in per capita incomes rather than population outflows (or Nunn, 2020).279 Two channels explain spatial diffusion. refugees inflows since we control for it). We also show First of all, conflict factors can move (e.g., armies) or that the parallel trends assumption is verified in CCN. be moved (e.g., weapons) spatially. Secondly, due to Finally, we find no effect on local (i.e. non-Boko Haram) economic spillovers, poverty can increase in surrounding conflict in CCN. Therefore, the estimated spill-over locations, thus raising the likelihood of conflict there. effects are purely economic. We do not find any impact of Boko Haram activities in Nigeria on local (non-Boko Haram) conflict activities When studying the confidence intervals of the in CCN, and this despite significant income declines baseline effect, we find that the estimated effects in contexts where most individuals already lived close range from about -30 percent to -10 percent in 2013. to the subsistence level.280 The lack of conflict spillovers Thus, while most places within the 200 km region were does not appear to be due to the increase of government negatively affected, some were less affected than others, forces in the area. Our interpretation is that poverty which motivates us to analyze the heterogeneous effects disproportionately increased in trade-reliant urban of foreign conflict depending on initial (pre-2009) local locations. Even if the opportunity cost of conflict labor conditions. We find stronger effects for initially more decreased, other economic factors must have dominated developed locations, hence more urban locations, which the previous effect and prevented conflict. shows the potential importance of foreign conflict for 278 Likewise, we find weaker effects on “rural” outcomes. Our analysis shows no effects on measures of greenness (proxying for agricultural expansion) or land use. We, however, find effects on agricultural burning, which proxies for agricultural intensification in rural areas (Blankespoor et al., 2021), most likely as a result of reduced urban incomes. 279 There are related literatures on the determinants of the spatial diffusion of conflict (e.g., Bosker and de Ree, 2014; Novta, 2016) and economic shocks (e.g., Amarasinghe et al., 2020). These studies all highlight the role of ethnic networks. Such networks are particularly important for domestic and international trade in Africa (Fafchamps, 2003). 280 Boko Haram also had no incentive to enter CCN, at least until 2014. 152 4.1 Introduction Technical Paper 3. Estimating the Spillover Economic Effects of Foreign Conflict: Evidence from Boko Haram Indeed, the causal mechanism of economic shocks more urban locations. Among urban locations, the least leading to conflict is complex, and the type of economic developed locations were disproportionately impacted. shock and industries should mediate the effects on When studying which locations were more resilient conflict. Positive shocks to labor-intensive industries, economically to the foreign conflict shock, we find that such as agriculture, raise wages and reduce conflict (Dal more connected and more secure locations were better Bó and Dal Bó, 2011; Berman and Couttenier, 2015; able to “weather” some of the impact of the shock. These Harari and Ferrara, 2018).281 But positive shocks to results are, we believe, important for policy because it capital-intensive industries raise the likelihood of conflict identifies potential factors of resilience to foreign conflict because the capital intensive industry expands at the shocks. In contrast, other studies examine countries that expense of the labor intensive one, which lowers the are, or were, directly impacted by conflict (instead of cost of appropriation activities relative to the amount of indirectly via cross-border effects). In these countries, they appropriable resources. Commodity discoveries or price focus on policies aimed at conflict prevention, resolution increases then increase violence because there is more and/or management (de Ree and Nillesen, 2009; Berman to appropriate (Angrist and Kugler, 2008; Dal Bó and et al., 2011; Rohner et al., 2013a; Nunn and Qian, 2014; Dal Bó, 2011; Dube and Vargas, 2013).282 In our case, Crost et al., 2014; König et al., 2017; Chiovelli et al., the shock reduced the amount of appropriable resources 2018; Sviatschi, 2018; Hartman et al., 2018; Eberle et al., and disproportionately impacted sectors that were more 2020) or post-conflict reconciliation (Fearon et al., 2009, capital-intensive than agriculture. The trading sector is 2015; Blattman and Annan, 2015; Blattman et al., 2015). then particularly sensitive to the impact of conflict on The government interventions that our results highlight trade costs, and economic agents may internalize that differ from some of the policies that have been studied in (Martin et al., 2008b, 2012). In our context, urban the literature, partly because the affected border regions residents whose incomes decreased due to the shock do not directly suffer deaths and destruction.283 plausibly internalized that having community members engage in conflict would further reduce incomes. Finally, Thirdly, there is a large literature on the impact of the shock was for the main period of study (wrongly) seen conflict on local economic development  (e.g., Abadie as temporary, as it was believed that the Nigerian army, and Gardeazabal, 2003; Nunn and Wantchekon, 2011; helped by international allies, would eventually eradicate Besley and Reynal-Querol, 2014; Burger et al., 2015; Boko Haram. It may have prevented individuals from Brodeur, 2018; Melnikov et al., 2020).284 However, switching to more conflict-related activities. conflict often arises endogenously due to socio-economic conditions, making it difficult to measure truly causal Secondly, this paper sheds light on the heterogeneous, local economic effects. Our natural experiment has the not just average, effects of conflict on growth at the merit of being simple and allows us to estimate the effects subnational level. In particular, for a similar conflict of a non-local, more exogenous, conflict shock. However, “shock”, the local impact may differ depending on our shock is externally less valid than in some of the initial economic conditions. We find stronger effects for other studies since it measures a cross-border effect. Also, 281 As shown by McGuirk and Burke (2020), global food price shocks increase conflict in areas without crop agriculture where most workers are net consumers of food. In food-producing areas, higher food prices may simultaneously reduce conflict due to the higher incomes and increase conflict from workers whose real wages fall. 282 Related studies include Hodler (2006); Lei and Michaels (2014); Caselli et al. (2015); Berman et al. (2017); Chiovelli et al. (2018); Sviatschi (2018); Castillo et al. (2020); de la Sierra (2020); Adhvaryu et al. (2021). 283 The government interventions studied in the literature include, for example, diplomacy, different types and locations of military interventions, weapon embargoes, reforms to property rights, development programs, service provision, community engagement programs, and food aid in conflict-prone or conflict-ridden areas, and demining, development aid, employment programs, cash transfers, and therapy sessions in post-conflict areas. 284 Studies on the more individual-level effects of conflict include, for example, Bellows and Miguel (2009); Blattman and Annan (2010); Annan et al. (2011); Akresh et al. (2012); Bauer et al. (2016); Sviatschi (2018). 4.1 Introduction 153 Lake Chad Regional Economic Memorandum  |  Development for Peace in CCN, our shock did not directly lead to deaths and (e.g. Glaeser, 2014; Gollin et al., 2016; Haslop et al., destruction (unlike most conflicts).285 2021a), demographic growth (e.g. Jedwab et al., 2017b; Jedwab and Vollrath, 2019), or climate shocks (Barrios Next, one of the mechanisms through which conflict et al., 2006; Henderson et al., 2017; Kocornik-Mina et affects economic development is by reducing trade and al., 2020; Haslop et al., 2021b). To our knowledge, the increasing economic uncertainty. While the linkages literature on conflict (or terrorism) and city growth is between conflict and trade have already been studied, more limited (e.g. Glaeser and Shapiro, 2002; Voigtländer empirical evidence is mostly cross-national (Blomberg and Voth, 2012; Dincecco and Onorato, 2016).288 and Hess, 2006; Martin et al., 2008b,a, 2012; Glick and Taylor, 2010; Qureshi, 2013; Rohner et al., 2013b; Seitz Lastly, our analysis has limitations. The three et al., 2015; De Sousa et al., 2018).286 Our focus instead countries of study are among the poorest in the world.289 lies in understanding how, within a country, spatial Understanding the economic effects of foreign conflict proximity to a foreign conflict affects local economic in such contexts is particularly important. However, development, most likely via trade disruptions as in data infrastructure and finances to collect and produce Chiovelli et al. (2018) who study the effects of post- data can be challenging;290 no consistent panel data on conflict demining on market access and local economic within-country variation in trade and migration flows, development. Other within-country studies such as production, wages, consumer prices and amenities are Berman and Couttenier (2015), Berman et al. (2017) available. or McGuirk and Burke (2020) then exploit trade shocks (from international commodity or food prices) to study The rest of this paper is structured as follows. Section the causal effects of income on conflict rather than the 4.2 provides information on the context while Section effects of conflict on income via trade or the role of trade 4.3 and Section 4.4 describe the data and the empirical diversification in mitigating the local economic impact of strategy, respectively. Sections 4.5 and 4.6 discuss the foreign conflict.287 estimated average and heterogeneous effects of the Boko Haram shock as well as its effects on local (non-Boko Fourthly, this work contributes to a body of literature Haram) conflict. Section 4.7 concludes. on the drivers of city growth in poor countries. Other studies on Africa have focused on the impact of transportation investments (e.g. Storeygard, 2016; Jedwab and Moradi, 2016; Jedwab et al., 2017a; Jedwab and Storeygard, 2020), trade more generally 285 Other studies of the effects of Boko Haram are mostly qualitative. Exceptions include Adelaja and George (2019); Bertoni et al. (2019). However, they study its effects in Nigeria, which complicates causal identification. 286 Martin et al. (2008b,a); Seitz et al. (2015) study the role of trade in conflict. Other studies examine the reverse relationship. Fenske and Kala (2017) study the relationship between historical African conflict and the slave trade. Emran et al. (2019) examine the long-lasting effects from temporary trade restrictions on the spatial distribution of employment and resource allocation exploiting the disrupted change in routes to the international market for two neighboring landlocked countries as the result of the the civil war in Côte d’Ivoire. 287 Berman and Couttenier (2015) find strong effects of negative income shocks (from lower international demand for a location’s crops) on conflict. They find a weaker effect for more remote locations. Because remote locations are more disconnected from international markets, their shock is smaller, hence their effect is smaller. Our analysis differs because we study how trade diversification is a factor of resilience for a given (conflict-driven) economic shock. 288 There is, however, a literature on the economic impact of refugees on cities (e.g., Lewis and Peri, 2015; Alix-Garcia et al., 2018; Fallah et al., 2019; Rozo and Sviatschi, 2021). In our analysis, the number of refugees received by each location is a control, not the main outcome of study. Indeed, we aim to capture the economic spill-over effects of conflict via trade disruptions mostly, instead of the direct reallocation of populations from Nigeria to CCN. 289 According to the World Economic Outlook database of the International Monetary Fund, Niger, Chad and Cameroon are in 2021 the 8th, 10th and 38th poorest countries in the world, respectively. 290 For household survey data collection, Kilic et al. (2017) find significantly higher survey implementation cost per household in Africa compared to other regions of the world. 154 4.1 Introduction Technical Paper 3. Estimating the Spillover Economic Effects of Foreign Conflict: Evidence from Boko Haram 4.2 Background: Studying Boko Haram as a Foreign Conflict In Nigeria. A decade-long insurgency posed by Boko Map 4.1:  Boko Haram Area and the Three Countries of Study Haram in Northeastern Nigeria (2009–present) is a case in point where its devastating economic and humanitarian impact has spilled over to its neighboring countries of Cameroon, Chad and Niger, killing tens of thousands of people and displacing 2.6 million globally (Tayimlong, 2020). According to the Global Terrorism Index of the Institute for Economics and Peace (2012– 2020), Boko Haram became during our main period of study—2009–2013—the world’s deadliest terrorist group, ahead of ISIL, the Taliban and Al-Shabaab. It is still the second deadliest terrorist group as of 2020. The group was founded in 2002. Boko Haram’s radicalization dates back to 2009 when state security forces killed 800 of its members, including its founder M. Yusuf (Kimenyi et al., 2014). At its peak (2015), the group seized a large swath of territories in Northeastern Nigeria, including major cities. 15 million people have been severally affected by the insurgency and the Notes: This figure shows the main Boko Haram area (defined as the area corresponding to the states of Adamawa, Borno and Yobe that is between the Komadugu Yobe river in the Yobe and the Benue river in Adamawa, and where most Boko Haram conflict events counterinsurgency efforts (Vanda Felbab-Brown, 2018). in 2009–2013 were located). It also shows the three countries of study (Cameroon, Chad and Niger) as well as the area within these three countries that is within 200 km from the Boko Haram has continued to engage in killing and Boko Haram area. abducting civilians, forcibly marrying off women and girls to its fighters, and conducting terrorist attacks Adamawa, most conflict events occurred north of the against government property, markets, refugee camps, Benue river. In this figure and in the rest of the paper, and mosques (Omenma et al., 2020). Anecdotal evidence we thus define the core Boko Haram area as the area of abounds to suggest that regional trade has been severely Borno, Yobe and Adamawa that is between the Yobe river disrupted by the insurgency, which has resulted in in the North (in Yobe) and the Benue river in the South repeated temporary border and road closures hampering (Adamawa). the mobility of people, goods and services in the whole Lake Chad region (World Food Program, 2016; Opoku Seen from space, the rise of Boko Haram after 2009 et al., 2017; Foyou et al., 2018; OECD/SWAC, 2020). is strongly associated with a rapid (relative) decline in the level of economic activity in Northeastern As seen in Map 4.1, most of the attacks between Nigeria, as measured based on changes in night- 2009 and 2013—our main period of study—were time light intensity (NTL). As explained in the next geographically concentrated in a few states in the section, this data comes from the U.S. Air Force Defense Northeastern corner of Nigeria, essentially Borno Meteorological Satellite Program (OLS-DMSP, 1992– (60 percent of all Boko Haram conflict events), but 2013). Using data for 7,761 0.1×0.1 degree grid cells also Yobe and Adamawa. However, within Yobe, most (≈ 11x11km at the equator) in Nigeria for the years conflict events took place south of the Yobe river. Within 2000–2013 (N = 108,654), and relying on a simple 4.2 Background: Studying Boko Haram as a Foreign Conflict 155 Lake Chad Regional Economic Memorandum  |  Development for Peace panel difference-in-difference (panel-DiD) framework to Exogeneity. Within-Nigeria effects are not necessarily account for cell and year effects, we find that the level causal given that the rise of Boko Haram might have not of NTL decreased by 6 percent on average between been independent of local socio-economic conditions. 2000–2008 (pre) and 2009–2013 (post) (not shown).291 That said, the timing of the insurgency—2009—could be By 2013, the correlation was -7.5 percent (Figure A4.1 pointed as exogenous. Boko Haram was founded in 2002 shows the coefficient of the Boko Haram area dummy and existed more or less peacefully as a sect for seven years in each year with 2000 being the omitted year). If we (Cook, 2011). When in 2009 the government started restrict the panel-DiD to 3,717 cells that were lit at any investigating Boko Haram’s activities and members were point between 2000 and 2013, we get -8.5 percent and arrested, deadly clashes took place and the insurrection -10 percent economic decline respectively (not shown).292 broke out. For many observers, it was surprising that We focus on the period 2000–2013 because Boko Haram the Nigerian government waited so long before cracking had not yet entered Cameroon, Chad and Niger. In down on the movement. For others, it was surprising that addition, night lights data from DMSP is only available the government finally decided to act in 2009. Thus, the until 2013. However, Li et al. (2020) combine night light government’s investigation could have started anytime data from two satellite series—OLS-DMSP (1992–2013) prior to, or after, 2009. Likewise, such investigation and SNPP-VIIRS (2012–2018)—to generate global could have been successful without resulting in an DMSP NTL time-series data for the whole period 1992– insurrection, or the insurrection might have been swiftly 2018 (DMSP is used as the baseline until 2013). As seen contained instead of dragging on for years.294 Finally, in Figure A4.2, Boko Haram areas have experienced “control” locations outside the Boko Haram area were an even bigger relative decline in night light intensity also affected by Nigeria losing control of almost one fifth between 2014 and 2018. Note that we use the same model of its territory. as just described (N = 7,761 cells) but for the full period 2000–2018. While there are still apparent comparability Focusing on Cameroon, Chad, and Niger (henceforth issues between DMSP and VIIRS, the figure suggests that “CCN”). To bypass these identification issues as well night light intensity might have decreased by as much as as focus on the spill-over effects of foreign conflict, we 60 percent by 2018.293 restrict our analysis to grid cells in CCN. Indeed, it was not until 2014 that Boko Haram expanded its terrorist As expected, the negative correlation between the activities outside the territory of Nigeria and into the Boko Haram area dummy and economic development territory of CCN (Figure 4.1 shows the trends in the decreased in 2015 and 2016 w  hen a coalition of West number of conflict events by country for the period African forces managed to regain part of the territory that 2009–2018). Indeed, Boko Haram did not want to have Boko Haram had captured. However, attacks by Boko to face four government armies. It is only when Boko Haram have since escalated and Boko Haram remains in Haram had no choice that it did, in particular after the control of large swaths of Northeastern Nigeria. Nigeria government dramatically intensified its military campaign against Boko Haram, forcing the movement to 291 The dependent variable is the log of mean light intensity (sum of lights divided by area + 1) in cell c in year t. We include cell c fixed effects, year t fixed effects, and interact the Boko Haram area dummy c (equal to one if the cell is within the Boko Haram area or if its centroid is within 10 km from the area’s border) with a post-2009 (incl.) dummy t. The coefficient of interest is the coefficient of the interacted dummy. To account for spatial autocorrelation, standard errors are clustered at the Local Government Area (LGA; N = 721). With 7,761 cells, there are 11 cells per LGA. 292 Also excluding 89 cells with top-coded pixels (whose maximum value is 63), we get -8.5 percent and -10.5 percent, respectively. 293 The harmonized night light data 1992–2018 is comparable by design, but harmonizing two disparate night light data sets from two different satellite series does rely on model estimates subject to error/assumptions. 294 Using the full sample and the same panel as before and interacting the Boko Haram dummy with a dummy for each year 2001–2013, we find that the negative effect of Boko Haram appears after 2009 (see Figure A4.1). Interestingly, we observe a slight positive effect in 2009, most likely due to the increased military presence in the area. 156 4.2 Background: Studying Boko Haram as a Foreign Conflict Technical Paper 3. Estimating the Spillover Economic Effects of Foreign Conflict: Evidence from Boko Haram move some of its activities to neighboring countries. The suggests that trade volumes severely diminished as borders population of the broader Lake Chad region has since were intermittently closed and major trade routes became been subject to an increasing number of attacks by Boko less accessible or even inaccessible (UNHCR and World Haram, which is now linked to al-Qaeda in the Islamic Bank, 2016; World Food Program, 2016) as well as local Maghreb as well as the Islamic State (Enobi and Johnson- markets (Blankespoor, 2021). Rokosu, 2016; Daouda, 2020). Figure 4.1: Number of Boko Haram Events, 2009–2018 700– 600– 500– 400– 300– 200– 100– 0– 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Period of analysis After period of analysis J Cameroon J Chad J Niger J Nigeria Notes: This figure shows for Nigeria and each of the countries of study the number of Boko Haram conflict events in each year. As can be seen, the Boko Haram conflict was restricted to Nigeria until 2013 (incl.). The Boko Haram insurrection represented a major economic shock at the “doorstep” of the affected regions in CCN. While the Boko Haram area of Nigeria was about twice poorer (based on mean night light intensity) than the rest of Nigeria in 2008, it was on average almost 10 percent wealthier than the whole sample of CCN (ibid.). In the region—defined as the Boko Haram area plus CCN’s areas within 200 km from the Boko Haram area (see Map 4.1)—the Boko Haram area contributed more than 50 percent of the total sum of night lights in 2008. The economic shock caused by the insurrection was then amplified by the fact that the Boko Haram area offered a major trade corridor between the other three countries. The state capital of Maiduguri is the principal trade hub in Northeastern Nigeria and also between Niger and Cameroon-Chad. Anecdotal evidence 4.2 Background: Studying Boko Haram as a Foreign Conflict 157 Lake Chad Regional Economic Memorandum  |  Development for Peace 4.3 Sample and Main Data for Cameroon, Chad and Niger We focus on estimating the spill-over effects of the period 1992–2013. Each 30-arcsecond pixel (≈ 1x1km) Boko Haram-driven economic shock on the Boko in each satellite-year contains a digital number (DN), an Haram area’s neighboring areas in CCN. Our full integer between 0 and 63, inclusive, that represents an sample consists of 25,491 0.1*0.1 degree grid cells in average of lights in all nights after sunlight, moonlight, CCN for the period 2000–2013 (N = 356,874). Our aurorae, forest fires, and clouds have been removed baseline analysis relies on a subsample of cells that were lit algorithmically, leaving mostly human settlements. This (NTL>0) at any point between 2000–2013, which yields data is typically subject to the issue of top-coding. In a sample of 1,546 cells and a total of 21,644 observations our case, however, this is not an issue. In fact, among (1,546 cells x 14 years). the 1,546 cells of our main analysis, only 11 have some top-coding. Indeed, the three countries of interest are Conflict Data and Boko Haram (BH) Area. We define among the poorest countries in the world. Among these the (core) BH area as the area of Borno, Yobe and Adamawa 11 cells, the mean share of top-coded pixels is then only that is between the Yobe river in the North (in Yobe) and 0.05.296 Finally, to study long-term effects we rely on the Benue river in the South (Adamawa) (see Map 4.1). the harmonized NTL data (1992–2018) from Li et al. For each CCN cell, we obtain their centroid’s Euclidean (2020).297 distance to the BH area. Our main conflict data is from the Armed Conflict Location & Event Data Project Rural Outcomes. NTL may not perform well in (ACLED) (Raleigh et al., 2010). We will also use data capturing economic activities in rural areas which remain from the Uppsala Conflict Database (UCD) (University, largely dark at night. We thus turn to other measures 2020) and the Social Conflict Analysis Database (SCAD) proxying for agricultural economic development in (CCAPS, 2020). rural areas. The first indicator of such activities is the Normalized Difference Vegetation Index (NDVI)—or Nighttime Lights (NTL). Since there is no reliable data Greenness Index—from NASA (2020b) and we calculate that measures income or economic activities at a fine its monthly mean at the grid level from 2001 to 2018. spatial level, we rely on satellite data on light emitted Higher values indicate denser vegetation. From European into space at night.295 Satellites from the U.S. Air Force Space Agency (2017, 2019), we then obtain the share of Defense Meteorological Satellite Program (DMSP) land that can be classified as “cropland”, “mosaic”, “other” have been recording data on lights at night using their or “urban” (available in 2000–2018).298 Operational Linescan System (OLS) sensor since the mid-1960s, with a global digital archive beginning in A common agricultural practice in the region is the 1992. Since two satellites are recording in most years, 30 burning of fields  (Kull and Laris, 2009; Nwaga et al., satellite-years worth of data are available for the 22-year 2010). Thick layers of biomass burning aerosols, generated 295 Henderson et al. (2011) and Bruederle and Hodler (2018) demonstrate the utility of it as a local measure of GDP and human development, respectively. See Michalopoulos and Papaioannou (2013, 2014) for studies on Africa. 296 We could have used instead the radiance calibrated data from NOAA 2015 which has the advantage of not being top coded. However, this data stops in 2011 whereas DMSP-OLS stops in 2013 and we need to study 2009–2013. 297 Li et al. (2020) combine night light data from OLS-DMSP (1992–2013) and SNPP-VIIRS (2012–2018). The nighttime lights from the SNPP satellite, carrying VIIRS, series brings unprecedented information compared to the previous OLS series, including improvements such as spatial resolution (15 arc seconds or 500m) and measurement (14 bit quantization) with a wider dynamic range and lower detection limits (Elvidge et al., 2017). 298 Cropland corresponds to rain-fed, irrigated or post-flooding. Mosaic corresponds to mosaic cropland (>50 percent) or natural vegetation (tree, shrub, herbaceous cover) (<50 percent). Other corresponds to all remaining land cover. 158 4.3 Sample and Main Data for Cameroon, Chad and Niger Technical Paper 3. Estimating the Spillover Economic Effects of Foreign Conflict: Evidence from Boko Haram mainly by agricultural burning during the dry season, can be detected across the Sahel region of Africa (Johnson et al., 2008). Aside from the threat to the atmospheric environment such aerosols pose, agricultural burning also causes the loss of forest system carbon, biomass and nutrient stocks due to deforestation, leading to long-term soil infertility despite achieving short-term soil fertility (Kotto-Same et al., 1997; Kanmegne, 2004). Despite the long-term harm to agricultural outcomes, impoverished farmers resort to agricultural burning to secure food and income.299 Following Blankespoor et al. (2021) who examine the effect of conflict on agricultural activity in the Central African Republic, we sum at the grid level the MODIS Burned Area data product (v6), which provides a burned- area estimate per 500m pixel by month (NASA, 2020a). Then, according to the main food crops for each country- crop calendar (FAO, 2020) we define each month into three seasons: (i) land preparation; (ii) sowing and growing; and (iii) harvest. Finally, the controls and other outcomes considered in our analysis are described below. 299 70 percent of deforestation in Africa is attributed to agricultural burning, compared to 50 percent in Asia and 30 percent in Latin America (Nwaga et al., 2010). In Cameroon, about half of the annual rate of deforestation, at 0.6 percent overall, is for agricultural purposes, while the other half is attributed to logging (Gockowski et al., 2005). 4.3 Sample and Main Data for Cameroon, Chad and Niger 159 Lake Chad Regional Economic Memorandum  |  Development for Peace 4.4 Econometric Specification and Issues We examine in a panel-DiD framework the average allow their effects to vary flexibly over time. First, we effect of the Boko Haram (BH) shock in CCN areas control for the log of the Euclidean distances to the largest neighboring the BH area. To do so, we first investigate city and the capital city in the cell’s country.300 We do so the geographical scope of the BH effect, i.e. how “far” because spatial patterns of economic development over into CCC a significant BH effect is observed. Second, time could be affected by proximity to the main economic we verify that this effect only appears in 2009, thus and political centers of the country. We also control for confirming parallel trends and the local exogeneity of the the log of the Euclidean distance to N’Djamena, the foreign BH shock, and also investigating how the effect capital and largest city of Chad. In Map 4.1, N’Djamena varied over time during the 2009–2013 period. is located in the North-West of Chad, close to the border with Cameroon. Since N’Djamena has been growing Model 1. The model examines the geographical scope of rapidly over time, for reasons unrelated to Boko Haram, the effect and can be formalized as follows: we need to avoid conflating the economic impact of Boko 250 Haram with the rapid expansion of N’Djamena per se. NTLs,c,t = α + ∑βd BHs,c,d * Post 2009 Dummyt d=25 + λs + Kc,t + Xs,cBX,t + εs,c,t (1) Due to attacks close to the border areas, Chad and Niger increased border controls as well as military  here s denotes the cell, c the cell’s country, and t the w presence at their borders with the North-East of year. NTL is the log of mean night light intensity (sum Nigeria. Cameroon also increased controls at the border of lights divided by cell area). Since NTL can be zero in with Chad that is close to the BH area. This may have some years, we use log (mean night light intensity + 1). resulted in public expenditure—and thus night lights— As discussed earlier, for our main regressions we focus on in these areas, which would cause an upward bias of the 1,546 cells with some night lights at one point in 2000– effect. In other words, this would make us under-estimate 2013, thus yielding 21,644 observations in total. λs and how negative the effect is. We thus consider a dummy if Kc,t correspond to cell fixed effects and country-year fixed the cell is a border cell and is within 50 km from the BH effects, respectively. The main variables of interest are the area. interactions of the dummies BHs,c,d equal to one if the cell is d kilometers (in terms of simple Euclidean distance) Resource-rich areas may have also seen their NTL away from the BH area in Nigeria (with d ranging from change over time, for example due to commodity price 25 km through 250 km at an increment of 25 km) fluctuations. For example, there is oil production and oil multiplied by a dummy Post 2009 Dummyt equal to one refining in the three countries and Niger is also a major if the Boko Haram conflict has started, hence post-2009. exporter of uranium. We create a dummy equal to one if the cell intersects with oil- or uranium-producing areas or Controls. We include various important time-invariant contains an oil refinery.301 controls Xs,c which we interact with year fixed effects to 300 These two are different in Cameroon where the largest city is Douala, followed closely by the capital city Yaoundé. 301 We use the Petroleum Dataset version 1.0 (Lujala et al., 2007) to identify onshore oil producing areas and we digitize locations of oil refineries from national sources (e.g. Nigeria Department of Petroleum Resources, 2020). Even though both Chad and Niger have a long history with the oil industry, the only refinery in Chad, Djarmaya, opened in 2011. In Niger, the Agadem oilfield and the Soraz refinery near Zinder opened in 2011. Niger exports oil via Chad or Cameroon. U.S. Geological Survey (2006) then capture the locations of uranium producing areas near Arlit, Niger. 160 4.4 Econometric Specification and Issues Technical Paper 3. Estimating the Spillover Economic Effects of Foreign Conflict: Evidence from Boko Haram Finally, due to heightened insecurity in Northeastern 200 km) vary each year (relative to the omitted year Nigeria, areas close to the border in the three countries 2000) instead of only comparing the 2009–2013 period received Nigerian refugees but also Cameroonese, to the pre-2009 period. More formally, we estimate the Chadian or Nigerien returnees. Some of them were following panel model: accommodated by the governments and international 2013 organizations in formal refugee camps. Others moved to NTLs,c,t = α + ∑ Υi × BH 200kms,c,d i=2001 localities in these areas. As such, this may have induced + λs + Kc,t + Xs,cBX,t (2) population increases and public investments, and thus amplified night lights, in these areas. This would cause  here the dummy variable BH 200kms,c,d coded as 1 if the w an upward bias and thus make us under-estimate the cell is within 200km from the BH area is interacted with negative local effect of Boko Haram. We thus add two year dummies ϒi generated for each year between 2001 dummies for whether there is a refugee camp in the cell and 2013. Our expectation is that the effect becomes (ca. 2015) and the estimated log number of (refugees + negative and statistically significant only after 2009. returnees) in each cell (ca. 2015). However, the influx of refugees + returnees could also have negative economic effects, for example if social tensions are increased as a result. One could then argue that there is overcontrolling. We will thus show that results are little sensitive to the omission of these controls.302 Spatial Autocorrelation. To account for spatial autocorrelation, standard errors are clustered at the 3rd level administrative unit, which corresponds to arrondissements in Cameroon (N = 343), sous-prefectures in Chad (N = 336) and communes in Niger (N = 265).303 For our full sample, this corresponds to 12, 33 and 40 cells per unit on average in each country respectively (areas of 1,452, 3,993 and 4,840 sq km, respectively). We use standard errors clustered using administrative units instead of Conley standard errors because, as discussed in Section 4.7, the latter are computationally intensive with many spatial units. However, we will show in the same section that results hold when clustering at a higher level or using Conley standard errors. Model 2. The second model examines the temporal scope of the effect. In particular, we will find that Boko Haram only has a significant effect within 200 km from the BH area. We then slightly modify Equation (1) so as to let the effect of proximity to the Boko Haram area (within 302 Refugee camp locations come from UNHCR (2020). The estimated local numbers of refugees and internally displaced people come from Direction Régionale de l’Etat Civil et des Réfugiés (2016); IOM (2016); UN OCHA (2015). 303 Administrative country boundaries come from GADM version 3.6. 4.4 Econometric Specification and Issues 161 Lake Chad Regional Economic Memorandum  |  Development for Peace 4.5 Average Effects in Cameroon, Chad and Niger 4.5.1. Baseline Results given the rapid intensification of the Boko Haram insurgency after 2009. By 2013, the effect is about -0.20, Results from the panel-DiD model (1) are shown in so cells “close” to the BH area have lost 20 percent of their Figure 4.2. There is a significant effect of Boko Haram level of economic activity on average. in the range between 25 (0–25) and 200 (175–200) km. The average effect within 50 km (across the 25 and  early Effect of Proximity to the Boko Figure 4.3: Y Haram Area (0–200 km) 50 bins) is -0.15 (p < 0:01), implying that the rise of Effect of 200 km from Boko Haram (relative to 2000) Boko Haram reduces NTL by 15 percent. The average 0.1– effect for 50-100 km (across the 75 and 100 bins), 100- 150 km (across the 100 and 125 bins) and 150–200 km (across the 175 and 200 bins) is -15, -11 and -7 percent 0– (p < 0:01), respectively. The average effect within 200 km is then -0.12 (p < 0:01), implying an average decrease of -0.1– 12 percent. For the sake of simplicity, in the rest of the analysis we focus on a simple 0–200 km dummy, thus -0.2– estimating an average effects across all affected bins.  ost-2009 (Incl.) Boko Haram Effect by Figure 4.2: P -0.3– Distance to the Boko Haram Area 2000 2002 2004 2006 2008 2010 2012 2014 Estimated post-2009 effect (incl.) for each bin with 95 percent confidence 0– Notes: The figure shows the yearly effect (relative to the year 2000) of a dummy equal to one if the cell is within 200 km from the Boko Haram area. See Equation 2 for details on the specification. * p<0.10, ** p<0.05, *** p<0.01. -0.05– If we use same model but further separate the BH -0.1– 0-200 km dummy into 0–50, 50–100, 100–150 and 150–200 km dummies, we find that Boko Haram has -0.15– no effect before 2009 in the four groups of cells. The effect by 2013 is then about -15, -20, -20 and -30 percent -0.2– (p < 0:01), respectively (see Figure A4.3). Aggregating some of these effects, cells within 100 km have lost almost -0.25– 25 percent while the cells farther away (but still within 25 50 75 100 125 150 175 200 225 250 Distance bin (km, to Boko Haram area) the 200 km window) have lost about 15 percent. In the Notes: The figure shows the post-2009 (incl.) Boko Haram effect for each distance (to the rest of the analysis, we will also sometimes distinguish Boko Haram area) bin. 25 corresponds to 0–25 km, 50 corresponds to 25–50 km, ..., and 250 corresponds to 225–250 km. See Equation (1) for details on the specification. See Appendix 0–100 and 100–200 km. for data sources. * p<0.10, ** p<0.05, *** p<0.01. Finally, we use the panel-DiD model of eq. (1) and the We find evidence that the assumptions of parallel harmonized NTL data from Li et al. (2020) to study trends and local exogeneity of the BH shock hold. As the long-term effects of the shock. There are several seen in Figure 4.3, when using the model of Eq. (2) no caveats with this analysis. First of all, there may still be effect is observed before 2009, a small effect is observed in comparability issues between DMSP (used for the 2000– 2009, and the effect decreases after that. This is expected 2013 period) and VIIRS (2014–2018) in the data of Li et 162 4.5 Average Effects in Cameroon, Chad and Niger Technical Paper 3. Estimating the Spillover Economic Effects of Foreign Conflict: Evidence from Boko Haram al. (2020). Second, Boko Haram had attacked Cameroon 4.5.2 Foreign Conflict as a Trade Shock by 2014 and Chad and Niger by 2015 and there may have Disproportionately Impacting been local and spill-over effects of these attacks. However, Cities? only 60 cells were ever affected in CCN. To attempt to study the long-term effects of foreign conflict, we exclude In this section, we examine whether the foreign the 60 cells as well as 166 cells within 50 km of these conflict shock disproportionately impacted trade- 60 cells. We also control for the log of the Euclidean reliant cities, mostly due to trade disruptions. To do distance to a CCN Boko Haram event in year t. so, we first show using the night lights data and other data on rural economic development that urban areas As seen in Figure A4.4, the negative effect of Boko were far more impacted than rural areas. Next, we argue Haram increased in magnitude over time, reaching that curfews, the in-migration of refugees and/or the -35 percent by 2015 and -50 percent by 2018. We outmigration of residents were not driving the results. see some recovery effects in 2016 when West African Finally, we do not find evidence for spill-over effects on troops managed in 2015 to regain some of the territory conflict. Thus, incomes did not decrease in the border captured by Boko Haram in Nigeria, another implicit test regions because conflict factors (e.g., armies and weapons) of our identification strategy. We thus see positive spill- moved from the BH area to these regions. Ultimately, we over effects of a successful foreign counter-insurgency believe that conflict in the BH reduced CCN’s trade with campaign. Next, the high standard errors for the VIIRS Nigeria but also trade between the regions of Cameroon- observations likely reflect the fact that the assumptions Chad and Niger that historically used the BH area as a made by Li et al. (2020) to recreate consistent NTL for trade corridor. the whole period also introduced a significant amount of noise. Lastly, we may not be capturing a long-term effect per se as the conflict never ended.304 4.5.2.1 Other Results on Night Lights and Rural Economic Outcomes Overall, we find very strong negative local effects of foreign conflict. The question now is which sectors, Night lights. Our analysis thus far focused on the sample and thus locations, foreign conflict disproportionately of cells that were ever lit at some point between 2000 impacts and why. and 2013. We now consider other samples of cells. Table 4.1:  Post-2009 Effect of Proximity to the Boko Haram Area (0–200 km), Night Lights Col. (1)–(3) and (5): Log (Mean Night Light Intensity + 1) in Year t Dependent Variable: Col. (4): Dummy if Mean Night Light Intensity in Year t > 0 Intensive All Extensive Extensive Pure Intensive Sample: (1) (2) (3) (4) (5) -0.097*** -0.007** -0.001 -0.004 -0.143*** BH 200 Km * Post-2009 [0.027] [0.003] [0.001] [0.003] [0.046] Cell FE, Country-Year FE Y Y Y Y Y Year FE*Controls Y Y Y Y Y Observations 21,644 356,874 348,470 373,227 7,835 Adjusted R-squared 0.89 0.89 0.21 0.27 0.93 Notes: SEs clustered at the 3rd-level administrative unit. * p<0.10, ** p<0.05, *** p<0.01. 304 The data from Li et al. (2020) generate more consistent results between the pre- and post-2013 periods for CCN than for Nigeria. Indeed, Li et al. (2020) explain that the harmonization of the DMSP and VIIRS series might work differently for locations with a level of night lights below vs. above 30. Nigeria has locations both below and above 30 whereas there are fewer such values in CCN. As such, harmonization should be less problematical there. 4.5 Average Effects in Cameroon, Chad and Niger 163 Lake Chad Regional Economic Memorandum  |  Development for Peace Table 4.1 shows the results for: i) the “intensive” margin economic activities: greenness, land use, and agricultural sample, i.e. only the cells that were ever lit between 2000 burning. and 2013 (Col. 1); ii) all observations (Col. 2); iii) the “extensive” margin sample, which excludes cell-years with The effects of foreign conflicts on rural economic night light intensity > 0 in t-1 (Col. 3); iv) the “extensive” development are theoretically ambiguous. Rural areas margin sample but with a simple dummy coded 1 if light are possibly isolated from such shocks if they do not trade intensity is higher than 0 in year t (Col. 4); and v) the with foreign areas. However, if they sell their agricultural “pure intensive” margin sample that consist of cell-years products to the foreign area, the level of demand decreases. for which light intensity > 0 in both t-1 and t (Col. 5). Furthermore, if urban areas are negatively impacted by reduced trade with the foreign area, this could in turn The negative effects of foreign conflict are particularly impact the demand for agricultural products in rural pronounced in urban areas (as reflected in cells that areas. In a context of high population growth, the latter are lit between 2000 and 2013). In the “intensive” and mechanisms would lead to slower rates of land expansion. “pure intensive” samples (Cols. 1 and 5), the average effects are -10 percent and -14 percent both significant Alternatively, if urban areas import rural products at the 0.01 level, respectively, whereas these effects are from the foreign area, insecurity may lead urban smaller in the full sample (Col. 2) and insignificant at the areas to demand local rural products instead. Reduced extensive margin (Cols. 3 and 4).305 More generally, the economic opportunities in urban areas trading with intensive margin effect of -0.097*** in Col. 1 represents the foreign area could also lead urban residents to seek about 47 percent of the mean in the sample (which is economic opportunities in the rural sector (in the region, 0.47) whereas the extensive margin effect of -0.004 it is common for urban residents to have farming relatives in Col. 4 represents only 5 percent of the mean in the in surrounding rural areas). In such cases, we might sample (0.07). observe faster land expansion. We thus do not find any effect of foreign conflict on Greenness. The measures of greenness, land use and the likelihood that non-lit cells become lit, a proxy for burned area are available at the grid cell level for 23,945 rural economic development. Villages and small towns cells without night lights at any point between 2000 and close to the BH area are thus not less likely to generate 2013, which correspond to more rural areas.306 In terms enough luminosity picked up by the satellites. These of the Greenness index, data is available on the monthly results could suggest that the geographical scope of the basis. When studying monthly patterns, we find that spill-over effects is limited to more urban areas, likely greenness peaks in August in Niger and Chad—at the because these urban settlements rely more extensively on height of the rainy season—and is high in Cameroon regional trade with, or through, the BH area than their around May (the light rainy season) and September (the rural counterparts (more on this later). heavy rainy season). Once one accounts for country- month effects, greenness could capture land expansion or However, one caveat is that NTL may not measure land abandonment and thus proxy for rural growth. well rural growth or decline, even when focusing on the extensive margin only. Thus, to better examine F  or greenness (available in 2001–2013), the model is the rural effects, we study other reasonable proxies for rural same panel-DiD model as before except the dependent variable is the log of (mean greenness + 1) in the cell s in 305 We find similar non-effects at the extensive margin when separating 0–100 km and 100–200 km (not shown). 306 Results are similar if we keep all cells including those cells that are ever lit between 2000 and 2013 (not shown). 164 4.5 Average Effects in Cameroon, Chad and Niger Technical Paper 3. Estimating the Spillover Economic Effects of Foreign Conflict: Evidence from Boko Haram  ost-2009 Effect of Proximity to the Boko Haram Area (0–200 km), Rural Outcomes Table 4.2: P Share LogMean Col. (3)–(4) and (6)–(9): Log (Agricultural Burning + 1) in t Dep. Var.: Crop+ Green. t Col. (5): Dummy if Agricultural Burning > 0 in t Mos Pure Land All All All Extensive Intensive Sowing Harvest Sample: Prep. Growing (1) (2) (3) (4) (5) (8) (9) (6) (7) -0.000 -0.001 0.042** 0.007* 0.007 0.047 0.001 0.005* 0.070** BH 200 km * Post-09 [0.001] [0.001] [0.017] [0.004] [0.006] [0.035] [0.016] [0.003] [0.027] Cell FE, Cntry-Yr FE Y Y Y Y Y Y Y Y Y Year FE*Controls Y Y Y Y Y Y Y Y Y Observations 311,285 311,285 232,040 232,040 61,496 311,285 311,285 311,285 311,285 Adjusted R-squared 1.00 1.00 0.85 0.40 0.38 0.71 0.77 0.31 0.79 Notes: SEs clustered at the 3rd-level administrative unit. * p<0.10, ** p<0.05, *** p<0.01. year t (mean = 0.31).307 As can be seen in Col. (1) of Table land that was not agricultural before), slash-and-burn 4.2, we find no effect of Boko Haram on greenness (the is common there. We thus investigate how agricultural point estimate only represents 5 percent of the mean in burning (available in 2001–2013) varies with the rise of the sample that is 0.31).308 Boko Haram, depending on the season: “harvest”, “land preparation” and “sowing-growing”.310 Since agricultural Land Use. We know the share of land that can be burning area can be equal to 0, we use log(burning + 1) classified as either “cropland” or “mosaic cropland” (at as the dependent variable. As we did for NTL, we explore least 50 percent cropland) for the full period 2000–2013 different margins (intensive, extensive, etc.) in Table 4.2 (mean = 0.09). As seen in Col. (2), we also find no effect of Col. 3–9. Boko Haram on land intensification or de-intensification (the point estimate only represents 1 percent of the mean In Col. 3, which includes all cell-years, we find a in the sample that is 0.09).309 positive and significant effect of 0.042***. It is however smaller than what was found for night lights. In particular, Agricultural Burning. When studying monthly the point estimate represents 20 percent of the mean in patterns in agricultural burning, we find that it peaks in the sample (20.4) against 47 percent for night lights. November-December when the harvest season ends. This type of agricultural burning corresponds to the practice The burning effect is driven by both extensive margin of stubble burning, where farmers set fire to the straw (Col. 4) and pure intensive margin (Col. 6) effects. stubble that remains after crops have been harvested. More precisely, in Cols. 4 and 5, we restrict the sample Agricultural burning is then observed until April–May, to cell-years whose burning in t-1 is zero. In Col. 4, the at the end of the land preparation season. For land outcome is log(burning + 1) in t whereas in Col. 5 it is a preparation (which includes the preparation of new dummy equal to one if burning > zero. The effect on the 307 Greenness has negative values. To use logs, we first shift all observations by the absolute value of the minimum value in the data (so that the new minimum value is 0) and then add +1. Also, since greenness is not bottom-coded we do not need to distinguish the intensive and extensive margins as we did for NTL. 308 For the sake of simplicity, we use mean greenness averaged across the 12 months of a given year. We obtain the same non-results if we regress for each cell- year-month greenness on country-month dummies and use as our measure the log of the average of the residuals (not shown). There also no effects for 0–100 vs. 100–200 km (ibid.). 309 The coefficients are not significantly different between 0–100 km and 100–200 km (not shown). 310 We rely on crop calendars from FAO GIEWS. “Harvest”: October–November in Cameroon; September–November in Niger; September–December in Chad. “Land preparation”: December–April in Cameroon; December–May in Niger; January–April in Chad. “Sowing-growing”: May–September in Cameroon; June–August in Niger and Chad. 4.5 Average Effects in Cameroon, Chad and Niger 165 Lake Chad Regional Economic Memorandum  |  Development for Peace dummy is small and not significant (Col. 5). However, to Nigeria decreased, there was also less competition the effect on log(burning + 1) is positive and significant from rural products coming from Nigeria. However, (0.007*). Thus, BH resulted in more burning amongst even if land use did not change overall, it could still be those cells without any burning in the previous year. In that the shock very negatively impacted some farming Col. 6, we focus on the pure intensive margin effect for communities. As their members likely live close to the cell-years with burning > 0 in both t-1 and t. The effect subsistence level, they found ways to increase short-run is not significant but seven times higher than for the incomes even if it meant borrowing against the future. extensive margin (0.047, or about 5 percent). Overall, while some rural areas were negatively impacted, the rural sector does not appear to have been driving Burning, while traditionally used, is not a sustainable the economic crisis observed in the region, hence our farming practice as it depletes the nutrients in the characterization of the Boko Haram-led economic shock soil. Results suggest that agriculture is little mechanized as an “urban” shock. (i.e., more traditional) in these areas, and that farmers are willing to increase short-term incomes at the expense of future incomes. Thus, farming households (and their 4.5.2.2 Income Shocks, Migration, and Urban Land possibly more urban-based members) may have become Expansion more present-biased in the face of the shock. Note that these results hold if we exclude border cells within Curfews. First of all, the reduction in night lights was 50 km from the Boko Haram area in case the measures of not due to curfews. While curfews were indeed imposed agricultural burning pick up fires related to destruction in some parts of Northeastern Nigeria, especially around caused by Boko Haram itself (not shown). the city of Maiduguri, there were no curfews occurring in CCN before Boko Haram actually entered these Finally, in Cols. 7–9 which disaggregate the results countries. by different seasons, we show the effects are driven mainly by the end of the harvest period. This finding Refugees and Returnees. Second, we could imagine implies that burning was not a result of preparing new that the inflows of refugees and returnees had negative land that had not been exploited before (Col. 7) but came economic effects on host communities in the border from increasing income as soon as the harvest season was regions. Such inflows could also have had positive effects over (Col. 9). This practice is particularly damaging in the if they generated economic activity and/or led to local long run since soils cannot recover at all. Also, the fact increases in public expenditure. The results reported so that it is at the end of the harvest season indicates that the far are conditional on various controls for the location of observed effects are for parcels that were already exploited refugee camps and the (log) number of returnees in each the year before, not new parcels (in line with the non- cell c. 2015 (all interacted with year fixed effects to allow results for greenness and land use).311 their effects to vary over time). Our baseline intensive margin effect is -0.097*** (Col. 1 of Table 4.1). If we omit Overall, we find no effect on rural lights or land the refugees/returnees controls, we obtain a slightly more expansion. Thus, the positive effects of the shock on rural negative effect of -0.103***. If anything, this suggests growth must have somewhat compensated its negative that the inflows of refugees/returnees had, on net, slightly effects. For example, even if the export of rural products positive, not negative, local economic effects.312 311 Throughout (Cols. (3)–(9)), the effects are stronger for 0–100 km than for 100–200 km (not shown). 312 Results are similar whether we omit the “refugees” controls only or the “returnees” controls only (not shown). As expected, cross-sectional regressions for the 1,546 cells confirm that the border regions had more refugee camps c. 2015 (Ibid.). However, conditional on the baseline controls, they did not receive more returnees c. 2015 (Ibid.). 166 4.5 Average Effects in Cameroon, Chad and Niger Technical Paper 3. Estimating the Spillover Economic Effects of Foreign Conflict: Evidence from Boko Haram Population Outflows due to Heightened Insecurity. areas decreases. However, housing is durable (Glaeser and We could also imagine that populations afraid of the Gyourko, 2005). Thus, if people outmigrate, housing rise of Boko Haram in Nigeria left the border regions, prices decrease, incentivizing them to stay. Individuals thus causing reductions in luminosity. Indeed, changes more sensitive to lower housing prices are more likely to in night light intensity (sum of night lights divided stay, thereby resulting in a greater proportion of poorer by area) may reflect both changes in nighttime lights individuals. As housing supply is now relatively higher per capita (in other words, per capita incomes) and (compared to demand), there is less construction. Since population changes (net migration). Of course, the two construction takes the form of land expansion in poor subcomponents are mechanically correlated. If incomes countries (Jedwab et al., 2020, 2021), one prediction decrease, local residents will more likely out migrate to could be that there is less land expansion in these areas as other areas and non-local residents will less likely migrate a result of the shock. However, the effect should not be in. We now discuss the respective contributions of each instantaneous since the construction sector often reacts channel, which allows us to discuss the potential role of with some temporal lag. In addition, people may wait for outmigration. a few years before deciding whether to outmigrate and thus just “weather” the shock. In particular, observers Suppose that income (NTL) per capita increases in initially did not expect the BH insurrection to last long a cell relative to other cells. Under this hypothetical as Nigeria was the most developed country in West situation, people migrate in and population density in Africa. The residents of Cameroon, Chad and Niger also settled areas initially increase (built-up area is fixed in the probably expected the BH shock to be temporary. short-run as construction takes time). As a result, housing prices increase. Housing supply eventually responds. In To conclude, with the negative BH-led economic areas where land is relatively cheap and construction shock, we may expect a strong effect on NTL per technology not so advanced, housing supply is likely to capita that is only weakly associated with an effect on respond by using more land, not building taller structures. population density and land expansion. In that case, Hence, the cell’s built-up share should eventually increase. most of the effect on NTL should come from changes in As urban land expands, the population density in settled NTL per capita. areas that initially increased redecreases. As population increases, NTL per capita may also decrease after initially To better assess the plausibility of the previous increasing if increased labor supply reduces wages. hypothesis, in Table 4.3 we focus on urban population However, the levels of income per capita and population outcomes by leveraging data from the Global Human density are likely to remain higher than they were before Settlements (GHS) database. GHS use satellite data to the initial per capita income increase. In this case, cell obtain for each cell built-up land area over time, more growth may be captured by a combination of NTL per precisely c. 1975, 1990, 2000 and 2013/14, which capita, population density (population divided by built- nicely coincides with the end of our period of study.313 up areas) and land expansion (built-up area divided by Furthermore, GHS reconstructs city populations c. 1975, total area). 1990, 2000 and 2015, using urban population levels at a relatively low administrative level circa these years and Now, when income (NTL) per capita decreases in a given then allocating the population within these administrative location to another location, people out-migrate (or areas depending on the distribution of built-up area.314 migrate-in less). As a result, population density in settled However, the population levels reported by GHS may 313 Built-up area is from GHS Builtup (Corbane et al., 2019). See https://ghsl.jrc.ec.europa.eu/ for details. 314 Note that the GHS database focuses on urban agglomerations with more than 50,000 inhabitants c. 2015. 4.5 Average Effects in Cameroon, Chad and Niger 167 Lake Chad Regional Economic Memorandum  |  Development for Peace Table 4.3: Post-2009 Effect of Proximity to the Boko Haram Area (0–200 km), Urban Outcomes LogUrb. (6), (8)–(9): Log (Built-Up Area + 1) t Dependent Variable: Log (Mean Light Intensity + 1) t Pop. t (7): Dummy if Built-Up Area t > 0 All All Niger Niger Niger All Extensive Intensive Sample: (1) (2) (3) (4) (5) (6) (7) (8) (9) -0.18*** -0.17*** -0.24*** -0.24*** 0.07 0.17 -0.05 -0.49 0.11 BH 200 km * Post-2009 [0.06] [0.06] [0.07] [0.07] [0.19] [0.46] [0.10] [0.86] [0.19] Log(BuiltUp Area/ 9.13*** Area+1)t [1.85] 0.023 Log(Urb. Pop./Area+1)t [0.015] Cell FE, Country-Year FE Y Y Y Y Y Y Y Y Y Year FE*Controls Y Y Y Y Y Y Y Y Y Observations 4,638 4,638 1,689 1,689 1,165 4,638 2,237 2,237 2,401 Notes: SEs clustered at the 3rd-level administrative unit. * p<0.10, ** p<0.05, *** p<0.01. not be reliable in our context because of the lack of census In Col. 2, we control for the log of built-up density data. In Niger, there were censuses in 2001 and 2012, (or urban built-up area divided by total area) since so their population level c. 2015 actually reflects 2012. it is available for all cells in 1990–2013. The effect is For Chad, the last two censuses were 1993 and 2009. only slightly lower, at -0.17 (p < 0:01), hence -17 percent. For Cameroon, these were 1988 and 2005. As such, Thus, assuming built-up density captures the effects of the reported population levels for 2015 likely measure both built-up density and population density in settled populations pre-Boko Haram. Thus, in this analysis, we areas—thus, population—almost all of the effect of the report the results based on built-up land area or the results shock on night light intensity must be due to the income based on urban population sizes but for Niger only. shock (i.e., NTL per capita).315 In Table 4.3 Cols. 1–4, we use log(NTL + 1) for the In Cols. 3–4, we focus on Niger, the only country with years 1992—which we call “1990”—2000 and 2013. city population data post-2009. In Col. 3, we run the This is the same panel-DiD regression (eq. (1)) as before same regression as in Col. 1 for Niger only. The estimated but we exclude the years in between. Note that we use effect is -0.24 (p < 0:01). Thus, the negative effect on data from 1990, 2000, and 2013 to mimic the structure NTL appears to have been stronger in Niger than in of the GHS data. First, in Cols. 1–3, we focus on the Cameroon/Chad. However, if we control for log urban 1,546 cells with NTL > 0 at any point in 2000–2013 × 3 population density (total city population divided by area) years, hence N = 4,638. The sample of 1,546 cells is the in the cell, we observe the same effect. Thus, almost all sample where we showed strong negative effects on NTL. of the effect of the shock on night light intensity must More precisely, according to Figure 4.2, we had an effect be due to reductions in income per capita (i.e., NTL per of almost -0.20 (hence -20 percent) by 2013. In Col. 1, capita).316 Relatedly, if we use log(total city population) as we use the same BH 200 Km dummy × post-2009 (in the dependent variable, thus comparing the population this case, the year “2013”, hence 2013/14) and obtain size of existing urban agglomerations over time, we also -0.18 (p < 0:01), hence the same result. find no effect of Boko Haram post-2009 (Col. 5). 315 Note that we use the log of (urban built-up area divided by total area +1). Indeed, some cells with NTL > 0 have an urban built-up area of 0 according to GHS. We thus verify that these cells also have very low levels of NTL. 316 Since some cells have no urban population according to GHS, we use log(total city population area + 1). 168 4.5 Average Effects in Cameroon, Chad and Niger Technical Paper 3. Estimating the Spillover Economic Effects of Foreign Conflict: Evidence from Boko Haram Alternatively, we study if built-up area changed due Overall, we find that the negative effects of foreign to the shock. Since structures are durable, built-up areas conflict on local economic development are driven by did not shrink. However, the shock may slowed down per capita incomes falling, not migration. If anything, urban land expansion. We thus study log(built-up area affected individuals appeared to have stayed in these + 1) for the years 1990, 2000 and 2013.317 In Col. 4, we areas despite the massive income shock, one plausible focus on the same 1,546 cells but study how log built-up explanation being the fact that the shock was seen as area grew slower with the shock. Given that structures temporary (even it was not in the end). are durable, we control for log (built-up area +1) in t-1 interacted with year fixed effects.318 4.5.2.3 Foreign Conflict, Local Conflict, and Local As seen in Col. 6, the coefficient is positive and not Economic Development significant. Thus, the main negative effect on night light intensity is not due to urban land expansion slowing Foreign conflict should have direct economic effects. down. Next, in Cols. 7 and 8, we study the extensive However, foreign conflict can also have a direct impact margin and focus on cell-years whose built-up area in on local conflict, for example by increasing the supply t-1 is zero (we no longer need to control for past built- of weapons and trained mercenaries in the region. up area). In Col. 7, the dependent variable is a dummy Alternatively, foreign conflict, by reducing local incomes, if the cell has some built-up area in t. In Col. 8, it is increases the likelihood of local conflict. In that case, we the log of (built-up area +1). The effect is negative but still capture a direct economic effect of foreign conflict insignificant, which leads us to conclude that while urban but the effect is magnified by a local conflict effect. While land expansion could have slowed down, reductions in possible, we show below that the Boko Haram shock income (NTL) per capita drove the results. did not increase the likelihood of local conflict in CCN. Consequently, the effect estimated so far are the pure Finally, in Col. 9, we focus on the pure intensive direct economic effects of foreign conflict. margin, keeping cell-years whose built-up area in t-1 is higher than 0 (we control for past built-up area). The For the years 2000–2013, we employ the same panel- positive effect suggests accelerated urban land expansion DiD model as before, but we now use measures of in cells where there were already built-up areas. Since the conflict as the dependent variable. In Panel A of Table overall effect (Col. 6) is positive, the intensive margin 4.4, the dependent variable is a dummy equal to one if a effects must have been stronger than the extensive margin conflict event unrelated to Boko Haram occurred in the effects. This may be counter-intuitive since the coefficient cell in year t. In Panel B, it is the number of non-Boko in Col. 9 is lower in absolute value than the coefficient Haram conflict events in the cell in year t (unlogged in Col. 8. However, the coefficient captures percentage because there are few events in a same cell in each year). changes, so the absolute effects depend on the initial Next, for each conflict database, we study the effect for all levels of built-up area in cells with built-up areas in t-1. cells first and then for the intensive sample (where NTL > 0 at any point in 2000–2013) and the extensive sample separately. Finally, ACLED and UCD focus on armed 317 Since most cells have the same area, log built-up area is similar to the log of the share of built-up areas. 318 This allows for the durability effect to vary over time, for example due to changing construction technologies. Adding a lag of the dependent variable in a panel model introduces a dynamic panel bias (Nickell, 1981) so these results should be taken with caution. However, we do not need these controls when studying the extensive margin. 4.5 Average Effects in Cameroon, Chad and Niger 169 Lake Chad Regional Economic Memorandum  |  Development for Peace Table 4.4: Effects of Boko Haram on Domestic Conflict, Various Databases, 2000–2013 Conflict Database: ACLED (Armed Conflict) Uppsala (Armed Conflict) SCAD (Social Conflict) All Intensive Extensive All Intensive Extensive All Intensive Extensive Sample: (1) (2) (3) (4) (5) (6) (7) (8) (9) Panel A:  Dep. Var.: Dummy if Non-Boko Haram Conflict Event in the Cell in Year t 0.0002 0.0047 -0.0002 0.0003 0.0035 0.0000 0.0005 0.0028 0.0002 BH 200Km * Post-09 [0.0004] [0.0042] [0.0003] [0.0002] [0.0025] [0.0001] [0.0005] [0.0046] [0.0002] Mean 0.0011 0.0106 0.0004 0.0004 0.0028 0.0002 0.0005 0.0047 0.0002 Panel B:  Dep. Var.: Number of Non-Boko Haram Conflict Events in the Cell in Year t 0.0024 0.0219 0.0000 0.0009 0.0092 -0.0000 0.0010 0.0055 0.0003 BH 200Km * Post-09 [0.0022] [0.0223] [0.0006] [0.0007] [0.0072] [0.0001] [0.0007] [0.0070] [0.0002] Mean 0.0011 0.0106 0.0004 0.0004 0.0028 0.0002 0.0005 0.0047 0.0002 Cell FE, Cntry-Yr FE Y Y Y Y Y Y Y Y Y Yr FE*Controls Y Y Y Y Y Y Y Y Y Observations 356,874 21,644 335,230 356,874 21,644 335,230 356,874 21,644 335,230 Notes: SEs clustered at the 3rd-level admin. unit. * p<0.10, ** p<0.05, *** p<0.01. conflict (Cols. (1)–(6)) whereas SCAD focuses on (not We then obtain similar non-results if, for the full necessarily armed) social conflict ((7)–(9)).319 (intensive + extensive) sample,  we: (i) study a composite index based on the number of conflict events plus 0.5 × As seen, none of our variables is significant. Therefore, the number of fatalities, thus giving more weight to more the likelihood of domestic conflict did not increase lethal conflict events (note that 0.5 is arbitrary); and (ii) significantly, which suggests that any economic impact of examine specific types of conflict. The results when using BH on neighboring areas in CCN must have been due to conflict data from ACLED, UCD and SCAD can be seen reduced trade, not a direct effect of BH on conflict supply in Tables A4.1, A4.2 and A4.3, respectively.321 We then factors. Likewise, the effect of the BH-led economic find similar non-results if we focus on the intensive shock was not reinforced by an indirect feedback effect sample only (not shown, but available upon request). in which poverty led to conflict, which in turn further caused poverty.320 Next, CCN’s governments increased military presence in the region. As such, domestic conflict might have In addition, the effect of BH on conflict appears been prevented in areas close to BH. Yet, if increased stronger (but is still not significant) in the more military presence came from redeployment, which is urban intensive sample than in the more rural plausible given the time it takes to expand an army, it extensive sample. Indeed, more urban areas have been might have increased conflict in areas farther away disproportionately hit by the BH-led economic shock. from BH. However, we do not observe negative effects. In addition, we find similar non-results as in Table 4.4 319 The total number of conflict events that took place in 2000–2013 is 900 in ACLED, 221 in UCD, and 276 in SCAD. The discrepancy between ACLED, UCD and SCAD could be due to them capturing distinct aspects of conflict or the way they assign the events to specific locations. However, results hold if we combine the three databases (not shown). 320 We also do not find stronger effects for 0–100 km than for 100–200 km (not shown, but available upon request). 321 For ACLED, we consider battles, violence against civilians, protests/riots, non-violent strategic developments, and explosions/remote violence. For UCD, we consider state violence (government forces are involved), non-state violence (none of the warring parties is a government), and one-sided violence (armed force is used against civilians). For SCAD, we consider demonstrations, riots, strikes, and violence. Note that the significant effect for UCD and one-sided violence (A2) is due to conflict ending in Eastern Chad in 2008, so not Boko Haram in Western Chad. 170 4.5 Average Effects in Cameroon, Chad and Niger Technical Paper 3. Estimating the Spillover Economic Effects of Foreign Conflict: Evidence from Boko Haram if we drop cells located within 50 km from a military result as confirming that the very negative economic or gendarmerie headquarter c. 2020 (Table A4.4). In impact of Boko Haram on neighboring areas in CCN francophone countries the gendarmerie is a paramilitary was driven by reduced trade in the region. organization with law enforcement duties among the civilian population and gendarmes often intervene where there is a national emergency crisis.322 Lastly, one way to interpret these non-results is that reduced urban incomes (especially related to a trade shock) does not automatically lead to more conflict. Otherwise, the average effects would have been significant. Thus, foreign conflict does not always beget domestic conflict. A body of literature has shown that negative income shocks, most often related to weather related shocks, lead to increased instances of conflicts ( Berman and Couttenier, 2015; Harari and Ferrara, 2018). Hegre and Sambanis (2006) also show that conflict begets more conflict. Lower incomes are often one of the main channels explaining spillover effects. Indeed, with lower incomes, the cost of hiring soldiers is lower (i.e. the opportunity cost of conflict labor is lower) (Harari and Ferrara, 2018). The existing literature relies on shocks that disproportionately affect the agricultural sector and thus rural areas. However, our shock disproportionately impacts urban areas, and urban areas might be more negatively impacted by conflict than agriculture. Indeed, urban production relies more on trade and thus security whereas rural production relies more on fixed factors of production such as land. Subsequently, rural production should be less affected by conflict than urban production. As such, there could be reduced economic incentives to engage in conflict when the income shock originates in urban areas. To summarize, while it is possible that the shock led to increased conflict in some areas of CCN, on average we do not find significant effects of Boko Haram activities in Nigeria on domestic conflict. We interpret this non- 322 Military headquarters include the headquarters of military regions (5–8 depending on the country). Gendarmerie headquarters include the headquarters of “compagnies” or “legions de gendarmerie” (15–23). Sources used include administrative sources, security reports, newspaper articles, and Wikipedia. There is no data for the pre-2009 period. 4.5 Average Effects in Cameroon, Chad and Niger 171 Lake Chad Regional Economic Memorandum  |  Development for Peace 4.6 Heterogeneous Effects for Cameroon, Chad and Niger Now that we have identified the “nature” of the Boko interaction between the 200 km Boko Haram dummy Haram shock for neighboring areas in CCN, we can and cell-specific characteristics defined c. 2009 or before. investigate the factors that accentuated or mitigated Lastly, given the country-year fixed effects we compare these spillovers of foreign conflict. cells within the same country. As seen in Figure 4.3, the 95 percent confidence interval values of the estimated effects vary 4.6.1 Heterogeneity with Respect to Initial significantly, from -0.10 to -0.30 percent in 2013. Economic Conditions For the year 2018, the effects varied by between -30 and -80 percent (Figure A4.4). However, given issues when We first explore how the effects vary depending on harmonizing the DMSP and VIIRS series, these values initial economic conditions,  i.e. night light intensity in respectively represent upper- and lower-bound values of 2008 (Boko Haram rose in 2009). For each cell, we create the 95 percent confidence intervals. a dummy equal to one if the cell’s night light value in 2008 is below the 10th or 25th percentile (i.e., the cell Likewise, the effect varies across the three countries. is “less” developed) or above the 75th or 90th percentile In particular, we use the same panel-DiD model as (i.e., the cell is “more” developed) in the cell’s country. In before but interact the “200 km Boko Haram x post- a triple-difference framework, we then interact the “200 2009” dummy with three dummies for whether the cell’s km Boko Haram x post-2009” dummy with the dummy country is Cameroon, Chad or Niger. For the year 2013 to see if the effect is stronger, or weaker, for less, or more, and relative to the year 2008, we find an effect of about developed areas. -5 percent (n.s.), -20 percent (***) and -25 percent (**), respectively (not shown, but available upon request). Our analysis reveals that those places that were initially Thus, in Cameroon, no significant effect is found on more developed than other areas were relatively less average. In the three countries, we then observe marked affected by the rise of Boko Haram. As seen in Cols. (1)– heterogeneity in the effects, as suggested by the wide (2) of Table 4.5, places that were relatively less developed confidence intervals (-0.13/0.03, -0.36/-0.10 and -0.47/- are the places where the effect was most negative, with 0.04, respectively).323 the overall effect about -0.14 (***). The overall effect in the third row corresponds to the combined effect Thus, the disruption effects of Boko Haram were of the effect of the BH 200 km x Post-09 dummy and very heterogeneous. However, for a given shock and its interaction with the chosen pre-2009 characteristic. country, it does not answer the question of which When we examine the effect for places that were initially locations “suffered” more vis-á-vis others. Conversely, more developed (Cols. (3)–(4)), then we find that the which locations were ultimately more resilient to the interaction is strongly positive, enough to make the negative effects of the shock? To answer these questions, observed negative effect of BH—about -14 percent— we use the same panel-DiD model as before but add the 323 The stronger effects in Chad and Niger might be explained by the heterogeneous effects shown below or the fact that Chad’s and Niger’s regions close to Boko Haram historically disproportionately relied on their trade links with Northeastern Nigeria. In contrast, Cameroon’s North was also trading with Southern Nigeria via Southern Cameroon (see Map 4.1). In particular, Niger’s Southeast is poorly connected to the more developed Western areas of Niger and its Northeast correspond to the Sahara, hence its Southeastern areas’ over-reliance on Northeastern Nigeria. 172 4.6 Heterogeneous Effects for Cameroon, Chad and Niger Technical Paper 3. Estimating the Spillover Economic Effects of Foreign Conflict: Evidence from Boko Haram disappear (Col. (3)) or even turn positive (Col. (4); 4.6.2 Factors of Resilience to Foreign 0.11**). Conflict Shocks Overall, while we found stronger negative effects for We now examine the heterogeneous effects of other the more urban intensive sample than for the more categories of initial (pre-2009) conditions. However, rural extensive sample, within the intensive sample due to lack of data, we sometimes use post-2009 cell we actually find stronger negative effects for less data. Next, in order to capture an interacted effect developed areas (which may for example include small that is different from the interacted effect with initial towns). If anything, the most developed areas relatively development (or “explain” some of the interacted effect gained from (or lost relatively less) from the presence of with initial development), we simultaneously control for BH. The relative gain in the most developed areas suggests the interaction of the BH 200 km x Post-09 dummy and that their sectors were more resilient to the BH shock, for the dummy equal to one if the cell’s night light intensity example because they trade more with other places within is above the 75th percentile value in 2008. When doing their respective country, with other regions of Nigeria, or so, we found that the average residual decline due to Boko with neighboring countries. Likewise, these places may Haram was 14 percent (see Col. (3) of Table 4.5). Finally, have attracted more economic outmigrants coming from we study the interacted effect of each characteristic one at negatively impacted areas. a time, mostly due to power issues. To improve our understanding of the factors of Note that using the 10th and 90th percentile values resilience in the face of an economic shock brought captures a more local, possibly stronger, effect, that about by foreign conflict, we next study heterogeneous could be better identified as a result. At the same time, effects related to trade diversification, agricultural if the studied characteristic has an effect above the 10th development, infrastructure, human capital, and percentile value of distance or below the 90th percentile institutions. value of distance, the effect may be mis-estimated because places above the 10th percentile or places below the 90th percentile are also directly affected by the characteristic. Table 4.5: Baseline Heterogeneous Effects of Boko Haram Dep. Var.: Log (Mean Night Light Intensity + 1) in Year t Interaction of BH 200km * Post-09 Interaction: with Dummy if Night Light Intensity in 2008 is ... Below 10th Below 25th Above 75th Above 90th Percentile: (1) (2) (3) (4) -0.001 -0.001 -0.135*** -0.110*** BH 200 km * Post-09 [0.030] [0.030] [0.026] [0.026] -0.135*** -0.135*** 0.166*** 0.216*** Interaction [0.026] [0.026] [0.026] [0.039] -0.14*** -0.14*** 0.03 0.11** Overall Effect [0.03] [0.03] [0.03] [0.04] Cell FE, Cntry-Yr FE Y Y Y Y Yr FE*Controls Y Y Y Y Observations 21,644 21,644 21,644 21,644 Notes: The dummy used for the interaction withBH200km * Post-09 is constructed using the 10th, 25th, 75th and 90th percentile values of night light intensity in the cell’s country in 2008. SEs clustered at the 3rd-level admin. unit. * p<0.10, ** p<0.05, *** p<0.01. 4.6 Heterogeneous Effects for Cameroon, Chad and Niger 173 Lake Chad Regional Economic Memorandum  |  Development for Peace In that case, using the 25th or 75th percentile could Trade Diversification. We first present our findings help better estimate the effect. With the 25th or 75th on heterogeneity based on market potential (MP). For percentile, more cells are included in the “relatively more each cell i and other cells j, MP of cell i is the weighted treated” group, which may also improve precision. There sum of the sum of night lights of other cells j, using as is thus a trade-off. As a result, we report the effects for the weights the driving time (in hours) circa 2008 between 10th and 25th percentiles as well as the 75th and 90th cell i and cell j to the power α. To begin, we assign to a percentiles. Figure 4.4 shows the interacted effects and cell the maximum speed between the speed(s) based on their confidence intervals. Two vertical lines are added, road categories applied in Jedwab and Storeygard (2020) one at 0 and one at 0.14. Indeed, a resilience effect of and the speed of travel across off-road cells from a hiking 0.14 is needed to offset the average residual decline due function (Tobler, 1993) that incorporates slopes from to Boko Haram (14 percent).324 Verdin et al. (2007). Then, we use the least-cost path algorithm to calculate the minimum travel time between  eterogeneous Resilience Effects Figure 4.4: H each cell and each other cell.325 Next, we assume α = 3 Depending on Initial Local Conditions in our baseline specification.326 Finally, when crossing 1. >75th Market Potential CCN+NGA 2. >90th Market Potential CCN+NGA borders, we impose that drivers have to go through 3. >75th Market Potential CCN Only 4. >90th Market Potential CCN Only border crossings (whose locations we know for the year 5. <10th Livestock Market 6. <25th Livestock Market 2008). The cost to cross the border is then assumed to be 7. >75th Sh. Ethnicity in BH 8. >90th Sh. Ethnicity in BH 4 hours. 9. <10th Airport 10. <25th Airport 11. <10th Paved Road 12. <25th Paved Road MP can first be defined using the cells of CCN and 13. <10th Paved/Improved Road 14. <25th Paved/Improved Road Nigeria but excluding the BH area itself since we aim 15. <10th Main Power Line 16. <25th Main Power Line to capture how the cell can trade with other areas than 17. <10th Cotton Ginning Fact. 18. <25th Cotton Ginning Fact. the BH area. As seen in rows 1–2 of Figure 4.4, we find 19. >75th Cotton Suit. 20. >90th Cotton Suit. a positive (but not significant) resilience effect if the cell 21. >75th Groundnut Suit. 22. >90th Groundnut Suit. is in the top 10th percentile in market potential in 2008 23. >75th Food Crop Suit. 24. >90th Food Crop Suit. (no effect is observed for the top 25th percentile). The 25. <10th Hospital 26. <25th Hospital point estimate is relatively high, at 0.11, enough to almost 27. <10th Hospital/Health Center 28. <25th Hospital/Health Center offset the negative independent effect of the BH shock. 29. <10th Higher Educ. Institution 30. <25th Higher Educ. Institution Standard errors are high, with the 95 percent confidence 31. <10th Military Forces HQ 32. <25th Military Forces HQ interval values ranging from -0.05 to 0.26. We thus 33. <10th Paramilitary Forces HQ 34. <25th Paramilitary Forces HQ observe heterogeneous effects of the heterogeneous effect 35. <10th 1st Lev. Admin. Capital 36. <25th 1st Lev. Admin. Capital itself. 37. <10th 2nd Lev. Admin. Capital 38. <25th 2nd Lev. Admin. Capital 39. <10th Border Crossing 40. <25th Border Crossing Nigeria’s economy dramatically suffered as a result of Boko Haram and a cleaner test of the trade 0 00 0 20 30 5 05 5 25 35 .0 0.1 .1 0.1 0. 0. 0. 0. -0 0. 0. -0 Q Coef. of triple interaction J Significant at 5 percent ‹ 10 percent diversification hypothesis could be to define MP using Notes: The figure shows the interacted effect of the 200 km BH*Post-2009 dummy with the variable shown at left. Each row represents a separate regression. The 2nd vertical line is only the cells of CCN, thus excluding Nigeria (rows for x = 0.14 because 14 percent is the average residual decline due to Boko Haram (= the independent effect of the 200 km BH dummy). * p<0.10, ** p<0.05, *** p<0.01. 3–4). The effect with the 10th percentile value is now even 324 In the 40 specifications described below, the effect of BH 200 km x Post-09 is almost always equal to 0.14. 325 The road data come from Jedwab and Storeygard (2020). The data include information on the surface of each road in 2008, i.e. whether the road is a highway, a paved road, an improved (gravel or laterite) road, or a dirt road. 326 Results are generally not sensitive to the alpha used (not shown). A high α implies a high trade cost of distance, making cells farther away from cell i matter less. α is not known in our context. Jedwab and Storeygard (2020) use 3.8 but they study the effect of market potential for the whole continent, thus focusing on long-distance trade. 174 4.6 Heterogeneous Effects for Cameroon, Chad and Niger Technical Paper 3. Estimating the Spillover Economic Effects of Foreign Conflict: Evidence from Boko Haram stronger (and significant). The point estimate—0.16—is Rohner et al. (2013b) discuss how a lack of inter-ethnic enough to fully offset the Boko Haram shock and the trust hampers trade. Therefore, ethnically connected 95 percent confidence interval values now range from areas should trade more. Amarasinghe et al. (2020) 0.00 to 0.33. Therefore, some locations among the most then find that ethnic connectivity, among other factors, connected locations might have even (relatively) gained is particularly important for the diffusion of economic with the BH shock. spillovers. We use the Murdock (1959) map to obtain for each cell the main ethnic group in terms of area in the While such locations perhaps trade more—which cell. For each cell/group, we then obtain the share of the means that they could have been affected relatively group’s total homeland area that is within the BH area. more by the income shocks experienced in the BH By interacting this share with the BH 200 km x Post-09 areas—the positive effects may indicate that their dummy, this allows us to test if cells that were historically economy is more diversified  (i.e. they trade more in more “connected” to other cells in the BH area are more general, not just with Northeastern Nigeria). As a result, directly affected, likely because of stronger trade links they may be on net less susceptible to foreign conflict with the BH area (via ethnicity-based trade networks). shocks. More generally, taking the simple average across More precisely, we use dummies if the share is above the rows 3 and 4, we obtain +10 percent. 75th or 90th percentile value in the country. As seen in row 8 of Figure 4.4, we find a negative significant effect of Next, we use the location of major livestock markets about -4 percent for the most connected cells (i.e., when as a proxy for general markets. In the region, markets using the 90th percentile). Thus, ethnic connectivity are used for agricultural products, cattle that is eventually plausibly helped the diffusion of the economic shock exported to urban markets in Southern Nigeria or caused by Boko Haram. Southern Cameroon, and manufactured products bought with income from the sale of agricultural products and Infrastructure. We now investigate how infrastructure cattle. Given the lower demand from Nigeria, we could factors related to trade or not may have mattered for the expect a negative interacted effect for the cells closest diffusion of the economic shock as well as local economic to the markets. At the same time, as livestock markets resilience. We examine how proximity to airports mediates proxy for markets more generally, the negative effects the impact of Boko Haram. We calculate the distance of could be (more than) compensated by positive effects for each locality to all airports in the same country.328 We locations trading more in general. In addition, cattle can find a positive and significant effect for the 10th and 25th travel to Nigeria through other routes not impacted by percentiles (rows 9–10; +7 percent on average) but the the “closure” of the BH region.327 We find positive effects effect is, as expected, higher for the 10th percentile. It of livestock markets (rows 5–6 of Figure 4.4). However, could be that cities close to airports have specific sectors the effect is weaker for the 10th percentile value than that are more resilient to land-based economic shocks for the 25th percentile value, possibly due to a more (i.e. overland trade with Northeastern Nigeria). negative impact for locations specialized in cattle export. The positive and significant effect for the 25th percentile Amarasinghe et al. (2020) show that road connectivity, (+5 percent) may then capture a more general resilience along with ethnic connectivity, is a critical factor in effect for trade-oriented regions. the diffusion of economic spillovers. We use the road network database of Jedwab and Storeygard (2020) 327 The location of 81 livestock markets in Chad and 10 livestock markets in Cameroon (c. 2004–2005) is obtained from République du Tchad (2010). The location of 66 livestock markets in Niger (in the 2010s) is obtained from USGS FEWS.NET (2017). There are fewer markets in Cameroon as most of the cattle is produced in Chad or Niger. 328 The locations of airports (circa 2003) come from U. S. Geological Survey (2003). 4.6 Heterogeneous Effects for Cameroon, Chad and Niger 175 Lake Chad Regional Economic Memorandum  |  Development for Peace to obtain for each cell and the year 2008 the minimal trade do not appear as important as the ones related to distance to a paved road (incl. highways), the minimal trade in our context. distance to a paved or improved road, and the minimal Euclidean distance to all roads (i.e., paved, improved, and Agricultural Development. We turn to heterogeneity dirt roads). We then create dummies based on whether with regard to agricultural development. Two main cash the cell’s distance to a paved road, a paved/improved road crops are grown in the area, cotton and groundnut. With or any road is below the 10th or 25th percentile value the shock, the demand from Nigeria likely decreased. in the country. As seen in rows 11–14, we find stronger At the same time, the supply of cotton and groundnut effects for paved roads (+5 percent) than for other roads. from Nigeria was also reduced, which may have increased The only significant effect is for the most connected cells, prices for local producers. The effect of the shock on i.e. cells whose distance to a paved road is below the 10th producing areas is thus ambiguous. In addition, if cash percentile value in the country (+8 percent). crop production is “fixed” in space, because of land suitability being an unsubstitutable factor of production Other types of infrastructure that are not related or because of past sunk investments in transformation to trade but possibly important include access to factories, then these locations remain valuable even in electricity and mobile networks. A reliable access times of crisis. In that case, we might expect these areas to to electricity is particularly important in countries be affected relatively less. where power failures are frequent. We thus investigate heterogeneity with respect to proximity to a major We estimate mean cotton and groundnut production electricity transmission line, assuming that such locations within 50 km from the cell’s centroid. We then create are more protected against regional power outages. In dummies based on whether cotton suitability is higher rows 15–16 of Figure 4.4, we interact the BH 200 km x than the 75th or 90th percentile value in the country.331 Post-09 dummy with a dummy if the cell’s distance to a Next, for cotton ginning factories, we use proximity to power line (c. 2008) is below the 10th or 25th percentile a factory, and thus create dummies if the cell’s distance value in the country. We find a positive but not significant to a factory is below the 25th or 10th percentile value effect of +5 percent for the 10th percentile and no effect in the country. Finally, note that there was no formal for the 25th percentile. The average effect is +2 percent.329 groundnut oil extraction plant in the area during the period. Groundnut oil was instead extracted artisanally Next, we examine heterogeneity with respect to GSM by local producers.332 coverage. More precisely, for each cell we obtain the area share that is covered by 2G mobile phone coverage c. As can be seen in Figure 4.4, we see positive interacted 2009.330 We then create dummies if coverage is above the effects for cotton ( rows 17–20; average affect of 75th or 90th percentile value in the country. However, +4 percent), which are only significant in two out of the we do not find any effect (not shown, but available upon four cases. No effect is observed for groundnut (rows 21– request). Therefore, infrastructure factors not related to 22), possibly because it is considered a less profitable cash crop in the area. 329 Data is obtained from the Africa Infrastructure Country Diagnostic (AICD) database of the World Bank. 330 The source of the data on 2G mobile phone geographic coverage is the Global System for Mobile Communications (GSMA) c. 2009, who summarizes submissions of mobile operators data that provide representation of network coverage with roaming detail based on strong and variable signal strength. 331 The distance threshold of 50 km is arbitrary. Results hold with 100 km (not shown, but available upon request). 332 Cotton and groundnut suitability-based measures of production c. 2010 are from SPAM 2010 (IFPRI, 2019). According to their website: “SPAM relies on a collection of relevant spatially explicit input data, including crop production statistics, cropland data, biophysical crop ‘suitability’ assessments, population density, as well as any prior knowledge about the spatial distribution of specific crops or crop systems.” The locations of cotton ginning factories are digitized from a map on Cotton Zones, Ginning Factories and Exports of West Africa in OECD (2006). 176 4.6 Heterogeneous Effects for Cameroon, Chad and Niger Technical Paper 3. Estimating the Spillover Economic Effects of Foreign Conflict: Evidence from Boko Haram The interacted effect with overall food crop suitability part public universities in CCN. For each cell we obtain then merits particular attention. Access to food crops the Euclidean distance to a higher education institution is important because, in time of (urban) crisis, urban and create dummies based on the 10th and 25th percentile areas surrounded by land that is relatively more suitable values in the country.335 As seen in rows 29–30, we find for food production may be more resilient to the shock. significant positive effects for both percentile values. The People are more likely to stay in these locations to weather effects are on average twice higher than the effects found an economic shock. We interact the BH 200 km x Post- for health (+6 percent vs. +3 percent). 09 dummy with dummies based on food crop suitability (averaged across 12 major food crops in Sub-Saharan Government Expenditure. We examine more broadly Africa).333 We see positive interacted effects (rows 23–24; if the effect of Boko Haram depends on government average effect of +5 percent, close to what we found for expenditure. Indeed, locations supported by the cotton). These are only significant for the 75th percentile. presence of government services may be more resilient due to the fact a larger share of their economy does not Overall, the resilience effects appear weaker for depend on local economic conditions but government agricultural development. However, if we focus on the budget allocations most often made at the national cotton industry or food suitability, we find resilience level. In addition, the presence of government services effects that are about 5 percent on average. may also positively, or negatively, impact the ability of local economies to bounce back in the face of a massive Human Capital. Health infrastructure proxies for both economic shock. human capital and government social expenditure as the health sector is mostly public in CCN. We construct We first examine heterogeneity with respect to major measures of the distance to hospitals or health centers military and paramilitary headquarters  (c. 2020 (2013–17) and create dummies based on whether it is as information is not available for earlier years). For below the 10th or 25th percentile value in the country.334 each cell we obtain the minimal Euclidean distance to We do not see any effect for hospitals (rows 25–26). When a major military headquarter or a major paramilitary considering hospitals and health centers simultaneously, headquarter and create dummies based on the 10th and we then see positive significant effects (rows 27–28; 25th percentile values in the country.336 As seen in rows average effect of +3 percent). The non-effects for hospitals 31–34, the interaction effects are strong and significant in suggests that these effects are not driven by health supply three out of the four cases (average of about +5 percent). per se. Instead, locations with health centers might have The effect is larger for military headquarters than for higher levels of social services and offer higher levels of paramilitary headquarters. social protection in times of crisis. We then study if the effect of Boko Haram depends We then examine heterogeneity with respect to higher on proximity to “regional” capitals (for 1st level education institutions (c. 2020), which are for the most administrative units) or “district” capitals (2nd-level 333 FAO (2013) provides for the period 1981–2010 a measure of food crop suitability that is based on both soils and the climate and the following 12 crops: manioc (cassava), maize, rice paddy (Japonica), rice paddy (Indica), common wheat, sorghum (low alt.), common millet, potato, potato yam, sugar beet, cowpea and common bean. 334 We rely on Maina et al. (2019). Cameroon (2014–17), Chad (2013–16) and Niger (2013–17) have 183 (2,836), 41 (824) and 78 (1,151) hospitals (health centers), respectively. Data does not exist for the pre-2019 period. 335 The location of higher education institutions comes from Wikipedia, reports, and newspaper articles. Cameroon, Chad and Niger have 31, 21 and 11 such institutions, respectively. Data does not exist for the pre-2019 period. 336 Cameroon, Chad and Niger have 5 (15), 8 (23) and 10 (23) military (paramilitary) headquarters, respectively. 4.6 Heterogeneous Effects for Cameroon, Chad and Niger 177 Lake Chad Regional Economic Memorandum  |  Development for Peace administrative units).337 For each cell we obtain the (especially when related to security for which the Euclidean distance to a regional capital or a district capital resilience effect is about +5/+6 percent). We do not and create dummies based on the 10th and 25th percentile find significant effects for access to electricity or mobile values in the country. The effects are not significant (rows networks, technologies that might only produce resilience 35–38; +2 percent on average). The effect is larger for if more resilient sectors are already present in the local regional capitals than for district ones. economy. More broadly, one can see that the interacted effect is While our results could have straightforward policy higher for military headquarters (about +6 percent) implications, one important caveat is that we only than for paramilitary headquarters (+5 percent), measure population, not real wages or welfare more regional capitals (+3 percent) or district capitals generally. Some “better endowed” locations may have (0 percent).338 Thus, security might have been a more experienced a slower relative decline in their population important concern than government employment. Given possibly because they were also attracting economic that Boko Haram had not entered CCN then, one refugees from equally affected neighboring locations. Our interpretation could be that firms reduced investments as analysis only captures relative population growth patterns a result of increased uncertainty in the region, especially and suggests that initially (pre-shock) better endowed in potentially more unsafe areas located farther away from locations, by being more resilient, grow faster than less military and paramilitary headquarters. well endowed locations. As such, economic shocks due to foreign conflict may accentuate spatial inequality. Finally, we examine heterogeneity with respect to border crossings/posts. A negative effect could be In addition, mostly due to power issues, we estimate expected in such areas due to reduced trade. However, each interacted effect one by one rather than such areas likely received more public investments and saw simultaneously. Some of the heterogeneity variables are an increase in military and police presence. For each cell also correlated with each other and may as such capture we compute the minimal Euclidean distance to a border similar dimensions. crossing circa 2008 and then create dummies based on the 10th and 25th percentile values in the country.339 As seen in rows 3–40, we find a negative, but insignificant, effect for the 10th percentile and no effect for the 25th percentile. As such, any negative effect due to reduced trade must have been offset by government expenditure. To summarize, factors of resilience in the face of an economic shock brought about by foreign conflict include trade diversification and infrastructure related to trade (resilience effect of about +5–10 percent), agricultural development (+5 percent), human capital (+3–6 percent), and government expenditure 337 For each country, we obtain a list of 1st-administrative level capitals—regional capitals (9 in Cameroon c. 2005, 22 in Chad c. 2020 and 7 in Niger c. 2014, respectively)—and a list of 2nd-administrative level capitals—departments capitals (48, 68 and 57, respectively). Sources used include the Humanitarian Data Exchange. While for Chad and Niger we use capitals defined post-2009, the total number of capitals barely changed there in the 2010s. 338 The coefficient of correlation between the 10th percentile dummies for these four types of government expenditure is between 0.16 and 0.65 (mean = 0.43). The dummies thus do not necessarily capture the same locations. 339 The locations of border crossings are obtained from Jedwab and Storeygard (2020). 178 4.6 Heterogeneous Effects for Cameroon, Chad and Niger Technical Paper 3. Estimating the Spillover Economic Effects of Foreign Conflict: Evidence from Boko Haram 4.7 Robustness and Other Considerations Spatial autocorrelation. To account for spatial for Borno or Maiduguri, likely because these were more autocorrelation, we cluster standard errors at the 3rd level affected; (iii) use a dummy for whether the cell is within administrative unit (N = 343, 336, and 265 in Cameroon, a 6.5 hours driving distance from the BH area. 6.5 hours Chad and Niger, respectively). We verify that the baseline corresponds to the 20th percentile in driving time to the negative effect of Col. (1) in Table 4.1 remains strongly BH area. We use the 20th percentile because 200 km significant when (Table A4.5): (i) clustering standard corresponds to the 20th percentile in Euclidean distance errors at the 2nd (36; 58; 53) or even 1st (8; 10; 23) to the BH area; and (iv) use the negative of the log administrative level; and (ii) using Conley standard distance to the BH area. The last two regressions are less errors using a distance cut-off of 100, 200 or even comparable to our baseline regression. The coefficients, 300 km. However, given how computationally intensive while different, remain strongly negative. computing Conley standard errors are when the number of spatial units is high, we first residualize the data, thus removing any variation due to the fixed effects and the controls. Using Conley standard errors is not feasible for regressions involving the full/extensive sample of cells, which we use for our analysis on the extensive margin of night lights, rural outcomes, and conflict. We also verify that these regressions and other regressions return similar results if we cluster standard errors at the 2nd or 1st administrative level (not shown, but available upon request). More generally, for the analysis on the extensive margin of night lights, greenness, land use and local conflict, we already find no effects. Thus, more conservative standard errors would not change our conclusions. Other Definitions of the Treatment. For the sake of simplicity, proximity to BH is constructed using Euclidean distance to the BH area, which we define as the area of the states of Borno, Yobe and Adamawa that is between the Yobe river in the North (in Yobe) and the Benue river in the South (Adamawa). Table A4.6 shows that the results hold if we: (i) define the BH area as the state of Borno (where 60 percent of conflict events took place) or the full area of the Borno, Yobe and Adamawa; (ii) use a dummy for whether the cell is within 300 km from Maiduguri, Northeastern Nigeria’s main city, which was particularly impacted by Boko Haram activities. We use 300 km instead of 200 km because Maiduguri is about 100 km from the border. The effects are stronger 4.7 Robustness and Other Considerations 179 Lake Chad Regional Economic Memorandum  |  Development for Peace 4.8 Conclusion What are the spillover effects of foreign terrorism and conflict on regional economies? Adopting a difference- in-difference framework leveraging the unexpected rise of the Boko Haram insurgency in Northeastern Nigeria in 2009, we studied its effects in neighboring areas in Cameroon, Chad and Niger. We found strong negative effects on regional economic activities— proxied by reductions in nighttime lights—particularly amongst areas within 200 km from the Boko Haram area. Our findings suggested that this negative impact was concentrated in urban areas and was particularly pronounced among those areas that were initially less developed and connected, which highlights the role of trade diversification and infrastructure in mitigating the effects of economic shocks brought about by foreign conflict. We also found that the rise of Boko Haram resulted in more agricultural burning—an agricultural practice that is profitable in the short-term but typically leads to long-term environmental and economic losses. Overall, these findings attest to both the short-term and long-term negative impacts of foreign conflicts on regional economies. More generally, we believe our findings might have important policy implications. First, conflicts have spillover effects that significantly impact regional economies as a whole, not only in the short run but also in the long run as well. For example, foreign conflicts push individuals in the urban sector to seek opportunities in the rural sector and engage in agricultural practices—namely, agricultural burning— that potentially jeopardizes long-run economic gains. Peace interventions can have positive effects “beyond” the country or countries in which they take place. Second, certain types of mitigation measures are perhaps more effective than others at alleviating the negative spillover economic effects of foreign conflict. In our context, initially more developed, connected, infrastructure- endowed, and government-protected areas were better able to “weather” the impact of the shock. 180 4.8 Conclusion Technical Paper 3. 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Estimating the Spillover Economic Effects of Foreign Conflict: Evidence from Boko Haram Appendix Figure A4.1:  Boko Haram Area Effect in Nigeria, 2000–  oko Haram Area Effect in Nigeria, Figure A4.2: B 2013 2000–2018 Effect of Boko Haram area dummy (relative to 2000) Effect of Boko Haram area dummy (omitted = 2000) 0.05– 0.2– Insurgency starts Counter-insurgency in 2015 0.1– 0– 0– -0.1– -0.2– -0.05– -0.3– -0.4– -0.5– -0.10– -0.6– -0.7– -0.15– -0.8– 2000 2002 2004 2006 2008 2010 2012 2014 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 with 95 percent confidence interval with 95 percent confidence interval Q DMSP-based lights ‹ VIIRS-based lights Notes: The figure shows for Nigeria the yearly effect (relative to the year 2000) of a dummy Notes: We use the same panel-DiD model as for Fig. A4.1 except that we now consider the equal to one if the cell is within the Boko Haram area (the area of Borno, Yobe and full period 2000–2018. For this analysis we rely on the harmonized NTL data (1992–2018) Adamawa that is between the Yobe river in the North (in Yobe) and the Benue river in the from Li et al. (2020) who combine night light data from OLS-DMSP (used until 2013) and South (Adamawa)). More precisely, we use data for 7,761 0.1×0.1 degree grid cells (≈ 11x11km SNPP-VIIRS (use for the period 2014–2018). Note that the high standard errors for the at the equator) in Nigeria for the years 2000–2013 (hence N = 108,654). The dependent VIIRS observations in 2014–2018 likely reflect the fact that the assumptions made by Li et variable is the log of mean light intensity (sum of lights divided by area + 1) in cell c in al. (2020) to recreate harmonized NTL for the whole period 2000–2018 also introduced a year t. We include cell c fixed effects, year t fixed effects, and interact the Boko Haram significant amount of noise. area dummy c (equal to one if the cell is within the Boko Haram area or if its centroid is within 10 km from the area’s border) with a dummy for each year t in 2001–2013. Standard errors are clustered at the Local Government Area (LGA; N = 721). With 7,761 cells, there are 11 cells per LGA.  oko Haram Area Effect in Cameroon, Figure A4.3: B  oko Haram Area Effect in Cameroon, Figure A4.4: B Chad and Tchad, 50 Km Bins, 2000–2013 Chad and Niger, 2000–2018 Effect of X km from Boko Haram (relative to 2000) Effect of 200 km from Boko Haram (omitted = 2010) 0– 0.1– Insurgency starts Counter-insurgency in 2015 0– -0.1– -0.2– -0.1– -0.3– -0.4– -0.5– -0.2– -0.6– -0.7– -0.8– -0.3– -1.0– 2000 2002 2004 2006 2008 2010 2012 2014 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 with 95 percent confidence interval ▬ 0–50 km ▬ 50–100 km ▬ 100–150 km ▬ 150–200 km Q DMSP-based lights ‹ VIIRS-based lights Notes: For 1,546 cells in Cameroon, Chad and Niger, we use the same panel-DiD model Notes: For 1,320 cells in Cameroon, Chad and Niger (CCN), we use the same panel-DiD as eq. (1) except that we now separate the 0–200 km Boko Haram Area Dummy into four model as eq. (1) except that we now consider the full period 2000–2018 (1,320 cells x 19 dummies for whether the cell is within 0–50 km, 50–100 km, 100–150 km or 150–200 km years = 25,080 obs.). We start with the sample of 1,546 cells but exclude cells having ever from the Boko Haram area (1,546 cells x 14 years = 21,644 obs.). To avoid the figure being too experienced a Boko Haram event during the period of study as well as cells within 50 km cluttered, we do not report confidence intervals. See text for details on the specification. from these cells. We also control for the log of the Euclidean distance to any CCN cell with a Boko Haram event in the same year t. For this analysis we rely on the harmonized NTL data (1992–2018) from Li et al. (2020) who combine night light data from OLS-DMSP (used until 2013) and SNPP-VIIRS (use for the period 2014–2018). Note that the high standard errors for the VIIRS observations in 2014–2018 likely reflect the fact that the assumptions made by Li et al. (2020) to recreate harmonized NTL for the whole period 2000–2018 also introduced a significant amount of noise. Appendix 189 Lake Chad Regional Economic Memorandum  |  Development for Peace  ffects of Boko Haram on Domestic Conflict, ACLED Database, 2000–2013 Table A4.1: E Combined Violence Non-Violent Explosions Protests or Conflict Measure: All Events (Including Battles Against Strategic & Remote Riots Fatalities) Civilians Dev. Violence Panel A. Dep. Var.: Dummy if Non-Boko Haram Conflict Event in the Cell in Year t 0.0002 – -0.0003 0.0004 0.0002 0.0000 0.0002 BH 200Km* Post-09 [0.0004] – [0.0003] [0.0003] [0.0003] [0.0001] [0.0002] Panel B. Dep. Var.: Number of Non-Boko Haram Conflict Events in the Cell in Year t 0.0024 0.0212 0.0016 0.0005 0.0001 -0.0001 0.0002 BH 200Km* Post-09 [0.0022] [0.0129] [0.0018] [0.0004] [0.0004] [0.0002] [0.0002] Cell FE, Cntry-Yr FE Y Y Y Y Y Y Y Yr FE*Controls Y Y Y Y Y Y Y Observations 356,874 356,874 356,874 356,874 356,874 356,874 356,874 Notes: SEs clustered at the 3rd-level admin. unit. * p<0.10, ** p<0.05, *** p<0.01.  ffects of Boko Haram on Domestic Conflict, UCD Database, 2000–2013 Table A4.2: E Type of Organized Violence Combined Conflict Measure: All Events (Incl. Fatalities) State Non-State One-Sided Panel A. Dummy if Non-Boko Haram Conflict Event in the Cell in Year t 0.0003 – 0.0000 0.0000 0.0003** BH 200Km * Post-09 [0.0002] – [0.0001] [0.0000] [0.0002] Panel B. Dep. Var.: Number of Non-Boko Haram Conflict Events in the Cell in Year t 0.0009 0.0299 0.0004 0.0000 0.0005* BH 200Km * Post-09 [0.0007] [0.0236] [0.0004] [0.0000] [0.0003] Cell FE, Cntry-Yr FE Y Y Y Y Y Yr FE*Controls Y Y Y Y Y Observations 356,874 356,874 356,874 356,874 356,874 Notes: SEs clustered at the 3rd-level admin. unit. * p<0.10, ** p<0.05, *** p<0.01. Table A4.3: Effects of Boko Haram on Domestic Conflict, SCAD Database, 2000–2013 Type of Social Conflict Combined Conflict Measure: All Events (Incl. Fatalities) Demonstration Riot Strike Violence Panel A. Dummy if Non-Boko Haram Conflict Event in the Cell in Year t 0.0005 – 0.0003 0.0003 0.0002 -0.0001 BH 200Km * Post-09 [0.0005] – [0.0003] [0.0002] [0.0002] [0.0003] Panel B. Dep. Var.: Number of Non-Boko Haram Conflict Events in the Cell in Year t 0.0010 0.0024 0.0007 0.0003 0.0001 -0.0001 BH 200Km * Post-09 [0.0007] [0.0020] [0.0004] [0.0002] [0.0003] [0.0003] Cell FE, Cntry-Yr FE Y Y Y Y Y Y Yr FE*Controls Y Y Y Y Y Y Observations 356,874 356,874 356,874 356,874 356,874 356,874 Notes: SEs clustered at the 3rd-level admin. unit. * p<0.10, ** p<0.05, *** p<0.01. 190 Appendix Technical Paper 3. Estimating the Spillover Economic Effects of Foreign Conflict: Evidence from Boko Haram Table A4.4: Effects on Domestic Conflict, 2000–2013, Excluding Military Headquarters Cells Conflict Database: ACLED (Armed Conflict) Uppsala (Armed Conflict) SCAD (Social Conflict) All Intensive Extensive All Intensive Extensive All Intensive Extensive Sample: (1) (2) (3) (4) (5) (6) (7) (8) (9) Panel A. Dep. Var.: Dummy if Non-Boko Haram Conflict Event in the Cell in Year t BH 200Km * Post- -0.0005 -0.0056* -0.0004 0.0001 0.0011 0.0001 -0.0004 -0.0052 0.0001 09 [0.0004] [0.0031] [0.0003] [0.0001] [0.0020] [0.0001] [0.0004] [0.0032] [0.0002] Panel B. Dep. Var.: Number of Non-Boko Haram Conflict Events in the Cell in Year t BH 200Km * Post- -0.0016* -0.0337** -0.0004 0.0000 0.0014 0.0000 -0.0004 -0.0063* 0.0002 09 [0.0009] [0.0162] [0.0006] [0.0002] [0.0034] [0.0001] [0.0004] [0.0036] [0.0002] Cell FE, Cntry-Yr FE Y Y Y Y Y Y Y Y Y Yr FE*Controls Y Y Y Y Y Y Y Y Y Observations 302,344 12,796 289,548 302,344 12,796 289,548 302,344 12,796 289,548 Notes: SEs clustered at the 3rd-level admin. unit. * p<0.10, ** p<0.05, *** p<0.01. Table A4.5: Post-2009 Effect of Proximity to the Boko Haram Area, Lights, Alternative SEs Dependent Variable: Log (Mean Night Light Intensity + 1) in Year t SEs Clustered using Admin. units Conley SEs - Distance Cut-Off = Standard errors: Level 3 Level 2 Level 1 50 km 100 km 200 km (1) (2) (3) (4) (5) (6) -0.097*** -0.097*** -0.097** -0.097*** -0.097*** -0.097*** BH 200Km * Post-09 [0.027] [0.031] [0.038] [0.029] [0.034] [0.036] Cell FE, Cntry-Year FE Y Y Y Y Y Y Year FE*Controls Y Y Y Y Y Y Notes: Obs.: 21,644. * p<0.10, ** p<0.05, *** p<0.01. Table A4.6: Post-2009 Effect of Proximity to Boko Haram, Alternative Measures of the Shock Dependent Variable: Log (Mean Night Light Intensity + 1) in Year t Borno Only Borno + Yobe City of Driving Log Dist. to Measure: Baseline + Adamawa Maiduguri Time BH Area (1) (2) (3) (4) (5) (6) -0.097*** -0.123*** -0.057** BH 200 Km * Post-09 [0.027] [0.038] [0.026] -0.119*** Maiduguri 300Km * Post-09 [0.039] -0.044** BH 6.5 Hrs * Post-09 [0.018] -0.033*** (-) Log Dist. BH * Post-09 [0.012] Cell FE, Cntry-Year FE Y Y Y Y Y Y Year FE*Controls Y Y Y Y Y Y Notes: Obs.: 21,644. * p<0.10, ** p<0.05, *** p<0.01. Appendix 191 Lake Chad Regional Economic Memorandum  |  Development for Peace Technical Paper 4. Infrastructure and Structural Change in the Lake Chad Region Mathilde Lebrand (World Bank) 192 Technical Paper 4. Infrastructure and Structural Change in the Lake Chad Region 5.1 Introduction Infrastructure investments can support economic national and regional perspective, and with a particular development through both capital accumulation and focus on the Lake Chad area. structural transformation.340 Structural change, the movement of workers from lower to higher productivity All four countries, while being at different stages of employment, is seen as essential to growth in low-income development, face a similar challenge to generate countries. This paper investigates how investments in more adequate-quality jobs through economic electricity, internet, transport infrastructure, and their transformation. Employment in nonagricultural sectors interactions, affect economic development through is currently around 55 percent in Cameroon, 65 percent productivity gains and structural change in countries in Nigeria, and less than 30 percent in Niger and Chad around the Lake Chad. Roads provide access to markets, (World Bank data, see Figure A5.1 in the appendix). increasing both economic opportunities for local firms The share of employment in agriculture in Cameroon and competition from other locations. Electricity and and Nigeria has been declining since the 1990s, while internet allow for modern production technologies it has stagnated at high levels for Niger and Chad. and complement roads by boosting firm productivity. Overall, the pace of structural change has remained While the literature has studied specific infrastructure slower than expected in the region, hence the need to expansions as potential drivers of development, little has better understand the role of infrastructure as a driver of been done on the associated structural change and how structural transformation. the combinations of such investments will matter. Because the Lake Chad region is characterized by This paper focuses on the impact of infrastructure strong historical trade, ethnic, cultural, and political on economic development for the countries ties, which makes the areas within countries that around the Lake Chad area, an economically- and comprise the region economically interdependent, socially-integrated area in north-west Africa that we finally consider regional integration and cross- has development potential, but which has been border linkages when assessing the impact of further undermined by multiple and interrelated drivers of infrastructure investments. The region and its vicinities fragility, conflict, and violence. The Lake Chad region host some key cities—such as Maiduguri in Nigeria, comprises a set of administrative areas across Cameroon, Maroua and Kousseri in Cameroon, N’Djamena in Chad, Niger, and Nigeria that surround Lake Chad, with Chad, and Diffa in Niger—that could serve as a trade an estimated 17 million to 19 million people, who are hub that could potentially drive the regional economy. primarily involved in agriculture and fishing activities. However, connectivity across the borders (or between The region has one of the largest concentrations of these cities within the national boundaries) is poor due extreme poverty in Sub-Saharan Africa and the world to a lack of road infrastructure and volatile security and lags in human development outcomes and access situations that make trade or transportation of goods too to key public services. The paper analyzes the impact of costly. The paper complements the economic analysis of infrastructure in Cameroon, Chad and Nigeria, from a key infrastructure investments with additional border investments. 340 There are two approaches for explaining economic growth (McMillan et al., 2017). The first one assumes that the accumulation of skills, capital, and broad institutional capabilities are needed to generate sustained productivity growth. The second approach assumes a dual economy where long-run growth is driven by the flow of resources to the modern economic activities that operate at higher levels of productivity. 5.1 Introduction 193 Lake Chad Regional Economic Memorandum  |  Development for Peace The paper is divided in two parts. The first part uses work for countries in the Horn of Africa (Herrera Dappe reduced-form analysis to quantify the impacts of past and Lebrand, 2021). investments in electricity, internet, and road infrastructure on the sectoral structure of employment in Cameroon, Our paper is related to a number of different strands Nigeria, and Chad. The second part uses a spatial general of research. First, our work contributes to research on equilibrium model, based on Moneke (2020), to assess the the different impacts of infrastructure. Several papers aggregate and spatial impacts of planned infrastructure have examined the impact of infrastructure investment investments in the region. Reduced-form results capture on sectoral employment at the micro-level (Adukia et al., the localized effects in the areas that have been affected, 2020; Asher and Novosad, 2018; Gertler et al., 2016). In but do not capture the general-equilibrium effects and the case of roads, lower transport costs empower women spillovers due to the network nature of infrastructure by opening labor market opportunities and increase their such as roads. The general-equilibrium model captures employment in the non-agricultural sector (Gertler et the spillover effects that a localized investment has on al., 2016). However most papers have considered the the rest of the country and all the countries in the Lake gains from energy, transport and digital investments Chad region and generates welfare estimates for the entire in isolation or bundled in a unique infrastructure region and all its subregions. index. The aggregate impact of infrastructure has been measured through the elasticity of output with respect to We first provide evidence on how past investments a synthetic infrastructure index, which includes transport and their combinations mattered for structural along with electricity and telecommunications (Calderon transformation in countries around the Lake Chad, et al., 2015). More recently, Moneke (2020) shows that which includes Cameroon, Nigeria, Niger, and interactions of transport and electricity investments are Chad. Facing endogenous infrastructure investments complementary and gave rise to large effects on economic with respect to sectoral employment outcomes across development in the context of Ethiopia. He finds starkly time and space, we use several instrumental variables to different patterns of big push infrastructure on sectoral overcome these endogeneity concerns. We then study the employment compared to only road investments: roads average and heterogenous effects to understand whether alone cause services employment to increase at the expense leading or lagging regions benefit differently from such of agriculture and, especially, manufacturing employment. investments. As the pace of structural change remains In contrast, the interaction of roads and electrification slow in the region, we provide counterfactual evidence to causes a strong reversal in manufacturing employment. which extent a push for more regional integration through Our paper is similar but includes investments in digital the expansion of transport and trade infrastructure infrastructure, and covers more countries. would support economic development and structural transformation. Finally, our paper contributes to the long literature using quantitative spatial general equilibrium The objective of this work is to extend our models to provide counterfactuals for infrastructure understanding on the impact of infrastructure investments. We look at the general equilibrium effects investments across several neighboring countries of road and border investments via changes in trade costs in Africa. The novelties of this work are to assess the that lead labor to reallocate across locations such as Allen interactions between different infrastructures and how and Arkolakis (2014) and Redding (2016). Bustos et it affects the sectoral structure of employment at the al. (2016) and Fried and Lagakos (2020) study general district level, and to assess the impacts of several planned equilibrium implications of electrification via its effect on transport investments and trade facilitation measures productivity. Michaels et al. (2011) look at changes in in neighboring countries that are at different stages of sectoral employment as outcome of interest that captures development. A companion paper undertakes similar the underlying infrastructure-induced effects. Several 194 5.1 Introduction Technical Paper 4. Infrastructure and Structural Change in the Lake Chad Region papers provide policy counterfactuals for future road and border infrastructure improvements for the Belt and Road Initiative (Lall and Lebrand, 2020; Bird et al., 2020), in Bangladesh (Herrera Dappe and Lebrand, 2019), and between Bangladesh and India (Herrera Dappe et al., 2021). The paper is structured as follows. Section 2 presents the data. Section 3 presents the empirical strategy and results. Section 4 develops a spatial general-equilibrium model to produce counterfactuals for more regional integration. Section 5 concludes. 5.1 Introduction 195 Lake Chad Regional Economic Memorandum  |  Development for Peace 5.2 Data In this paper, we complement household survey networks around the year 2007 based on surveys and data that have been geolocalized with new spatial governments sources. We complement each network with  n order to study links between access infrastructure data i data from recent government surveys for Cameroon and to infrastructure and structure of the local economies, Chad, and from the work of Ali et al. (2015) for Nigeria. and the complementarities between the different types of In the latest, geographic information system road network infrastructure. data are combined with road survey data from the Nigeria Federal Roads Maintenance Agency (FERMA) and the World Bank’s Fadama project.341 Panels of roads from 5.2.1 Sources of data the same source are rare. Related works include a similar paper applied to the Horn of Africa (Herrera Dappe and Infrastructure. We start by collecting new information Lebrand, 2021) and Moneke (2020) whose focus on ‘all- on road network expansions, access to the electricity weather’ (i.e. gravel, asphalt or bitumen surface) roads is network, and access to the internet fiber backbone. Table closer to ours. 5.1 summarizes the data sources and years of coverage. Second, we use two methods to map access to the First, we collect geospatial maps of road expansion electricity network, nighttime lights as a proxy for using governmental sources but also previously- access to electricity and maps of the power transmission harmonized collections of road networks  (Foster and grids. Nighttime lights are available for most years Briceno-Garmendia, 2010; Jedwab and Storeygard, and locations but convey imperfect information on 2020). The quality of the network and associated features, electrification. Historical maps of electricity grids are and the frequency of updates vary across countries. For more difficult to find and use in a consistent way. First, all three countries, we first rely on data from Foster and we use satellite images of annualized nighttime lights Briceno-Garmendia (2010) that cover all African roads and population rasters to calculate the percentage of Table 5.1: Summary of Infrastructure data Infrastructure Country Year Source Nigeria 1991 Jedwab and Storeygard (2020) Nigeria 2009 Jedwab and Storeygard (2020) around 2013 Ali et al. (2015) Roads Cameroon 2009 Foster and Briceno-Garmendia (2010) 2018 Road authorities Chad 2009 Foster and Briceno-Garmendia (2010) 2018 Road authorities Electricity All vary across countries Nighttime lights/Population raster Electricity grid All around 2006 Foster and Briceno-Garmendia (2010) All most recent gridfinder.org and Arderne et al. (2020) Internet All 2009–2019 Africa Bandwidth Maps 2009–19 341 To "ground truth" and take advantage of first hand local knowledge, government offices across Nigeria were surveyed about the conditions of specific road segments near them. 196 5.2 Data Technical Paper 4. Infrastructure and Structural Change in the Lake Chad Region electrified population, meaning population in settlements from the Africa Infrastructure Country Diagnostic that produce some lights at night. We compare the results (AICD) which collected primary data covering network for two metrics: a dummy that is equal to one if at least service infrastructures from 2001 to 2006 in 24 selected 50 percent of the population has access to electricity African countries. To complement these data, we rely from as defined previously, and the percentage of electrified on a recent effort by the World Bank, Facebook and other population per district. Sensitivity checks show that the institutions (KTH, ESMAP, WRI and the University of choice of the threshold does not significantly change the Massachusetts Amherst) to use remote sensing, machine results.342 Such methods have been used before to estimate learning and big data to map connected populations and electricity access in remote areas and guide grid extension the systems that support them. They create an algorithm programs.343 They assume that locations that emit lights at for estimating the location of existing medium-voltage night are settlements that have electricity access, and that infrastructure based on nighttime lights and the location their electricity is most likely supplied from an electrical of roads assuming that medium voltage lines are more grid. It also assumes that small off-grid systems do not likely to follow (or be followed by) main roads.345 Figure emit enough light to be captured by satellites, but larger A5.21 in the appendix shows the grid for the Lake Chad isolated power networks certainly do. We cross-check the using the 2009 grid from Foster and Briceno-Garmendia numbers that we get with country estimates of electrified (2010) and using the most recent grid. population over years from the World Bank.344 Figure A5.2 in the appendix shows the results for the percentage Internet infrastructure is proxied by access to the fiber of electrified population for all countries. broadband backbone network. We obtained data for all Africa for the period 2009–2020 with the exact location We also collect information on transmission of fiber nodes along the backbone network from Africa grids based on past efforts to harmonize data for Bandwidth Maps. We construct a proxy for access to the infrastructure from primary sources and recent fiber backbone which is equal to one if there is a node mapping strategies to infer the electricity grids based of the backbone in the location of interest. Each node on satellite data. For past data, we use electricity grids has a year attribute which allows us to build a panel for Figure 5.1: Route-Kilometers of Terrestrial Transmission Network, Africa 2009–2019 1.4M– 1.2M– 1.0M– 800K– 600K– 400K– 200K– 0– 9 09 0 0 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 -1 -1 -1 -1 -1 -1 -1 -1 -1 -1 -0 -1 -1 -1 -1 -1 -1 -1 -1 -1 - Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 J Fiber operational J Fiber under construction J Fiber planned J Fiber proposed Source: http://www.africabandwidthmaps.com/ 342 There is a large concentration of data points around 0 and 100 percent, which explains that the choice of the threshold, being the mid-point of the average, does not have a strong impact on the analysis. 343 An example of mapping rural electrification based on nighttime lights can be found at http://india.nightlights.io/ 344 The World Bank reports access to electricity (percent of population) for most countries for a long time period at https://data.worldbank.org/indicator/ EG.ELC.ACCS.ZS. 345 More details can be found on the blog https://blogs.worldbank.org/energy/using-night-lights-map-electricalgrid-infrastructure and in the paper Arderne et al. (2020). 5.2 Data 197 Lake Chad Regional Economic Memorandum  |  Development for Peace access to the backbone. We assume that access before round. The DHS-provided GPS coordinates for EAs 2008 is null everywhere, which is supported by World locations are not perfectly reliable due to the common Bank data on access to internet which reports that less random displacement applied to GPS coordinates for than 4 percent of individuals in Sub-Saharan countries anonymity.347 We aggregate EAs per geographic location. (including high-income countries) have access to internet in 2008. Figure 5.1 shows the growth of the network for Table 5.2: Survey data the whole of Africa, and Figures A5.8, A5.12, A5.18 show Data Country Year Source the geographic evolution per country. However, internet 1990, 2003, access remains unequal across countries as some countries Nigeria 2008, 2013, have a broad internet coverage while others are still 2018 Household DHS lagging. We cross-check our numbers using the World surveys 1991, 2004, Cameroon 2011, 2018 Bank indicators reporting the percentage of individuals using the internet.346 Chad 2014 Table 5.3: Additional district-level data Employment. We are interested in structural transformation, which we interpret in line with the Population GHSL Herrendorf et al., 2014) as changes in sectoral literature ( Land ESA Land Cover employment. Following Moneke (2020), we require Distance to the coast GSHHG information on sectoral employment shares, which we Distance to the border Aiddata database derive from the Demographic & Health Survey (DHS). Access to a city The DHS produces harmonized survey data with GPS >50,000 inhabitants The Malaria Atlas Project coordinates available for most surveys and is available for Land Processes several rounds per country. The DHS is a repeated cross- Temperature Distributed Active Archive Center section of enumeration areas (EA), with approximately Elevation CGIAR-CSI 20 to 30 households enumerated per EA. In total, five rounds in Nigeria [1990, 2003, 2008, 2013, 2018], four rounds in Cameroon [1991, 2004, 2011, 2018], and one Usages of infrastructure. In addition of access to round in Chad, summarized in Table 5.2. Unfortunately infrastructure, we consider how usages linked to roads, we are not able to cover Niger. electricity and ICT infrastructure impact the structure of employment. We include variables from the DHS We use DHS data for which we have access to the surveys that cover access to electricity as reported by the occupation of the individuals as well as a proxy for their households, ownership of cars and motorcycles, ownership location. In order to construct the shares of employment of land phone and mobile phone, and use of internet. We per sector, we use respondents’ answer to questions about aggregate the answers at the subnational level of interest their current occupation. We first compute the shares of as percentage of individuals that have access to electricity, non-working individuals, and then we group the working own a car, a motorcycle, a land phone, a mobile phone, individuals into three sectors, agriculture, manufacturing or use internet. The analysis of usage complements the and services. We aggregate individual responses to the analysis of infrastructure investments. Not all variables are enumeration area and then generate an unbalanced panel available for the whole period so we restrict our analysis of districts that have at least one EA during a survey to the period 2008–2018. 346 The World Bank reports access to internet (percent of population) for most countries for a long time period at https://data.worldbank.org/indicator/WeT. NET.USER.ZS. based on International Telecommunication Union, World Telecommunication/ICT Development Report and database. 347 DHS coordinates of rural (urban) EAs are randomly displaced within a 0–10km (0–5km) radius. 198 5.2 Data Technical Paper 4. Infrastructure and Structural Change in the Lake Chad Region District characteristics. We use additional data to control In Cameroon, 60 percent of the communes and for district heterogeneity as described in Table 5.3. First, 80 percent of the population are connected to a paved we use population from satellite data from GHSL348, road. The coverage falls when restricting access to fair or land categories from ESA land cover349, distance from good paved roads. Access to electricity and internet covers the coast from GSHHG350, distance to the border351, a small number of communes but the most populated access to a city larger than 50,000 inhabitants from the ones as the percentage of population is almost twice the Malaria Atlas Project,352 temperature from Land Processes percentage of communes. Between 2003 and 2018, the Distributed Active Archive Center353, and elevation from number of communes covered has more than double CGIAR-CSI354. but the percentage of population covered has increased by only 7 percent percentage points from 41 percent. The additional communes that have received electricity 5.2.2 Access to infrastructure coverage over the last two decades are much less populated. We compare access to infrastructure for paved roads, Access to infrastructure in Chad is very limited electricity, and internet broadband for Nigeria, compared to other countries. In 2014, only 2.6 percent Cameroon and Chad after 2000. Figures 5.2, 5.3, of communes had access to a paved road, 3 percent to and 5.4 report summary statistics of the infrastructure the internet broadband, and 6 percent to the electricity variables used in the next sections at the country level, network. The covered communes are the most populated and Figure 5.5 focuses on the smaller area around the ones, as 20 percent of the population has access to lake Chad. electricity and 15 percent of the population has access to the internet broadband. Recent improvements of the Nigeria has the highest level of access to paved roads paved road network since 2014 as shown in Figure A5.17 and electricity with more than 90 percent of the show that the percentage of communes and population districts and population having access to a paved road having access to a paved road has largely increased. in 2018. While access to paved roads has barely changed since 2000, access to electricity has increased significantly The Lake Chad area, which includes The Extreme from 35 percent to 56 percent of districts having access North region in Cameroon, the regions of Kanem, to electricity between 2003 and 2018.355 23 percent of Lac, Hadjer-Lamis, and Chari-Baguirmi in Chad, districts are connected to the fiber network as defined by and the regions of Borno, Yobe and Adamawa in the presence of a node from the fiber backbone. Nigeria as depicted on Figure A5.20, is characterized by a limited access to infrastructure. Only 30 percent 348 GHSL: Population count from the Global Human Settlement Layer. Based on population data from Gridded Population of the World v4.10 polygons, distributed across cells using the Global Human Settlement Layer global layer. Source data provided in 9 arc-second (250m) grid cells. 349 ESA land cover: Defourny, P. (2017): ESA Land Cover Climate Change Initiative (Land Cover cci): Land Cover Maps, v2.0.7. Centre for Environmental Data Analysis, 7/2017. 350 Distance to coast (on land only), measured in meters. Derived using World Vector Shorelines. Wessel, P., and W. H. F. Smith, A Global Self-consistent, Hierarchical, High-resolution Shoreline Database, J. Geophys. Res., 101, B4, pp. 8741-8743, 1996. 351 Distance to country borders, measured in meters. Derived using GADM 2.8 ADM0 (Country) boundaries. 352 Incorporates data from Open Street Map (OSM) data and the Google roads database. D.J. Weiss, A. Nelson, H.S. Gibson, W. Temperley, S. Peedell, A. Lieber, M. Hancher, E. Poyart, S. Belchior, N. Fullman, B. Mappin, U. Dalrymple, J. Rozier, T.C.D. Lucas, R.E. Howes, L.S. Tusting, S.Y. Kang, E. Cameron, D. Bisanzio, K.E. Battle, S. Bhatt, and P.W. Gething. A global map of travel time to cities to assess inequalities in accessibility in 2015. (2018). Nature. doi:10.1038/nature25181. 353 Yearly daytime land surface temperature. Wan, Z., Hook, S., Hulley, G. (2015). MOD11C3 MODWeS/Terra Land Surface Temperature/Emissivity Monthly L3 Global 0.05Deg CMG V006 [Data set]. NASA EOSDWeS LP DAAC. doi: 10.5067/MODWeS/MOD11C3.006. 354 Global elevation (in meters) from Shuttle Radar Topography Mission (SRTM) dataset (v4.1) at 500m resolution. Jarvis A., H. We. Reuter, A. Nelson, E. Guevara, 2008, Hole-filled seamless SRTM data V4, International Centre for Tropical Agriculture (CIAT), available from http://srtm.csi.cgiar.org. 355 A district is classified as electrified when at least 50 percent of its population has access to electricity as monitored with nighttime lights. 5.2 Data 199 Lake Chad Regional Economic Memorandum  |  Development for Peace Figure 5.2: Access to infrastructure in Nigeria a. At the district level b. At the population level Percentage of districts with access to infrastructure Percentage of population with access to infrastructure 100– 100– 94.8 95.3 86.6 86.5 88.9 88.6 80– 80– 79.9 76.3 60– 60– 61.5 56.3 40– 40– 42.9 35.5 28.4 20– 23.2 20– 0.0 0.0 0– 0– Paved road Good paved road Electricity Internet Paved road Good paved road Electricity Internet J 2003 J 2018 J 2003 J 2018 Note: Authors’ calculations using data sources listed in previous section. Good paved roads include roads of fair or good condition. The left graph shows the percentage of districts (admin 2 for Nigeria), the right graph the percentage of population using the 2015 district population. Figure 5.3: Access to infrastructure in Cameroon a. At the district level b. At the population level Percentage of districts with access to infrastructure Percentage of population with access to infrastructure 100– 100– 80– 80– 82.0 75.8 60– 61.9 60– 57.5 51.7 53.1 47.7 48.9 40– 40– 41.3 36.5 32.5 29.8 20– 22.8 20– 9.3 0.0 0.0 0– 0– Paved road Good paved road Electricity Internet Paved road Good paved road Electricity Internet J 2004 J 2018 J 2004 J 2018 Note: Authors’ calculations using data sources listed in previous section. The left graph shows the percentage of districts (admin 3 for Cameroon), the right graph the percentage of population using the 2015 district population. Figure 5.4: Access to infrastructure in Chad (2014) of the 80 locations—districts in Nigeria, communes in Percentage Cameroon and Chad—have a paved road, 16 percent 20– 20.0 access to electricity, and 10 percent access to internet. Only half of the population has access to a paved road, 15– 14.9 20 percent to electricity, and 30 percent to the internet broadband. 10– 6.3 5– 2.9 2.6 4.3 0– Electricity Internet Paved road J Districts J Population Note: Authors’ calculations using data sources listed in previous section. 200 5.2 Data Technical Paper 4. Infrastructure and Structural Change in the Lake Chad Region Figure 5.5: Access to infrastructure in the Lake Chad region a. At the district level b. At the population level Percentage of districts with access to infrastructure Percentage of population with access to infrastructure 100– 100– 80– 80– 60– 60– 60.3 40– 40– 32.5 29.8 20– 20– 21.0 16.3 10.0 0– 0– Paved road Electricity Internet Paved road Electricity Internet Note: Authors’ calculations using data sources listed in previous section. The Lake Chad area is defined as the area depicted in Figure A5.20 around the lake. The left graph shows the percentage of districts (admin 2 for Nigeria, admin 3 for Chad and Cameroon), the right graph the percentage of population using the 2015 district population. 5.2 Data 201 Lake Chad Regional Economic Memorandum  |  Development for Peace 5.3 Empirical Strategy and Results 5.3.1 Ordinary Least Squares We run two other specifications. First we include a specification to study labor participation where the The first empirical strategy uses panel ordinary least dependent variable is not the normalized sectoral share squares (OLS) regressions,  which includes year and but the share of non-working individuals. Second, country fixed effects and a battery of initial district-level we use variables of usage rather than presence of hard controls. The OLS specification is: infrastructure to compare the results. Sectori,c,t = α + βR Paced Roadi,c,t + βE Electricityi,c,t Employmenti,c,t = α + βE Electricityi,c,t + βC Cari,c,t + βI Interneti,c,t + ΥRE Paved Roadi,c,t * + βM Motorcyclei,c,t + βLP LandPhonei,c,t + Electricityi,c,t + ΥRI Paved Roadi,c,t * Interneti,c,t βMP MobilePhonei,c,t + βI Useofinterneti,c,t + + Controlsi,c,t + FE + εi,c,t  (5.3.1) Controlsi,c,t + FE + εi,c,t  (5.3.2) Sectori,c,t is the share of employment in agriculture,  ith Electricityi,c,t the percentage of respondents in w manufacturing or services for district i in country c, at location i with access to electricity as indicated by year t. The shares are normalized and equal to one. Paved the household, Cari,c,t the percentage owning a car, Roadi,c,t is a dummy variable that takes a value of one if Motorcyclei,c,t the percentage owning a motorcycle, location i in country c contains a paved road at year t. LandPhonei,c,t the percentage owning a land phone line, Electricityi,c,t is a dummy variable that takes a value of Mobilephonei,c,t the percentage owning a mobile phone, one if location i in country c has more than 50 percent of and Useofinterneti,c,t the percentage using internet. its population with lights at night at year t. Interneti,c,t Employmenti,c,t can be either the sectoral share or the is a dummy variable that takes a value of one if location labor force participation share. i in country c has a node on the internet backbone fiber network at year t. Paved Roadi,c,t * Electricityi,c,t captures There are several identification challenges that we the interaction of the road and electricity infrastructure, have identified. Infrastructure investments are likely and Paved Roadi,c,t * Interneti,c,t the interaction of the endogenously allocated with respect to the outcomes of road and internet infrastructures. We add interaction interest. Given the high cost of infrastructure investments, effects between the dummies to better understand the conscious allocation decisions are to be expected, for complementarities between infrastructures. We do not example by targeting high growth potential locations or include an interaction effect for electricity and internet as politically demanded locations. Finally, measurement error access to internet is assumed to rely on electricity access. in the right-hand side variables may lead to attenuation Controlsi,c,t represents the additional location-specific bias, for example due to inaccurate timing information of controls, which include initial district population, access infrastructure expansion or imprecise historic road and to a main city, land size, distance to the coast, distance grid maps. Measurement errors which are expected to be to the border, access to a city of more than 50,000 large in this case, lead to an OLS estimate biased towards inhabitants, temperature, and elevation. FE is the year zero. In the next section, we present results from OLS and country fixed-effects. The coefficients β capture the regressions, keeping in mind that they do not represent correlation between access to a type of infrastructure causality. We explore an instrumental variable (IV) on the different sectoral employment shares, while the strategy in section 3.2 using instruments for paved roads coefficients Υ capture the infrastructure interaction terms. and electricity access only. 202 5.3 Empirical Strategy and Results Technical Paper 4. Infrastructure and Structural Change in the Lake Chad Region 5.3.1.1 OLS Results All countries. Access to electricity is associated with a transformation away from agriculture in the Lake Chad This section reports results for the unbalanced region. Table 5.4 reports the results of pooling together panel of districts that include at least one EA. We data from Nigeria, Cameroon, and Chad. Having access first estimate local average associations of the three to electricity at the district level is associated with a infrastructure investments—roads, electricity, and 20.8 percentage-point reduction in the employment internet—and the interaction between these investments share of agriculture, a 8.5 percentage-point increase on sectoral employment at the district-year level. Then in the employment share of manufacturing, and a we analyze the within-country heterogeneity in structural 12 percentage-point increase in the employment transformation across districts. share of services. Access to internet is associated with a decrease in the share of employment in agriculture and an increase in the share of services, but the coefficients 5.3.1.2 Average Effects are not significant. Access to a paved road is significantly associated with a transformation away from agriculture. We start with a regression that includes all countries Having access to a paved road at the district or commune from the Lake Chad. Then, we compare the results level is associated with 4 percentage-point increase in the by country revealing some heterogeneity in responses. employment share of manufacturing, and a 2 percentage- Throughout, standard errors are clustered at the district- point increase in the employment share of services. level, which is the level of the treatment. Agriculture, Table A5.2 in the appendix presents the results using the Manufacturing and Services represent the sector shares dummy variable that captures electricity access based on that add up to one. The ’Non-Working’ column represent the grid expansion for comparison. the share of active population reporting not working at the moment of the interview. Table 5.4: Nigeria, Cameroon, Chad Agriculture Manufacturing Services Not working -0.0580** 0.0387** 0.0207+ 0.0422** Paved road (-3.43) (4.96) (1.70) (5.82) -0.0791 0.00545 0.0674 0.0134 Internet (-1.58) (0.34) (1.63) (0.68) -0.208** 0.0849** 0.126** 0.0699** Electricity (>50p) (-6.68) (4.70) (5.70) (5.21) 0.0288 -0.0122 -0.00946 -0.0285 Road + Internet (0.57) (-0.73) (-0.22) (-1.39) -0.00994 -0.0126 0.0199 -0.0811** Road + Electricity (-0.32) (-0.68) (0.89) (-5.88) Year + Country FE Yes Yes Yes Yes Controls Yes Yes Yes Yes R-squared 0.403 0.346 0.420 0.157 N. of observations 3,041 3,041 3,041 3,041 Notes: t statistics in parentheses; + p < 0.10; * p < 0.05; ** p < 0.01 5.3 Empirical Strategy and Results 203 Lake Chad Regional Economic Memorandum  |  Development for Peace Table 5.5 shows the results of the analysis when have strong impacts, with a 10 percentage-point increase including usages of infrastructure instead of the in the number of respondents using a mobile phone presence of infrastructure in the district. Both analysis (land phone) associated with a 1.9 (3.3) percentage-point are complementary. The presence of infrastructure does decrease in agricultural employment shares. not ensure its full usage by households and represents therefore a low bound of the impacts of infrastructure.  verall the impacts on employment and labor market O The usage represents the higher bound of the estimate of participation as reported on the last column ’Not impacts when individuals acquire the goods or services working’ are mixed. to make the best of these infrastructure. Estimated coefficients are therefore higher when considering Around the Lake Chad. We restrict our analysis to the the usage rather than the presence of infrastructure. regions neighboring the Lake Chad at the intersection of Usage variables in Table 5.5 represent the percentage of Chad, Cameroon and Nigeria as shown in Appendix on respondents that own a certain good or use the services Figure A5.20. These regions are poorer, less developed allowed by certain infrastructures. and more prone to conflicts. Table A5.5 shows that infrastructure investments there are associated with much A 10 percentage-point increase in the number of larger effects on sectoral shares, especially for electricity respondents using electricity is associated with and paved roads. Access to electricity and a paved road a 3.6 percentage-point decrease in the share of is associated with a large transformation away from agricultural employment,  a 1 percentage point agriculture in the districts directly located around the increase in manufacturing and a 2.5 percentage-point Lake. Having access to a paved road at the district level increase in services. Having a car, and to a lower extent, is associated with a 13 percentage-point reduction in the having a motorcycle has a large impact on structural employment share of agriculture, an 8 percentage-point transformation. Both the use of mobile and land phones increase in the employment share of manufacturing, and Table 5.5: Nigeria, Cameroon, Chad: the usage perspective, 2008–2018 Agriculture Manufacturing Services Not working -0.359** 0.109** 0.252** -0.0257** Electricity (share) (-23.64) (15.44) (19.92) (-3.47) -0.0177 -0.00197 0.0286 0.0140 Motorcycle (share) (-0.81) (-0.17) (1.46) (1.11) -0.362** -0.0517* 0.411** -0.0498* Car (share) (-8.19) (-2.11) (11.03) (-2.08) Use of internet -0.0393 -0.00883 0.0723+ -0.117** (share) (-0.80) (-0.31) (1.67) (-3.79) Mobile phone -0.189** 0.0909** 0.0942** 0.0667** (share) (-6.49) (6.35) (3.69) (3.08) -0.334** -0.000578 0.345** 0.179** Land phone (share) (-3.22) (-0.01) (3.55) (3.11) Year + Country FE Yes Yes Yes Yes Controls Yes Yes Yes Yes R-squared 0.605 0.358 0.561 0.157 N. of observations 2,369 2,369 2,369 2,369 Notes: t statistics in parentheses; + p < 0.10; * p < 0.05; ** p < 0.01. All explanatory variables are shares of population between 0 and 1. 204 5.3 Empirical Strategy and Results Technical Paper 4. Infrastructure and Structural Change in the Lake Chad Region a 5 percentage-point increase in the employment share By country. In Cameroon, access to electricity is associated of services. Access to electricity is also associated with with a significant reduction in agriculture employment large impacts, with a decrease of 14 percentage points for and increase in employment in manufacturing and services agriculture employment. (Table 5.7). Having access to electricity at the district level is associated with a 26 percentage-point reduction in the agriculture employment share, a 21 percentage-point Table 5.6: Around Lake Chad Agriculture Manufacturing Services Not working -0.124* 0.0753* 0.0443 -0.0147 Paved road (-2.05) (2.39) (1.11) (-0.74) -0.0583 0.0551* 0.0269 0.0463* Internet (-1.02) (2.03) (0.65) (2.16) -0.240** 0.0450 0.177** 0.0247 Electricity (>50p) (-3.13) (1.66) (2.75) (1.00) -0.136 -0.0598 0.192+ -0.00410 Road + Internet (-1.22) (-1.31) (1.97) (-0.13) -0.154 0.143** 0.0348 0.0313 Road + Electricity (-1.32) (2.74) (0.42) (0.73) Year + Country FE Yes Yes Yes Yes Controls Yes Yes Yes Yes R-squared 0.415 0.468 0.540 0.638 N. of observations 123 123 123 123 Notes: t statistics in parentheses; + p < 0.10; * p < 0.05; ** p < 0.01. All explanatory variables are shares of population between 0 and 1. Table 5.7: Cameroon Agriculture Manufacturing Services Not working -0.117** 0.0584** 0.0583** 0.0290** Paved road (-4.77) (4.68) (3.66) (2.59) -0.134* 0.0112 0.122** 0.0201 Internet (-2.46) (0.52) (2.63) (0.60) -0.261** 0.212** 0.0489 0.0538+ Electricity (>50p) (-3.21) (4.53) (1.16) (1.95) 0.0810 -0.0125 -0.0685 -0.0269 Road + Internet (1.37) (-0.53) (-1.38) (-0.75) 0.0135 -0.114* 0.100. -0.00549 Road + Electricity (0.16) (-2.41) (2.25) (-0.19) Year + Country FE Yes Yes Yes Yes Controls Yes Yes Yes Yes R-squared 0.410 0.379 0.462 0.103 N. of observations 661 661 661 661 Notes: t statistics in parentheses; + p < 0.10; * p < 0.05; ** p < 0.01. All explanatory variables are shares of population between 0 and 1. 5.3 Empirical Strategy and Results 205 Lake Chad Regional Economic Memorandum  |  Development for Peace increase in the manufacturing employment share and a 5.3.2 Instrumental Variables 5 percentage-point increase in the employment share of services. Access to a paved road is also associated with In this section we use an instrumental variables a significant impact, from agriculture with a reduction identification strategy to deal with the potential of 12 percentage points to manufacturing and services. endogeneity in the placement of the infrastructure. We Finally access to internet is associated with a large impact instrument both roads and electricity and the interaction too, mostly towards the services sector. In terms of terms. combined investments, the combination of both paved roads and electricity seems to support employment in services at the expense of the manufacturing sector. 5.3.2.1 IV strategy Reduced-form estimates for the usage of infrastructure are reported in Appendix in Table A5.6. We instrument access to the national electricity grid and access to a paved road. Regarding electrification, Table 5.8 reports the results of the regression for the instrumental variable relies on four assumptions. Nigeria only. Similar to Table 5.4, access to electricity Electricity generation must be connected to demand, is associated to a large impact. The combined accesses which comes mostly from the main cities. The sources to internet and paved roads as well as paved roads and of energy generation that are identified are the main electricity are associated with a large reduction in the sources of electricity generation. Third the locations share of agriculture employment, and an increase in the of the supply sources are exogenous to economic services sector. Reduced-form estimates for the usage of geographic development. Finally, the locations between infrastructure are reported in Appendix in Tables A5.7. the generation sources and the main demand centers are Table A5.8 reports the results of the regression for Tchad. more likely to be electrified. Table 5.8: Nigeria Agriculture Manufacturing Services Not working 0.0137 0.00325 -0.0170 0.0113 Paved road (0.53) (0.31) (-0.82) (1.01) 0.0122 0.00139 -0.0136 0.0157 Internet (0.16) (0.07) (-0.19) (0.58) -0.151** 0.0319 0.119** 0.00496 Electricity (>50p) (-3.51) (1.60) (3.53) (0.29) -0.0757 -0.00170 0.0773 -0.0378 Road + Internet (-0.98) (-0.09) (1.08) (-1.36) -0.0431 0.0232 0.0199 -0.0113 Road + Electricity (-1.00) (1.14) (0.59) (-0.63) Year + Country FE Yes Yes Yes Yes Controls Yes Yes Yes Yes R-squared 0.357 0.321 0.282 0.161 N. of observations 2,137 2,137 2,137 2,137 Notes: t statistics in parentheses; + p < 0.10; * p < 0.05; ** p < 0.01. All explanatory variables are shares of population between 0 and 1. 206 5.3 Empirical Strategy and Results Technical Paper 4. Infrastructure and Structural Change in the Lake Chad Region We identify two sources of energy generation that can economic activity in the area. The timing of opening can be used for the IV strategy: dams for hydroelectricity be considered as exogenous as years of delay are common and wind farms. These sources of energy cover most of for such projects. The random assignment assumption the sources of electricity generation as reported in Table of the IV would imply that a district’s inclusion along a A14. The main sources of energy supply are hydropower straight line corridor is spatially and temporally as good in Cameroon, and gas in Nigeria. Similar to Moneke as randomly assigned. (2020), we develop an IV which yields a hypothetical electrification status based on a location’s proximity to To instrument for the timing of a district’s paved road a straight line corridor from electricity generators to the connection, we find the optimal network to connect main cities. First, we identify the locations of the electricity all cities with more than 50,000 inhabitants in a generators using two databases, one on dams opening year least-cost fashion by employing common minimum and another on power plants locations (Platts database). spanning tree algorithms such as Kruskal’s and For Cameroon, we use the geolocalized database Boruvka’s algorithms. The list of cities with more than including all dams in Africa and their year of opening. 50,000 inhabitants varies over time because of changes For Nigeria, we use the global power plant database that in population, which creates a panel of roads for each includes all power plants per type of energy (hydro, wind, country. gas, and geothermal) with their capacity and year of commissioning. From the year of dam opening or power W  e now run two-stage least squares (2SLS) on the plant commissioning onwards, all districts lying along the following specifications, with province and year fixed straight lines connecting the dams or power plants to the effects and district-level initial values as controls:356 main demand centers are considered as having access to electricity. For Nigeria and Cameroon, the main sources Roadi,t #Electricityi,t = of demand vary across time. At the beginning of our  α + βR (RoadIVi,t = 1 & ElectricityIVi,t = 0) panel, all dams in Cameroon have been opened therefore  + βE (RoadIVi,t = 0 & ElectricityIVi,t = 1) a panel IV is created by varying the sources of demand  + γRE (RoadIVi,t = 1 & ElectricityIVi,t = 1) rather than the supply sources. For Cameroon, we set the  + βI Interneti,t + Controlsi + FE + εi,t  (5.3.3) threshold of 500,000 inhabitants for a city to be included as a main source of demand for the hydropower supply  ith Roadi,t #Electricityi,t being one of the interactions w sources. In 1990, only Douala and Yaounde are included. terms between the dummies Roadi,t and Electricityi,t. In 2000, Garoua in the North is included, and in 2015, Maroua is also included. For each year, all districts lying The second stage equation is given by:  along the straight lines connecting the dams to the cities of more than half million inhabitants will be considered Sectori,t = hypothetically electrified. We then identify the main  α + βR,2SLS (RoadIVi,t = 1 & ElectricityIVi,t = 0) sources of demand in each country. For Nigeria, we  + βE,2SLS (RoadIVi,t = 0 & ElectricityIVi,t = 1) include the cities with more than a million inhabitants.  + γRE,2SLS (RoadIVi,t = 1 & ElectricityIVi,t = 1)  + βI,2SLS Interneti,t + Controlsi,t + YearFE + εi,t Our IV satisfies the main assumptions of an IV (5.3.4) strategy. The choice of location of hydro, gas wind  ith Sectori,t being the share of employment in w generators can be assumed to be driven by geographic agriculture, manufacturing, or services in district i in year and climatic characteristics of the locations and not by t. 356 District level controls variables are interacted with the country dummy such that the effects of distances can only be compared within countries. 5.3 Empirical Strategy and Results 207 Lake Chad Regional Economic Memorandum  |  Development for Peace 5.3.2.2 IV Results countries, the combined effects of electricity and roads are dominant to lead to a reduction of agriculture Table 5.9 reports the results for the 2SLS method for employment and an increase in services and to a lesser Cameroon and Nigeria, that can be compared with the extent in manufacturing. The presence of a paved road OLS method regression for Nigeria and Cameroon in Cameroon has led to a larger impact than in Nigeria only in Table A5.10 in Appendix. First stages results where the change in access to paved roads has been very and weak instrument tests are available on demand. small over the period. Access to internet has had a larger The IV methodology shows stronger effects, especially impact in Nigeria with respect to Cameroon. Table A5.11 for combined investments, than the equivalent OLS in Appendix reports the results of the IV specification for regression. First access to infrastructure leads to a sharp the Lake Chad region. reduction in the share of non-working individuals, especially when access to electricity is secured. Both access to paved roads and to electricity lead to structural transformation with jobs moving from agriculture to manufacturing and services. The impact of infrastructure investments is even larger when combining investments in roads and electricity, with an additional reduction of 19 percentage points in agriculture employment, mostly redistributed towards services. Access to the fiber backbone also has a significant impact and supports employment in the services sector. Table A5.11 reports the results of the IV specification for Nigeria only, and Table A5.12 reports the results of the IV specification for Cameroon only. The effects are similar to Table 5.9 when doing the analysis at the country level for Cameroon and Nigeria. For both Table 5.9: Nigeria and Cameroon: 2SLS method Agriculture Manufacturing Services Not working Paved road=0 × -0.117 0.0499 0.0671 -0.334** Electricity (>50p)=1 (-0.64) (0.84) (0.39) (-3.76) Paved road=1 × -0.0521 0.0412+ 0.0110 -0.0376 Electricity (>50p)=0 (-1.03) (1.73) (0.26) (-1.44) Paved road=1 × -0.191** 0.0486+ 0.142** -0.0923** Electricity (>50p)=1 (-3.32) (1.86) (2.86) (-3.15) -0.0335** -0.00308 0.0365** -0.00654 Internet (-3.10) (-0.59) (3.85) (-1.02) Year + province FE Yes Yes Yes Yes Controls Yes Yes Yes Yes R-squared 0.268 0.130 0.200 -0.122 N. of observations 2,798 2,798 2,798 2,798 Notes: t statistics in parentheses; + p < 0.10; * p < 0.05; ** p < 0.01. 208 5.3 Empirical Strategy and Results Technical Paper 4. Infrastructure and Structural Change in the Lake Chad Region 5.4 Welfare Impacts of Infrastructure We use a model to be able to assess the general land, h. Utility of a representative household in location equilibrium effects of infrastructure investments and n is assumed to follow an upper tier Cobb-Douglas produce counterfactuals for future investments. First, functional form over goods and land consumption, scaled we present the general equilibrium model. Second, we by a location-specific amenity shock Vn: calibrate the model based on the current distribution of α 1–α population and economic activities. Third we change the Un = VnCn hn (5.4.1) trade costs to produce counterfactuals.  ith 0 < α < 1. The goods consumption index is defined w over consumption of each tradeable sector’s composite 5.4.1 The Model good and services: T T ρ M M ρ S S ρ We now present a spatial general equilibrium model Cn = [ψ (Cn) + ψ (C n ) + ψ (Cn) ] (5.4.2) based on Moneke (2020). It is characterized by the following broad features. First, locations differ in their  ssuming consumption of sectoral composite goods to be a productivity, geography and trade links with each complementary, i.e. other. Second, road investments are assumed to have general equilibrium effects via changes in trade costs Consumers exhibit love of variety for both tradeable and the resulting reallocation of labor across space as sectors’ goods,CT and CM, which we model in the standard in Allen and Arkolakis (2014) and Redding (2016). CES fashion, where n denotes the consumer’s location Third, electrification investments are assumed to have and i the producer’s location, whereas j is a measure of general equilibrium effects via productivity, like models varieties. Consumption of each tradeable sector’s good is of differential productivity shocks across space such as defined over a fixed continuum of varieties j ϵ [0,1]: Bustos et al. (2016). Lastly, we assume the economy T 1 T v 1/v to consist of multiple sectors of production such that Cn = [∑ ∫0 (cni (j)) d j] (5.4.3) i N changes in sectoral employment across locations (i.e. spatial structural transformation) capture an outcome of  ith v an elasticity of substitution across varieties such w interest as in Michaels et al. (2011) and Eckert and Peters that varieties within each sector are substitutes for each (2018). Compared to Moneke (2020), we consider a other σ = 1/(1−v) > 1. An equivalent formulation is geography that includes several countries which can trade used for CMn. The following equation provides the classic with each other, where additional trade barriers apply for Dixit-Stiglitz price index over traditional sector goods: cross-border trade. Workers can move across locations T 1 T __ 1–σ 1 within country but not across countries. Pn = [∑ ∫0 (pni (j)) d j]1– σ (5.4.4) i N On the production side, there are two tradeable sectors 5.4.1.1 Setup from which firms produce varieties that can be traded across many other locations. Production uses labor and The whole geography consists of many locations, n ε N, land as inputs under constant returns to scale subject to of varying land size (Hn) and endogenous population stochastic location. (Ln). Consumers value consumption of agriculture goods, CT, manufacturing goods, CM, services, CS, and 5.4 Welfare Impacts of Infrastructure 209 Lake Chad Regional Economic Memorandum  |  Development for Peace i i service. We assume agriculture to be the most and services i i Ln μi hn 1–μ i (5.4.5) Yn = ğ ( ) ( ) i=T,M the least land-intensive sector μT < μM < μS. μi 1–μi  here 0 < μi < 1 and, zK denotes the sector-location- w W  ithin each location, the expenditure share on each specific realisation of productivity z for a variety in sector tradeable sector’s varieties and services depends on the i and location n. Following Eaton and Kortum (2002), relative (local) price of each sector’s (composite) good: locations draw sector specific idiosyncratic productivities K κ (ψ ) (P n) K 1–κ K for each variety j from a Frechet distribution: ξn = M κ M 1–κ T κ T 1–κ S κ S 1–κ K {T,M,S} (5.4.10) (ψ ) (Pn) +(ψ ) (Pn) +(ψ ) (Pn ) i i –0 i Fn (ɩ i) = e(–A z ) n i=T,M (5.4.6) G  iven the properties of the Frechet distribution of productivities, tradeable sectoral price indices can be  ith Ain the average sectoral productivity in location n. w further simplified: The shape parameter, θ, determines the variability of i μi 1–μ i –θ –1/θ T –1/θ productivity draws across varieties in a given location n. Pni = γ[kΣN Ak (ωk rk dnk) ] =γ(ɸn ) (5.4.11) Trade in both sectors’ final goods is costly and trade To arrive at a spatial equilibrium, we provide conditions costs are assumed to follow an iceberg structure. Trade for land market clearing, labor market clearing and costs between locations n and m are denoted as dnm, such a labor mobility condition. For an equilibrium in the that quantity dnm > 1 has to be produced in m for one land market, total income from land must equal total unit to arrive in n. We assume that trade costs are the expenditure on land, where the latter summarizes land same across sectors and are symmetric. expenditure by consumers, M-sector firms, T-sector firms and S-sector firms. Similarly, labor market clearing Given perfect competition in both production sectors, requires that total labor income earned in one location the price of a given i-sector variety equals marginal cost must equal total labor payments across sectors on goods inclusive of trade costs: purchased from that location everywhere. Finally, we i μi ωm rm dnm 1–μi assume that workers can freely move across locations p nm = i (5.4.7) within a country but cannot move across countries. zm Therefore, free mobility of workers across locations within with ωm the wage of a worker and rm the price of land.  country implies that the wage earned by workers in a given location after correcting for land and goods prices,  ach location n will buy a given variety from its minimum- E as well as a location’s amenity value, must be equalized cost supplier location m: across locations of a same country. The welfare in each i i location of a same country c is given by: pnm = min {pm , m N} (5.4.8) α 1–α α (1–α) Vn,cωn,c A Vn,c = Vc = α/(1–κ) 1–α , n country c (5.4.12) [Pn,c] rn,c Th  e share of expenditure that the destination location n spends on agricultural sector (and equivalently where Pn,c = (ɸM)k(PMn,c)1−k + (ɸT )k(PTn,c)1−k + (ɸS)  manufacturing sector) goods produced in origin m is k(PSn,c)1−k. We follow the specification in Moneke (2020) given by: and Michaels et al. (2011) to include the district specific Am i (ωmμi r1– μi m dnm) –0 parameter nn;c in the wage so that the welfare can be i πnm = i μ 1–μi –0 i (5.4.9) interpreted as the real income in each location. Σk N Ak (ωm rk dnk) Production of non-tradeable services also uses labor but output is a single homogeneous and land as inputs,  210 5.4 Welfare Impacts of Infrastructure Technical Paper 4. Infrastructure and Structural Change in the Lake Chad Region 5.4.2 Calibration of the Model 5.4.3 Counterfactuals We calibrate the model by using some parameters from We calibrate the model to assess the welfare and the literature and by recovering the key productivity spatial impacts of new transport investments. The parameters and wages to obtain an equilibrium for counterfactual exercise is done in three steps. First, we the current situation. Table A5.15 in the appendix calibrate the model to obtain the underlying parameters reports the parameters from the literature to calibrate of the model for the baseline situation, without the new the model which are like the ones in Moneke (2020) investments as explained in the previous section. Second, applied to Ethiopia. We use the sectoral labor shares from we update the trade costs based on the new assumptions. Table A5.15. To recover the productivity parameters, Third, we use the model to obtain the new employment we use the labor market clearing conditions, the land shares given the new transport costs, the wage per location, market conditions, and the labor mobility conditions. and therefore the real wage given the new equilibrium For each location, the model admits three equations goods and housing prices. for the three endogenous variables in each location— land market clearing, labor market clearing, and labor We use the available road networks for each country, mobility condition—which allows to solve for a general with assumptions on speed along the networks given equilibrium of the model in terms of its core endogenous the type and condition of roads that are registered. We variables: wages, land rental rates, and population. rely on additional features such as the type of surface and Moneke (2020) shows the uniqueness of the equilibrium the condition of the roads. Investments are assumed to based on a similar work by Michaels et al. (2011). We increase the speed at which vehicles can travel along the obtain a series of {ATn ,AMn ,ASn}nϵN for which the segments that are improved or build new links between distribution of population, employment, and land is an locations. We assume trade costs to be iceberg costs such equilibrium given the current trade costs. that the costs between location o and destination d are Map 5.1: Descriptive statistics for the 24 regions in the Lake Chad a. Share of employment in agricultural sector b. Total population per subregion Source: Authors’ calculations. 5.4 Welfare Impacts of Infrastructure 211 Lake Chad Regional Economic Memorandum  |  Development for Peace given by dod = max(1,timeτ). Border costs are also added 5.4.3.1 New transport infrastructure in Cameroon to trace costs as detailed in the following sections. and Chad We calibrate the model using spatial data for land, We investigate the impact of several transport and population, and sectoral shares from the sources trade facilitation projects listed in Table 5.10 and previously used. Because of the complexity of a 3-sector represented on Map 5.2 for the part potentially financed model to converge in order to recover the initial sectoral by the World Bank and on Figures A5.22 for all the productivities, we reduce the spatial disaggregation segments financed by different donors assessed in the to fewer locations. Such aggregation also smoothes next section. These projects are part of a comprehensive measurement issues of sectoral employment based on the and continued approach to provide a long-term, reliable, DHS data. For Lake Chad, we have a total of 24 regions, 8 safe and efficient multimodal corridor over the entire for Cameroon (adm1 level), 6 for Nigeria, and 8 for Chad. 1,800km long stretch between Douala-Ngaoundéré- Map 5.1 shows the share of agricultural employment and Koutéré-Moundou-Ndjamena (forthcoming World Bank population for each of these subnational regions. PAD document). The corridor contributes to improve domestic, regional as well as international connectivity for both countries. Map 5.2: World Bank investments in rail and road projects in Cameroon and Chad 212 5.4 Welfare Impacts of Infrastructure Technical Paper 4. Infrastructure and Structural Change in the Lake Chad Region Table 5.10: Summary of counterfactual scenarios Baseline Scenario Country Infrastructure Policies Rail line that is less and less Platform in Ngadoundere to move 1 Cameroon competitive with the road: speed from rail to road 40km per hour Corridor (Njamena-Moundou) in bad Land border with Cameroon: 30 conditions: speed 30km/h followed hours per each border point + Chad by the segment Moundou to the administrative costs to trade border in good condition Transport infrastructure investments Cameroon 2.1 Chad Upgraded road line Cameroon Upgraded rail line 2.2 Chad Upgraded road line Border investments 3 Cameroon and Chad Baseline from 30 hours to half time: 15 hours Transport + Border investments Cameroon Baseline Half border time 4.1 Chad Upgraded road corridor Half border time Cameroon Upgraded rail line Half border time 4.2 Chad Upgraded road corridor Half border time Rehabilitation of the rail line in Cameroon. The Tensions in the Extreme North have closed the corridors renovation of the rail line between Ngaoundere, Yaounde passing by the Northern part of Cameroon and opened and Douala in Cameroon is going through several steps. the possibilities for other corridors to develop. From The World Bank participates in the financing of the Ngaoundére to Ndjamena, the traditional road corridor Southern part of the project for the segment between crosses the region of North Cameroun which is under the Douala and Yaounde, while Agence Française de threat of Boko Haram, for this reason this road section is Développement (AFD) and European Investment Bank today considered as unsafe and unreliable. An alternative (EIB) are planning to finance in 2022 the rehabilitation of road corridor from Ngaoundére to Ndjamena crosses the the section from Belabo up to Ngaoundere in the North border near Moundou (second largest city in Chad) and Cameroun. We assume that the two rehabilitations will then connect Moundou with Ndjamena (about 600 km). happen at the same time so we consider both segments. The World Bank is currently assessing a project aiming at The government is currently planning to renovate the rehabilitating this section of the corridor with other donors most used segment between Yaounde and Douala, co-financing as today the road is totally dilapidated while whose condition has deteriorated in the last years. After 100% is paved. This project would improve connectivity these projects are completed, the whole existing railway to the port of Douala, increases domestic connectivity network will be rehabilitated, increasing capacity safety, between the main two cities of Chad and improves the speed, reliability and efficiency of rail traffic and therefore regional/ international connectivity of Moudoun. The improving performance of the corridors. We assume very proposed project covers the whole corridor between low speed on the whole line in the baseline. Koutere-Moundou-Ndjamena under a phased 10-year long-term Output Performance Based approach that Rehabilitation of road corridors in Chad. There are entails rehabilitation works, reinforcement, maintenance several historical corridors between Cameroon and Chad. and axle load monitoring facilities management. 5.4 Welfare Impacts of Infrastructure 213 Lake Chad Regional Economic Memorandum  |  Development for Peace Complementary policies: Border frictions. We assume Second we compute the welfare impacts in each that trade across locations from a same country only face counterfactual and compare it to the baseline welfare. transport costs while traders across countries have to wait Because we do not allow for mobility across countries, an additional 30 hours to be able to cross the borders. welfare is equalized within each country but not across Given the lack of data, we assume a level of 30 hours countries. by default. In the forthcoming counterfactuals, we add a reduction of half border time to the transport investments. ΔWelfarec = ΔPopulationn,c × Vn,c (5.4.14)  ith Vn,c the welfare in location n of country c defined in w 5.4.3.2 Calibration of the new counterfactual equation 4.12. We use the most recent transport networks from each Table 5.11 reports the change in employment share country as the baseline. We assume a new speed of in non-agricultural sectors at the national level from 70km/h for the new road corridor and reduce the time at the combined road and rail investments and with the the border in some of the scenarios. For the rail corridor, additional border friction reduction. The proposed we keep the road network as it is and assume a new transport investments are expected to have a marginal direct transport line between Ngaoundere, Yaounde and impact on structural change away from agriculture at the Douala. New transport times are computed assuming that national level in most countries. When reducing border the previous roads can be used as well as the new rail line, frictions, Nigeria benefits from a better access to its which is more efficient. Stops between the main cities neighbors to specialize slightly more in non-agricultural are not permitted. The first section between Ngaoundere activities. Chad tends to specialize more in the primary and Yaounde is assumed to be 627kms with an average sector. However most changes will happen between speed of 70km/h.357 The second section between Yaounde regions within country. and Douala is assumed to be 261kms with a new average speed of 70km/h. Tables 5.12 and 5.14 show the change in nominal income and welfare (real income) for the three countries when only considering the new road 5.4.3.3 Welfare impacts corridor in Chad. Tables 5.13 and 5.15 show the change in nominal income and welfare (real income) for the We look at the impacts on country GDP and welfare. three countries when considering both the rail and road Welfare differs from income as it also includes differences corridors in Chad and Cameroon. Overall Chad gains in prices for goods and housing across locations as well the most from the projected investments as it benefits as an amenity from living in different places. First we from its own corridor and the corridor in Cameroon. compute the nominal GDP impacts measured as the total The new transport corridor in Cameroon benefits the nominal incomes. most Cameroon when it is accompanied by a significant reduction in border costs. Nigeria benefits from welfare ΔGDPc = ΔPopulationn,c × NominalIncomen,c (5.4.13) gains through lower prices in the two other countries, but does not benefit from income gains. Tables 5.12 and 5.13  ith Incomen,c the total nominal income in location n w show that most gains come increasing purchasing power of country c. due to lower prices. 357 Distance assumptions come from the website rome2rio.com which reports distance per transport mode. 214 5.4 Welfare Impacts of Infrastructure Technical Paper 4. Infrastructure and Structural Change in the Lake Chad Region  oad and rail corridors: change of Table 5.11: R transport investments, especially the road corridor in employment share in non-agricultural sectors (in percentage points) Chad, and from indirect better connectivity to the rest of Cameroon as well as from the reduction in border delays. Scenarios Cameroon Chad Nigeria Transport -0.3 0.05 0.03 only 5.4.3.4 Spatial impacts of the road and rail Transport + corridors 0.1 -0.6 1.8 Border Table 5.12: R  oad corridor in Chad: Percentage Change Maps below report the spatial impacts in terms of in nominal GDP change in agricultural employment and welfare Scenarios Cameroon Chad Nigeria changes at the aggregated local level for two scenarios: only with the rail and road transport investments and Transport 0 0.1 0 with reduction in border time. only Transport + 0 0.7 0 Change in non-agricultural agricultural employment Border shares. Map 5.3 reports the change in employment at the  oad and rail corridors: Percentage Change Table 5.13: R subnational level. The specialization patterns differ when in nominal GDP reducing border frictions or not. Combined transport and Scenarios Cameroon Chad Nigeria border investments increase the specialization of Nigerian regions and the South-Eastern part of Cameroon towards Transport 0 0.3 0 non-agricultural activities. The rest of Cameroon and only Transport + most Chadian regions specialize more into tradable 0 0.6 0 Border agricultural activities. Map 5.4 show that it is mostly the South-Eastern parts of Cameroon that will specialize  oad corridor in Chad: Percentage Change Table 5.14: R more in manufacturing activities. in Welfare (real income) Nigeria Lake Chad Overall, welfare gains, measured as gains in real Scenarios Cameroon Chad region subnational income, are positive at the aggregate level Transport for all countries but not for all subnational regions. 0.0 0.23 0.02 0.1 only Regional real income, i.e. the sum of real incomes for Transport 2.25 3.3 2.3 4 the whole population of the region, increases for the + Border regions that benefit from new corridors and lower border Table 5.15: R  oad and rail corridors: Percentage Change costs first. When only investing in corridors, some in Welfare (real income) regions lose in terms of regional income, while others gain. When adding border time reduction, the large Nigeria Lake Chad Scenarios Cameroon Chad majority gains from lower trade costs and new regional region Transport trade opportunities. As seen from Tables 5.12 and 5.13, 0.5 0.7 0.03 0.8 only most gains come from lower prices and therefore higher Transport purchasing power. 2.8 3.7 2.3 4.8 + Border Tables 5.14 and 5.15 show that the welfare gains in the limited Lake Chad region would be relatively larger than at the country level. The region benefits from direct 5.4 Welfare Impacts of Infrastructure 215 Lake Chad Regional Economic Memorandum  |  Development for Peace  hange in share of employment in non-agricultural sectors from transport corridor investments (left) Map 5.3: C with additional border reduction (right) compared to baseline - in percentage points  hange in the share of employment in manufacturing sectors from transport corridor investments Map 5.4: C (left) with additional border reduction (right) compared to baseline - change in percentage points 216 5.4 Welfare Impacts of Infrastructure Technical Paper 4. Infrastructure and Structural Change in the Lake Chad Region  egional welfare impacts from transport corridor investments (left) with additional border reduction Map 5.5: R (right) - percentage change in regional welfare 5.4 Welfare Impacts of Infrastructure 217 Lake Chad Regional Economic Memorandum  |  Development for Peace 5.5 Conclusion This paper investigates how infrastructure—transport, electricity and internet—affects economic development through the channels of sectoral employment and structural change. First, the paper provides estimates of the impacts of past transport, electricity and internet investments in Nigeria, Cameroon and Chad on sectoral employment. Using a series of instruments, we estimate a large impact of infrastructure investments, especially from the combination of paved roads and electricity. The paper then uses a spatial general equilibrium model to provide estimates of the potential impacts of proposed regional transport corridor projects in the Lake Chad, with a focus on the structural transformation at the regional, county and subnational levels. The analysis also looks at the impact of complementary trade facilitation measures. The analysis shows the importance of such complementary interventions to facilitate regional trade and enhance the benefits of transport corridors. The spatial general equilibrium model developed in the paper does not consider investments in electricity and internet. The plan for future research is to include those infrastructure sectors in the model and link it with the empirical analysis. 218 5.5 Conclusion Technical Paper 4. Infrastructure and Structural Change in the Lake Chad Region References Adukia, Anjali, Sam Asher, and Paul Novosad, “Educational Investment Responses to Economic Opportunity: Evidence from Indian Road Construction,” American Economic Journal: Applied Economics, January 2020, 12 (1), 348–376. Ali, Rubaba, A. Federico Barra, Claudia Berg, Richard Damania, John Nash, and Jason Russ, Highways to Success or Byways to Waste number 22551. In ‘World Bank Publications.’, The World Bank, November 2015. Allen, Treb and Costas Arkolakis, “Trade and the Topography of the Spatial Economy,” The Quarterly Journal of Economics, 2014, 129 (3), 1085–1140. Arderne, C., C. Zorn, C. Nicolas, and E. Koks, “Predictive mapping of the global power system using open data.,” Sci Data 7, 19, 2020. Asher, Sam and Paul Novosad, “Rural roads and local economic development,” Policy Research Working Paper Series 8466, The World Bank June 2018. Bird, Julia, Mathilde Lebrand, and Anthony J. Venables, “The Belt and Road Initiative: Reshaping economic geography in Central Asia?,” Journal of Development Economics, 2020, 144 (C). Bustos, Paula, Bruno Caprettini, and Jacopo Ponticelli, “Agricultural Productivity and Structural Transformation: Evidence from Brazil,” American Economic Review, June 2016, 106 (6), 1320–1365. Calderon, Cesar, Enrique Moral-Benito, and Luis Serven, “Is infrastructure capital productive? A dynamic heterogeneous approach,” Journal of Applied Econometrics, March 2015, 30 (2), 177–198. Donaldson, Dave, “Railroads of the Raj: Estimating the Impact of Transportation Infrastructure,” American Economic Review, April 2018, 108 (4-5), 899–934. Eckert, Fabian and Michael Peters, “Spatial Structural Change,” 2018 Meeting Papers 98, Society for Economic Dynamics 2018. Foster, Vivien and Cecilia Briceno-Garmendia, Africa’s Infrastructure : A Time for Transformation [Infrastructures africaines] number 2692. In ‘World Bank Publications.’, The World Bank, June 2010. Fried, Stephie and David Lagakos, “Electricity and Firm Productivity: A General-Equilibrium Approach,” Working Paper 27081, National Bureau of Economic Research May 2020. Gertler, Paul J., Marco Gonzalez-Navarro, Tadeja Gravcner, and Alexander D. Rothenberg, “Road Quality, Local Economic Activity, and Welfare: Evidence from Indonesia’s Highways,” 2016. Herrera Dappe, Matías and Mathilde Lebrand, “The Spatial Effects of Logistics Interventions on the Economic Geography of Bangladesh,” 2019. _ and _ , “Infrastructure and Structural Change in the Horn of Africa,” 2021. _ , _ , and Diana Van Patten, “Bridging India and Bangladesh: Cross-border Trade and the BBIN Motor Vehicles Agreement,” 2021. Jedwab, Remi and Adam Storeygard, “The Average and Heterogeneous Effects of Transportation Investments: Evidence from Sub-Saharan Africa 1960-2010,” NBER Working Papers 27670, National Bureau of Economic Research, Inc August 2020. Lall, Somik V. and Mathilde Lebrand, “Who wins, who loses? Understanding the spatially differentiated effects of the belt and road initiative,” Journal of Development Economics, 2020, 146 (C). McMillan, Margaret, Dani Rodrik, and Claudia Sepulveda, “Structural Change, Fundamentals and Growth: A Framework and Case Studies,” Working Paper 23378, National Bureau of Economic Research May 2017. References 219 Lake Chad Regional Economic Memorandum  |  Development for Peace Michaels, Guy, Ferdinand Rauch, and Steve Redding, “Technical note: an Eaton and Kortum (2002) model of urbanization and structural transformation.,” 2011. Moneke, Niclas, “Can Big Push Infrastructure Unlock Development? Evidence from Ethiopia,” Mimeo 2020. Ngai, L. Rachel and Christopher A. Pissarides, “Structural Change in a Multisector Model of Growth,” American Economic Review, March 2007, 97 (1), 429–443. Redding, Stephen J., “Goods trade, factor mobility and welfare,” Journal of International Economics, 2016, 101 (C), 148–167. 220 References Chapter 5. Infrastructure and Structural Change in the Lake Chad Region Appendix A5.1 Employment Figure A5.1:  Employment in agriculture in the Lake Chad countries Appendix 221 Lake Chad Regional Economic Memorandum  |  Development for Peace A5.2 Mapping Infrastructure in the Lake Chad A5.2.1 Measuring electricity access based on Night-Time Lights (2016)  ercentage of population with access to electricity (2016) Figure A5.2: P Percent of population with electricity Percent of population with electricity Percent of population with electricity 222 Appendix Chapter 5. Infrastructure and Structural Change in the Lake Chad Region A5.2.2 Nigeria Figure A5.3: Access to paved roads a. All b. In fair or good condition Note: Data from Foster and Briceno-Garmendia (2010) and Ali et al. (2015). The map represents the year at which access to a paved road is observed. 0 means that no paved road is reported in the latest observed year. 2013 refers to districts with a paved road when observed in 2013 only. 2018 refers to additional districts with a paved road when observed in 2018 compared to 2013. Figure A5.4: Access to electricity Note: Authors’ calculations using Night Time Lights. The mapap represents the year at which at least 50 percent of the population has access to electricity, measured by lights at night. 0 means that no access to electricity is reported in the latest observed year. The earliest year refers to districts with access when observed in that year only. Successive years refer to additional districts which gained access when compared to previous years. Appendix 223 Lake Chad Regional Economic Memorandum  |  Development for Peace Figure A5.5: Access to internet fibre network a. From 2009 to 2019 b. Years of interest Note: Authors’ calculations using Africa Bandwidth Maps. The maps represent access to the fiber network as measured with a node being present in the district. 0 means that no access is reported in the latest observed year. The earliest year refers to districts with access when observed in that year only. Successive years refer to additional districts which gained access when compared to previous years.  ercentage of districts and population with access to a paved road Figure A5.6: P a. All b. In fair or good condition Note: Data from Foster and Briceno-Garmendia (2010) and Ali et al. (2015). The population used for weighted average of access is from GHS 2015. 224 Appendix Chapter 5. Infrastructure and Structural Change in the Lake Chad Region Figure A5.7:  Percentage of districts and population with access to electricity for different thresholds a. Threshold=10% b. Threshold=50% c. Threshold=90% Note: Authors’ calculations. Figure A5.8: Access to internet broadband Note: Authors’ calculations using Africa Bandwidth Maps. Appendix 225 Lake Chad Regional Economic Memorandum  |  Development for Peace  ercentage of districts and population with access to combined infrastructures Figure A5.9: P a. Roads and electricity b. Roads and internet c. Electricity and internet Note: Authors’ calculations. 226 Appendix Chapter 5. Infrastructure and Structural Change in the Lake Chad Region A5.3 Cameroon Figure A5.10: Access to paved roads a. All b. In fair or good condition Note: Data from Foster and Briceno-Garmendia (2010) and government sources. The map represents the year at which access to a paved road is observed. 0 means that no paved road is reported in the latest observed year. 2013 refers to districts with a paved road when observed in 2013 only. 2018 refers to additional districts with a paved road when observed in 2018 compared to 2013. Appendix 227 Lake Chad Regional Economic Memorandum  |  Development for Peace Figure A5.11: Access to electricity Note: Authors’ calculations using Night Time Lights. The map represents the year at which at least 50 percent of the population has access to electricity, measured by lights at night. 0 means that no access to electricity is reported in the latest observed year. The earliest year refers to districts with access when observed in that year only. Successive years refer to additional districts which gained access when compared to previous years. 228 Appendix Chapter 5. Infrastructure and Structural Change in the Lake Chad Region Figure A5.12: Access to internet fibre network a. From 2009 to 2019 b. Years of interest Note: Authors’ calculations using Africa Bandwidth Maps. The maps represent access to the fiber network as measured with a node being present in the district. 0 means that no access is reported in the latest observed year. The earliest year refers to districts with access when observed in that year only. Successive years refer to additional districts which gained access when compared to previous years. Appendix 229 Lake Chad Regional Economic Memorandum  |  Development for Peace Figure A5.13:  Percentage of districts and population with access to a paved road a. All b. In fair or good condition Note: Data from Foster and Briceno-Garmendia (2010) and government sources. The population used for weighted average of access is from GHS 2015.  ercentage of districts and population with access to electricity for different thresholds Figure A5.14: P a. Threshold=10% b. Threshold=50% c. Threshold=90% Note: Authors’ calculations. 230 Appendix Chapter 5. Infrastructure and Structural Change in the Lake Chad Region Figure A5.15: Access to internet Note: Authors’ calculations using Africa Bandwidth Maps.  ercentage of districts and population with access to combined infrastructures Figure A5.16: P a. Roads and electricity b. Roads and internet c. Electricity and internet Note: Authors’ calculations. Appendix 231 Lake Chad Regional Economic Memorandum  |  Development for Peace A5.4 Chad Figure A5.17: Access to paved roads and electricity a. Paved roads b. Electricity (2014) Note: Data using government sources and Night Time Lights. The map (b) represents the year at which at least 50 percent of the population has access to electricity, measured by lights at night in 2014. The map (a) represents the year at which at the population has access to a paved road. The map represents the year at which access is observed. 0 means that no access is reported in the latest observed year. Successive years refer to additional districts which gained access when compared to previous years. 232 Appendix Chapter 5. Infrastructure and Structural Change in the Lake Chad Region Figure A5.18: Access to internet fibre network a. From 2009 to 2019 b. In 2014 Note: Authors’ calculations using Africa Bandwidth Maps. The maps represent access to the fiber network as measured with a node being present in the district. 0 means that no access is reported in the latest observed year. The earliest year refers to districts with access when observed in that year only. Successive years refer to additional districts which gained access when compared to previous years. Appendix 233 Lake Chad Regional Economic Memorandum  |  Development for Peace  ercentage of districts and population with access to infrastructure (2014) Figure A5.19: P a. All b. Combined c. Electricity thresholds Note: Authors’ calculations. The population used for weighted average of access is from GHS 2015. A5.5 Additional Data Table A5.1: GADM administrative levels Figure A5.20: Regions around the Lake Chad Level NGA NER TCD CMR adm1 37 8 23 10 adm2 775 36 55 58 adm3 NA 132 348 360 234 Appendix Chapter 5. Infrastructure and Structural Change in the Lake Chad Region Figure A5.21: Electricity grid A5.6 Regression tables Table A5.2: Lake Chad (electricity grid) Agriculture Manufacturing Services -0.0598** 0.0383** 0.0143 Paved road (-2.82) (3.94) (0.91) -0.0852+ 0.0142 0.0582 Internet (-1.81) (0.97) (1.53) -0.0451+ 0.0243+ 0.0244 Electricity grid (-1.83) (1.95) (1.44) -0.00883 -0.00867 0.0290 Road + Internet (-0.18) (-0.56) (0.73) -0.0106 -0.000294 0.0176 Road + Electricity grid (-0.38) (-0.02) (0.88) Year + Country FE Yes Yes Yes Controls Yes Yes Yes R-squared 0.296 0.342 0.347 N. of observations 3,041 3,041 3,041 t statistics in parentheses; + p < 0.10, * p < 0.05, ** p < 0.01 Appendix 235 Lake Chad Regional Economic Memorandum  |  Development for Peace  eterogenous effects on agriculture employment, by the initial share of agricultural employment, in Table A5.3: H Cameroon Agriculture q0.25 Agriculture q0.5 Agriculture q0.75 main -0.134** -0.128** -0.107** Paved road (-3.34) (-6.59) (-4.95) -0.0598 -0.0726 -0.141+ Internet (-0.52) (-0.71) (-1.75) -0.342** -0.269+ -0.192+ Electricity (>50p) (-3.13) (-1.87) (-1.71) 0.0282 0.0551 0.105 Road + Internet (0.26) (0.51) (1.30) 0.105 0.0117 -0.0520 Road + Electricity (1.06) (0.08) (-0.41) Year FE Yes Yes Yes Controls Yes Yes Yes R-squared N. of observations 661 661 661 t statistics in parentheses; + p < 0.10, * p < 0.05, ** p < 0.01 Table A5.4: Nigeria, Cameroon, Chad in the period 2008–2018 Agriculture Manufacturing Services Not working -0.0944** 0.0377** 0.0611** 0.0583** Paved road (-4.47) (4.36) (3.68) (6.11) -0.0706 0.00874 0.0680 0.0162 Internet (-1.29) (0.42) (1.56) (0.67) -0.182** 0.0661** 0.117** 0.0778** Electricity (>50p) (-5.38) (3.37) (4.60) (4.81) 0.0268 -0.0110 -0.0204 -0.0293 Road + Internet (0.48) (-0.51) (-0.46) (-1.17) -0.0122 0.00351 0.00647 -0.111** Road + Electricity (-0.35) (0.18) (0.25) (-6.67) Year + Country FE Yes Yes Yes Yes Controls Yes Yes Yes Yes R-squared 0.458 0.341 0.417 0.162 N. of observations 1,817 1,817 1,817 1,817 t statistics in parentheses; + p < 0.10, * p < 0.05, ** p < 0.01 236 Appendix Chapter 5. Infrastructure and Structural Change in the Lake Chad Region Table A5.5: Around Lake Chad: the usage perspective, 2008–2018 Agriculture Manufacturing Services Not working -0.227 0.155 0.165 0.0238 Electricity (share) (-1.01) (1.44) (1.13) (0.50) -0.0123 -0.0223 0.0820 -0.0885 Motorcycle (share) (-0.10) (-0.37) (0.85) (-1.64) -1.799** 0.432+ 0.975+ -0.0441 Car (share) (-3.02) (1.94) (1.97) (-0.14) Use of internet -0.712 -0.442 0.983 -0.380 (share) (-0.70) (-0.77) (1.52) (-1.32) Mobile phone -0.526* 0.113 0.324* 0.278** (share) (-2.52) (1.22) (2.10) (3.03) 0.258 -0.0435 -0.217 0.383 Land phone (share) (0.30) (-0.13) (-0.34) (0.93) Year + Country FE Yes Yes Yes Yes Controls Yes Yes Yes Yes R-squared 0.552 0.466 0.540 0.749 N. of observations 96 96 96 96 t statistics in parentheses; + p < 0.10, * p < 0.05, ** p < 0.01 Table A5.6: Cameroon: from the usage perspective, after 2008 Agriculture Manufacturing Services Not working -0.413** 0.157** 0.256** 0.0727** Electricity (share) (-11.60) (7.69) (9.42) (3.98) -0.125* 0.0456 0.0799 -0.0116 Motorcycle (share) (-2.10) (1.36) (1.65) (-0.37) -0.369** 0.0479 0.321** 0.00608 Car (share) (-2.88) (0.63) (3.18) (0.07) Use of internet -0.284** 0.123* 0.161* -0.0947 (share) (-3.11) (2.18) (2.13) (-1.64) Mobile phone -0.220** -0.0159 0.236** 0.176** (share) (-3.13) (-0.42) (4.21) (3.99) -0.244 -0.197 0.441* -0.140 Land phone (share) (-1.09) (-1.08) (2.29) (-1.00) Year + Country FE Yes Yes Yes Yes Controls Yes Yes Yes Yes R-squared 0.661 0.427 0.604 0.178 N. of observations 442 442 442 442 t statistics in parentheses; + p < 0.10, * p < 0.05, ** p < 0.01 Appendix 237 Lake Chad Regional Economic Memorandum  |  Development for Peace Table A5.7: Nigeria: from the usage perspective, after 2008 Agriculture Manufacturing Services Not working -0.323** 0.0827** 0.241** -0.0458** Electricity (share) (-18.64) (10.53) (16.55) (-5.59) 0.0161 -0.00839 -0.00770 -0.00806 Motorcycle (share) (0.64) (-0.61) (-0.34) (-0.59) -0.382** -0.0461+ 0.428** -0.0144 Car (share) (-8.56) (-1.79) (11.20) (-0.61) Use of internet 0.111* -0.0852** -0.0259 -0.244** (share) (2.14) (-2.86) (-0.56) (-7.65) Mobile phone -0.198** 0.103** 0.0951** 0.0551* (share) (-6.61) (6.85) (3.48) (2.34) -0.271* -0.0236 0.295* 0.166** Land phone (share) (-2.20) (-0.35) (2.40) (2.67) Year + Country FE Yes Yes Yes Yes Controls Yes Yes Yes Yes R-squared 0.572 0.315 0.514 0.176 N. of observations 1,684 1,684 1,684 1,684 t statistics in parentheses; + p < 0.10, * p < 0.05, ** p < 0.01 Table A5.8: Chad Agriculture Manufacturing Services 0.0220 0.00467 0.0122 Paved road (0.28) (0.29) (0.29) -0.113 0.0273 0.0403 Internet (-0.94) (1.14) (1.31) 0.0595 -0.0145 0.00794 Electricity (>50p) (0.82) (-0.86) (0.31) 0.111 -0.0590* -0.0184 Road + Internet (0.78) (-2.10) (-0.37) 0 0 0 Road + Electricity (.) (.) (.) Year FE Yes Yes Yes Controls Yes Yes Yes R-squared 0.426 0.339 0.551 N. of observations 243 243 243 t statistics in parentheses; + p < 0.10, * p < 0.05, ** p < 0.01 238 Appendix Chapter 5. Infrastructure and Structural Change in the Lake Chad Region A5.7 Regression tables: heterogenous impacts  eterogenous effects on agriculture employment, by the initial share of agricultural employment, in Table A5.9: H Nigeria Agriculture q0.25 Agriculture q0.5 Agriculture q0.75 main 0.00808 0.0171 0.0122 Paved road (0.26) (0.64) (0.22) 0.000394 0.0777 0.0696 Internet (0.00) (0.96) (0.66) -0.0709 -0.134** -0.245** Electricity (>50p) (-1.06) (-2.61) (-3.08) -0.0203 -0.109 -0.149 Road + Internet (-0.18) (-1.33) (-1.31) -0.0795 -0.0739 -0.00163 Road + Electricity (-1.14) (-1.59) (-0.02) Year FE Yes Yes Yes Controls Yes Yes Yes R-squared N. of observations 2,137 2,137 2,137 t statistics in parentheses; + p < 0.10, * p < 0.05, ** p < 0.01 Appendix 239 Lake Chad Regional Economic Memorandum  |  Development for Peace A5.8 Regression tables: IV strategy Table A5.10: Nigeria and Cameroon: comparison table (OLS) Agriculture Manufacturing Services Not working -0.0683** 0.0406** 0.0292* 0.0337** Paved road (-3.77) (4.89) (2.25) (4.41) -0.0869+ 0.0110 0.0682 0.0121 Internet (-1.68) (0.65) (1.58) (0.51) -0.200** 0.0870** 0.117** 0.0481** Electricity (>50p) (-5.30) (3.82) (4.49) (3.24) 0.0277 -0.0132 -0.00571 -0.0292 Road + Internet (0.53) (-0.76) (-0.13) (-1.21) -0.00481 -0.0238 0.0253 -0.0580** Road + Electricity (-0.13) (-1.04) (1.00) (-3.89) Year + Country FE Yes Yes Yes Yes Controls Yes Yes Yes Yes R-squared 0.396 0.325 0.431 0.114 N. of observations 2,798 2,798 2,798 2,798 t statistics in parentheses; + p < 0.10, * p < 0.05, ** p < 0.01 Table A5.11: Nigeria - 2SLS method Agriculture Manufacturing Services Paved road=0 × Electricity -0.142 -0.0299 0.172 (>50p)=1 (-0.77) (-0.48) (0.95) Paved road=1 × Electricity -0.0273 0.0202 0.00709 (>50p)=0 (-0.47) (0.76) (0.14) Paved road=1 × Electricity -0.221** 0.0478+ 0.173** (>50p)=1 (-3.24) (1.67) (2.86) -0.0319** -0.00275 0.0346** Internet (-2.63) (-0.49) (3.13) Year + province FE Yes Yes Yes Controls Yes Yes Yes R-squared 0.224 0.076 0.177 N. of observations 2,137 2,137 2,137 t statistics in parentheses; + p < 0.10, * p < 0.05, ** p < 0.01 240 Appendix Chapter 5. Infrastructure and Structural Change in the Lake Chad Region Table A5.12: Cameroon - 2SLS method Agriculture Manufacturing Services Paved road=0 × Electricity 0.479 0.0795 -0.559 (>50p)=1 (0.93) (0.35) (-1.31) Paved road=1 × Electricity -0.207* 0.130** 0.0773 (>50p)=0 (-2.42) (2.60) (1.22) Paved road=1 × Electricity -0.321** 0.0478 0.273** (>50p)=1 (-2.95) (0.75) (3.37) 0.0000678 -0.0264+ 0.0264 Internet (0.00) (-1.75) (1.01) Year + province FE Yes Yes Yes Controls Yes Yes Yes R-squared 0.252 0.145 0.055 N. of observations 661 661 661 t statistics in parentheses; + p < 0.10, * p < 0.05, ** p < 0.01 Table A5.13: Lake Chad area: 2SLS method Agriculture Manufacturing Services Not working Paved road=1 × -0.133 0.271 -0.138 -0.166 Electricity (>50p)=0 (-0.48) (1.21) (-0.60) (-1.17) Paved road=1 × -0.482 0.518* -0.0363 0.0923 Electricity (>50p)=1 (-1.58) (2.11) (-0.17) (0.61) -0.221** 0.0257 0.195* 0.0225 Internet (-2.59) (0.42) (2.41) (0.46) Year + province FE Yes Yes Yes Yes Controls Yes Yes Yes Yes R-squared 0.528 0.099 0.284 0.063 N. of observations 91 91 91 91 t statistics in parentheses; + p < 0.10, * p < 0.05, ** p < 0.01 Table A5.14: Energy sources in electricity production (in %) 1990 2015 Cameroon Nigeria Cameroon Nigeria Hydro 99% 42% 75% 18% Renewable, excluding hydro NA NA 1% NA Oil, gas and coal 1% 58% 25% 82% Appendix 241 Lake Chad Regional Economic Memorandum  |  Development for Peace Figure A5.22: Rail and road investments in Cameroon (left) and Chad (right) A5.9 Calibration of the Model: Parameters Table A5.15: Parameters for Structural Estimation Parameter Value Source Description σ 4 Bernard et al. (2003) Elasticity of substitution between varieties 1−α 0.25 Data for Ethiopia (HCES) Expenditure share on land/housing κ 0.5 Ngai and Pissarides (2007) Elasticity of substitution across sectors μM 0.82 Moneke (2020) for Ethiopia Labor share in M-production μT 0.78 Moneke (2020) for Ethiopia Labor share in T-production μS 0.84 Moneke (2020) for Ethiopia Labor share in S-production τ 0.3 Moneke (2020) for Ethiopia Elasticity of trade cost with respect to distance θ Shape parameter of productivity distribution 4 Donaldson (2018) across varieties & locations 242 Appendix Lake Chad Regional Economic Memorandum  |  Development for Peace Technical Paper 5. Conflict and Climate Change in the Lake Chad Region Peter Fisker (University of Copenhagen) 243 Lake Chad Regional Economic Memorandum  |  Development for Peace 6.1 Introduction Peace and security are basic conditions for economic is somehow physiological, as humans are generally and social development. Conflict, on the other hand, shown, in the medical literature, to be more aggressive can reverse years of economic growth and induce long- when temperatures are higher. Harari and Ferrara [2018] term harm on almost all aspects of development. For the explore the ’income channel’ and find that part of the past decade, the Lake Chad region has been the setting of variation in conflict can be explained by a drought index conflicts between government forces and armed groups, when dis-aggregated to the growing period of the main most notably the Boko Haram. Although the intensity of crops across Africa. However, whether the results would fighting has petered off in recent years, the conflict has hold without temperatures as an input to the SPEI is spread from Northern Nigeria and now affects all four unclear. countries of the region. This paper attempts to shed light on the geographical Due to the paramount importance of avoiding armed distribution of conflict and its climatic determinants conflict, a large economic literature exists that seeks in the Lake Chad region following a sub-national to find explanations for the onset and prevalence of approach where readily available spatial data is conflict in developing countries. Blattman and Miguel employed at two different units of aggregation:  Firstly, [2010] list some of the most common theories of conflict 90 second level administrative areas, and secondly, around including competition for resources, economic grievances, 5,318 grid cells covering the same region. Exposure to and the possibility of looting. conflict is here defined as the intensity (for districts) or incidence (for cells) of conflict in a given unit in a More recently, a strand of literature focuses more given year. Parts of the population may not be directly on geographic and climatic root causes of conflict. exposed by this definition, but since the units of analysis For instance, in a meta-analysis of 55 studies, Burke are relatively small, most will be affected in some ways, et al. [2015] find that higher temperatures is the most for instance by safety concerns when visiting the nearest important climatic factor leading to more interpersonal towns to trade or by the general economic consequences. and intergroup conflict. With a specific focus on civil war in Africa, Burke et al. [2009] warned that projected The results of the analysis suggest, in line with increases in temperatures could lead to 54 percent the literature mentioned above, that temperature increase in armed conflicts by 2030. However, both anomalies do have a positive impact on conflict studies conclude that more research is needed in order across districts, cells and years. It also shows that to understand the mechanisms behind this relationship negative NDVI (Normalised Difference Vegetation as well as investigating the potential adverse effects of Index) anomalies are associated with more conflict— climate change. More recently, Eberle et al. [2020] found especially in cropland zones and during growing seasons. that a 1 degree increase in temperatures is associated Rainfall anomalies as well as the SPEI (Standardized with a 54 percent increase in conflict probability in Precipitation-Evapotranspiration Index) do not exhibit areas that are home to both herders and farmers and a the same effect on conflict. This could be an indication 17 percent increase in other areas of Africa. A central of measurement errors in these variables—or it could question is whether the effect goes through an ’income indicate that temperatures and rainfall have different channel’ where conflict is ultimately caused by economic effects on conflict rather than the often-mentioned downturns due to lower agricultural productivity in drought-income channel. periods of warmer temperatures—or whether the effect 244 6.1 Introduction Technical Paper 5. Conflict and Climate in the Lake Chad Region 6.2 Data At the core of the analysis lies the geographical Table A6.1 in the appendix contains a list of indicators delimitation of the Lake Chad region. It comprises included in the analysis, their sources, as well as the 4 countries and a total of 90 districts (2nd level spatial and temporal resolution of the raw data. Except administrative units). for conflict, all data sets included here are originally raster format, but are, for the purpose of the analysis, Map 6.1 shows the extent of the Lake Chad region aggregated to the units of analysis, either using the sum within the four countries of Niger, Chad, Nigeria, (population, conflict event, and fatalities) or mean (Share and Cameroon. It also shows the units of analysis of this of cropland, travel time, rainfall, temperatures, and study, namely the districts within the lake region on the greenness). While NDVI and temperature data is based left panel and the grid cells on the right. These units are on pure (processed) satellite images, data on population, chosen from a practical and methodological perspective. travel time, and precipitation are drawn from secondary Firstly, they are large enough to cover a meaningful sources where the pixel values of the raster data sets are number of satellite data pixels, while small enough for the generated from combining various sources of raw data. total number of units to be useful in regression analyses. Conflict risk numbers stand out in this list as it is based Secondly, many policies are implemented at this level, so on geo-referenced point data from the ACLED database policy-makers will be interested in being able to compare and aggregated to the second level administrative units distributions of key variables at district level. The directly from the recorded latitudes and longitudes of the grid cell level is chosen to accompany the district level conflict events. analysis since it allows for much more variation and more observations due to a higher resolution. Furthermore, Data on conflict as well as climate come with a time since the cells represent little squares, there is no concern dimension as well. Here, values are summarized to about endogenous border locations. individual calendar years from 2001 to 2018. Map 6.1: Extent and units of analysis 6.2 Data 245 Lake Chad Regional Economic Memorandum  |  Development for Peace 6.2.1 Conflict conflict event types, battles and violence against civilians have followed a largely similar pattern over the years while The conflict data used in this study comes from riots and protests are not as commonly reported, but still the Armed Conflict Location and Event Database growing in later years. The sum of conflict fatalities in (ACLED). In this database, conflict events are registered the region is generally high and volatile, but saw a peak based mainly on local media reports, and geo-referenced. around 2014 and 2015 to around 1,000 per year before It distinguishes between various types of conflict events, dropping again later. Note the logarithmic scale of the most notably battles, riots, protests, and violence against vertical axis. civilians. For each conflict event, the number of fatalities is also reported. In this analysis, both the number of Table 6.1:  Number of conflict events and fatalities 2001–2018 events and the number of fatalities by district-year are used. These two measures of conflict exposure are central Cameroon Chad Niger Nigeria Total outcome variables in the regression analyses presented in Conflict 1,861 692 620 12,702 15,875 the next section. events Battles 636 332 256 3,171 4,395 Table 6.1 includes summary statistics of key conflict Protests 145 56 83 3,101 3,385 variables in the Lake Chad region during the years Riots 87 24 61 1,448 1,620 2001 to 2018. Of conflict events, battles and violence Violence 621 193 133 3,813 4,760 against civilians are the most widespread types. Nigeria Fatalities 6,124 6,234 2,550 60,925 75,833 has seen by far the largest number of actual battles, and also the largest number of fatalities. Cameroon is in second place in terms of events, but with a distribution 6.2.2 Climate of events leaning more towards acts of violence against civilians. Niger is the most peaceful country in the region Climate and climate change are often mentioned over the period. among the most important factors for peace and development in the Lake Chad region. For instance, Figure 6.1 shows the development of conflict over time the lake itself has provided livelihoods for the people in the entirety of the Lake Chad Region. Of the four surrounding it for centuries, but shrank dramatically Figure 6.1: Conflict events and fatalities over time Number of events, 2001–2018 100,000– 10,000– 1,000– 100– 1– 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 ▬ Battles ▬ Riots ▬ Protests ▬ Violence … Fatalities Source: Fisker 2021. 246 6.2 Data Technical Paper 5. Conflict and Climate in the Lake Chad Region in size during the 1970’s and 80’s before gradually other parts of the region despite relatively low levels regenerating in recent decades. It now covers 56 percent of rainfall. Map 6.2 shows the distribution of rainfall, of its 1973 extent, although much of the surface is now temperatures, and greenness across the 90 sub-national also covered by vegetation [Vivekananda et al., 2019]. units of the region. While rainfall and greenness show a Land-degradation, over-exploitation, and climate change clear latitudinal gradient, temperatures are also mediated are often mentioned as possible causes for this. by altitude, and thus generally higher in the Eastern parts of the region. Furthermore, the region around Lake Chad is by no means uniform in terms of climate and weather. To the While large geographical variations exist as shown South, the climate is more humid, and the landscape is in Map 6.2, another in- teresting perspective is greener, whereas the Northern parts are drier, less green, the variation over time. Figure 6.2 demonstrates the and with a larger difference between day and night- district-level average anomalies of NDVI, rainfall, and time temperatures. The large areas that were historically temperatures over the period 2001–2018. The large submerged by the lake are still greener and cooler than positive daytime temperature anomaly towards the end  verage rainfall, temperatures, and NDVI Map 6.2: A Source: Fisker 2021. Figure 6.2: NDVI, rainfall, and temperature anomalies over time 1.0– 0.8– 0.6– 0.4– 0.2– 0– -0.2– -0.4– -0.6– -0.8– -1.0– 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 ▬ NDVI ▬ Rainfall ▬ Temperature (day) ▬ Temperature (night) 6.2 Data 247 Lake Chad Regional Economic Memorandum  |  Development for Peace of the period stands out while two other interesting number is probably needed in order for law enforcement observations is a general decline in NDVI throughout and other societal institutions to be efficient. Likewise, the period as well as an upward trend in temperatures. infrastructure can be considered to play a roll in the Rainfall generally fluctuates around the mean. spread of conflict, since an efficient road system allows armed groups to move between locations. Again, more In this paper, drought is measured in three different desolate areas may also provide opportunities to hide ways: F  irstly by anomalies in rainfall and temperatures from government forces, thus enabling local militias measured respectively by the Chirps (Climate Hazards to form and grow. Finally, economic activity—often Group InfraRed Precipitation with Station) data and measured by the intensity of night lights—can affect the Modis Terra, which would correspond to the notion risk of conflict; either because richer areas contain more of meteorological droughts; secondly by NDVI opportunity for looting, or because poorer areas may be anomalies—a more direct proxy for agricultural drought, easier to capture. Map 6.3 displays the distribution by and finally by the SPEI drought index which combines district of the number of conflict fatalities during the long time series of rainfall and temperatures to calculate period 2015–2019, population in 2020, and average the difference between precipiation and potential travel time to nearest urban centre in 2015. While the evapotransipiration. Despite several shortcomings, the distributions of the latter two indicators look similar, latter is used extensively in the economics literature, for they measure slightly different aspects of economic instance by Harari and Ferrara [2018]. development: For any given population density, travel time indicates how easy it is to move around the district. 6.2.3 Other explanatory factors Table 6.2 shows mean values of the different indicators split by country. In terms of average rainfall, the districts Obviously, conflict depends on other factors than the of the region belonging to Niger are the driest and climatic: demographics, infrastructure, and economic Cameroon the wettest. Temperatures are highest in Chad development, to mention a few. A larger population (28.5 degrees Celsius) while the other three countries density means more potential for disagreement and are all around one degree cooler. The largest increases in more competition for limited resources, cf Blattman and temperatures due to climate change are projected to take Miguel [2010]. On the other hand, a certain population place in Niger, followed by Chad. Niger is also the country  onflict intensity, population density and travel time Map 6.3: C 248 6.2 Data Technical Paper 5. Conflict and Climate in the Lake Chad Region Table 6.2: Summary statistics: Mean values of climate and control variables Cameroon Chad Niger Nigeria Total NDVI 0.360 0.287 0.189 0.347 0.327 Temp. (daytime) 15.42 15.51 15.48 15.40 15.42 Temp. (nighttime) 14.69 14.69 14.61 14.66 14.66 Rainfall (chirps) 61.45 36.75 24.39 63.39 56.84 Projected rainfall change 22.00 30.44 30.90 22.63 24.19 Projected temp. change 6.045 6.430 7.498 6.364 6.451 Population 2000 (1000s) 443.6 142.3 290.6 121.3 160.2 Population 2020 (1000s) 788.2 276.4 769.5 228.0 318.8 Travel time 73.27 282.1 603.4 73.19 143.5 Distance to border 25.98 96.79 97.96 72.79 74.57 with the lowest projected increase in rainfall, pointing populations, smaller travel times to urban centres, towards even more difficult conditions for farmers and and also in areas with a larger share of cropland areas. pastoralists there. NDVI values are generally much larger Regarding the latter two indicators, the correlations are in Cameroon and Nigeria, and lower in Niger. reversed when observing districts compared to cells. This is likely caused by the fact that some districts are  verage population numbers for districts vary between A geographically large (especially in Niger and Chad) and 228,000 (Nigeria) and 788,000 (Cameroon), with these have lower shares of cropland area as well as larger the districts belonging to Niger having seen the largest travel distances while also less conflict. percentage increase between 2000 and 2020.  airwise correlations between conflict and Table 6.3: P explanatory variables in pooled data  ravel times to urban areas are generally low in Nigeria T and Cameroon, while large distances exist in Niger and Any event log(events) (cells) (districts) to a lesser extent in Chad, the main reason being that districts in these countries stretch far into desert areas. Temp anom. 0.0873 0.241 Average distance to an international border is by far Rainfall anom 0.0171 0.0345 lowest in Cameroon. NDVI anom -0.0822 -0.1697 SPEI 0.0912 0.1496 log(population) 0.1409 0.5557 6.2.4 Correlations log(travel time) -0.1648 0.0057 Cropland share 0.1278 -0.0598 In order to provide an overview of how conflict Observations 96,642 1,692 incidence and intensity is correlated with the factors that form part of the analysis,  Table 6.3 consists of pairwise correlations between conflict and each of the other variables when all cross-sections that form the panel are pooled. While the effects of the climatic variables are studied in more detail in the next section, it is interesting to note here that conflict is more likely in areas with larger 6.2 Data 249 Lake Chad Regional Economic Memorandum  |  Development for Peace 6.3 Empirical strategy This section lays out the approach to analysing the index in the third. In the analysis, these three models climatic determinants of conflict in the Lake Chad are used because they represent three different ways of region. The analysis investigates the effects of climate measuring climatic impacts. The first model, which on conflict from various perspectives: in the main includes rainfall and temperature anomalies, is the most specification, district-year conflict intensity and cell-year direct way of linking climate shocks to conflict intensity/ conflict incidence are explained by anomalies (z-scores incidence. The second model (with NDVI anomalies) calculated each month in the 19-year period where the compares the outcome of climate variations (i.e. the value represents standard deviations from the long- conditions of the vegetation) to conflict, while the third term mean within the unit and month) in temperature, approach refers to a drought index (SPEI) that combines rainfall, and greenness as well as a 6-month SPEI drought rainfall and temperatures into a measure that informs index in a fixed effects set-up. Since both conflict and about agricultural potential. climate are spatially dynamic processes, the regressions are based upon assumptions of spatially correlated error W * conflictit is the spatial lag of the dependent terms, and in some specifications including a spatially variable. It measures the average number of conflict lagged dependent variable. This takes into account the events or fatalities in neighboring districts in the same year, fact that conflict events tend to spread from a point of i.e. districts or cells that share a border with the unit in origin to neighboring areas. question. It does not distinguish between within-country borders and country borders in this set-up. This term is Due to the differences in size between second-level included separately as a check to whether controlling for administrative units and cells of approx. 10 km * 10 km, the auto-regressive nature of conflict alters the results. ε is two different dependent variables are considered, that the random error term that allows for spatial correlation. best exploit the variation in the data: the former case employs the logarithm of the number of conflict events The climatic variables included in the baseline (i.e. the intensity of conflict) while in the latter case, a specification described by equation 1 are all averages dummy variable indicating whether a conflict event has for full calendar years. However, as argued by Harari taken place in a given cell in a given year is used (i.e. and Ferrara [2018] among others, if the mechanism that incidence of conflict). links climate anomalies and conflict is economic hardship induced by agricultural drought, only the anomalies Equation 1 d  escribes the fixed effects model of conflict observed during the agricultural growing season should intensity/incidence and its climatic predictors at the matter. district/cell level: A related concern is that not all units of observation Conflictit = β1Cit + β2W * conflictit + εit  (1) are areas of agricultural activity. If a drought-income- conflict relationship is expected, it is likely to be more  here Conflict is either the logarithm of the number w directly impacting cropland areas than desert or pastoral of conflict events in a district (i) or an indicator of the areas. In order to capture the differential effect of climate presence of conflict in a cell (also i) in given year (t). C is anomalies on conflict, in equation 2, each climate variable a vector of climate anomalies observed in unit i in year t: in C is therefore interacted with the share of cropland in rainfall as well as daytime temperature in the first model, each unit of observation. Another potential source of NDVI (greenness) in the second, and the 6-month SPEI heterogeneity in impacts is the population of a given 250 6.3 Empirical strategy Technical Paper 5. Conflict and Climate in the Lake Chad Region unit. More people means more potential for conflict and thus a larger effect of climate shocks could be expected. Equation 2 describes the model with heterogeneous effects, which is similar to equation 1 in all other aspects: Conflictit = β1C(GP)it + β2C(GP)it * Xi + β3W * conflictit + εit  (2)  here C(GP)it is a vector of climate anomalies calculated w only for the growing period months i the specific locations before aggregating to years, districts and cells and X is the share of cropland in cell/district i in the year 2000. Finally, in order to test whether the relationships depend on population density,  a model is run at the cell level where conflict incidence is interacted with a dummy variable taking the value one if a cell belongs to the upper half of the population distribution. 6.3 Empirical strategy 251 Lake Chad Regional Economic Memorandum  |  Development for Peace 6.4 Results 6.4.1 Baseline results usual years, districts or cells are more likely to experience conflict activity. Furthermore, and perhaps surprisingly, Table 6.4 includes the results of applying a fixed effects positive rainfall anomalies, i.e. years where rainfall levels estimator to equation 1 where the units of observation are above the mean are also associated with more conflict are districts and the dependent variable the logarithm measured at both district and cells. Turning to measures of conflict events in a given year. Column 1–3 contain of drought, NDVI anomalies have the expected sign, the results of regressions where the error terms are meaning that worse growing conditions are correlated assumed to be spatially correlated whereas column with more conflict. The SPEI, on the other hand, shows 4–6 assume spatial auto-correlation and thus include a the opposite correlation, namely that drought-years (a spatially lagged dependent variable. negative value by this measure) tend to be aligned with less widespread conflict. Each column represents a specific way of measuring impacts of climate variation: Column 1 and 4 focus Adding numbers to the results, a positive temperature on the direct relationship between weather anomalies anomaly of one standard deviation is associated with a (rainfall and temperature) and conflict intensity. 17.6 percentage points increase in the yearly number of Column 2 and 5 use the observed NDVI-anomalies as an conflict events taking place in a given district. At the cell observable proxy for drought conditions whereas column level, a similar temperature anomaly adds 0.8 percentage 3 and 6 show the effects of a common drought-index points to the likelihood of a cell experiencing any conflict that combines long-term information on rainfall and events in that year. A negative NDVI anomaly of one temperatures, namely the 6-month SPEI. standard deviation leads to an increase in the number of conflict events of 8.9 percentage points at the district The results for districts and cells are qualitatively level whereas the likelihood of experiencing a conflict at comparable: Temperature anomalies (both daytime the cell level increases by 0.7 percentage points. and night-time) show a positive effect on conflict intensity and incidence. In other words, in hotter-than- Table 6.4: Baseline results, Districts (1) (2) (3) (4) (5) (6) 0.176*** 0.099*** Temp. (0.028) 0.015) 0.011 0.013 Rainfall (0.027) (0.014) -0.089*** -0.057*** NDVI (0.028) (0.014) 0.165*** 0.080*** SPEI (0.048) (0.022) Spat. lag 0.784*** 0.796*** 0.811*** Conf. events (0.020) (0.020) (0.019) N 1,692 1,598 1,692 1,692 1,598 1,692 Pseudo-r2 0.059 0.029 0.022 0.067 0.037 0.028 Note: Spatially correlated standard errors in parentheses. Fixed effects. Z-scores. * p<0.10, ** p<0.05, *** p<0.01 252 6.4 Results Technical Paper 5. Conflict and Climate in the Lake Chad Region Table 6.5: Baseline results, Cells (1) (2) (3) (4) (5) (6) 0.008*** 0.006*** Temp. (0.001) (0.000) 0.002*** 0.001*** Rainfall (0.001) (0.000) -0.007*** -0.005*** NDVI (0.001) (0.000) 0.011*** 0.006*** SPEI (0.001) (0.001) 0.443*** 0.446*** 0.450*** Sp_lag (0.005) (0.005) (0.005) N 91,273 91,273 91,273 91,273 91,273 91,273 psudo-r2 0.01 0.01 0.01 0.01 0.01 0.01 Note: Spatially correlated standard errors in parentheses. Fixed effects. Z-scores. * p<0.10, ** p<0.05, *** p<0.01 All results are robust to controlling for the geographical economic hardship. In order to investigate that, the next spillover of conflicts. Column 4–6 of Table 6.4 and 6.5 set of results will include climate anomalies calculated add a spatially lagged version of the dependent variable on basis of growing season months only, and further that measures the average conflict incidence or number introduce interaction terms between each variable and of conflict events in neighboring units (i.e. districts the share of cropland within a unit of observation. This or cells that share a border with the district or cell in largely follows the approach of Harari and Ferrara [2018] question). This variable generally has a large contribution who found an effect growing season SPEI on conflict to explaining conflict intensity while point estimates on incidence across all of Sub-Saharan Africa, albeit with the explanatory variables tend to drop slightly. much larger units of observations. Table A6.2 and A6.3 in the appendix show results Table 6.6 and 6.7 show the effects of growing season- of estimating a model including temporal lags of specific climate anomalies on conflict in districts and the explanatory variables. It is demonstrated that cells respectively. Both tables further include interactions temperature anomalies are significant predictors of the between these and the share of cropland within each unit. number of conflict events at the district level up to three years into the future. NDVI anomalies, on the other T  emperature anomalies are still positively associated with hand, only predict conflict with statistical significance conflict; especially in areas with more cropland. in the same year as the conflicts. This fits well with the notion of NDVI anomalies being a more direct proxy of For drought measured by NDVI anomalies, the vegetation conditions on the ground than other climatic negative effect observed in the baseline model also variables. persists. Additionally it should be noted that the effect is weaker in areas of no cropland and larger, the larger the share of a unit is considered cropland. This is in line with 6.4.2 Exploring heterogeneous effects expectations that bad harvests can lead to more conflict through an income channel. A central question that remains to be addressed is whether the results found in table 6.4 and 6.5 are Turning to rainfall and SPEI—the two variables where caused by a drought-income-channel where conflict is results opposite to the expectations were found in the more likely in places where farmers are suffering from baseline analysis, a few interesting observations are 6.4 Results 253 Lake Chad Regional Economic Memorandum  |  Development for Peace Table 6.6: Heterogeneous effects, Districts Table 6.7: Heterogeneous croplands effects, Cells (1) (2) (3) (1) (2) (3) 0.021 0.002* GP Temp. anom. GP Temp. anom. (0.047) (0.001) 0.002 0.001 GP Rainfall anom. GP Rainfall anom. (0.043) (0.001) Cropland*GP Temp. 0.478*** Cropland*GP Temp. 0.046*** anom. (0.112) anom. (0.001) -0.086* Cropland*GP 0.004 GP NDVI anom. (0.051) Rainfall anom. (0.003) Cropland*GP NDVI -0.219* -0.001 GP NDVI anom. anom. (0.117) (0.001) -0.173** Cropland*GP NDVI -0.036*** GP SPEI (0.070) anom. (0.003) 0.464*** 0.001 Cropland*GP SPEI GP SPEI (0.159) (0.002) 0.025*** N 1,692 1,692 1,692 Cropland*GP SPEI (0.004) N 61,013 61,013 61,013 pseudo-r2 0.07 0.05 0.01 pseudo-r2 0.02 0.01 0.00 Note: Standard errors in parentheses. * p<0.10, ** p<0.05, *** p<0.01 Note: Standard errors in parentheses. * p<0.10, ** p<0.05, *** p<0.01 noted: F  irstly, the positive correlation between rainfall Table 6.8: Heterogeneous population effects, Cells and conflict disappears when only considering the (1) (2) (3) growing seasons. The same is true for SPEI, however, 0.002*** when focusing on the agricultural areas, the positive (and Temp. anom. (0.001) somewhat contradictory) relationship re-emerges. 0.000 Rainfall anom. (0.001) Another potential mediating factor is population Temp. anom. 1.288*** density. In Table 6.8, Urban refers to a situation where (day)*Urban (0.095) the population of a cell is larger than the median of the Rainfall 0.385*** anom*Urban (0.095) distribution, which serves as a crude way of distinguishing -0.002*** between urban and rural areas. What is evident is that NDVI anom. (0.001) the effects of climate anomalies on conflict events are -1.251*** NDVI anom*Urban largely driven by areas witha population density above (0.093) the median. In all cases the point estimates retain their 0.003** SPEI direction, but become much more significant (statistically (0.001) and economically) when adding the urban interaction 1.404*** SPEI*Urban (0.165) terms. N 91,273 91,273 91,273 pseudo-r2 0.01 0.01 0.00  esults including heterogeneous effects related to market R Note: Standard errors in parentheses. * p<0.10, ** p<0.05, *** p<0.01 access (travel time to nearest urban area) are not included as they are similar to those where population is used as interaction term. 254 6.4 Results Technical Paper 5. Conflict and Climate in the Lake Chad Region 6.5 Conclusion In conclusion, t his study finds that the distribution of Based on this it is therefore not possible to conclude conflict events across time and space in the Lake Chad which of the explanations is more likely. The fact that region is correlated with climatic factors. NDVI anomalies show expected signs and the effect is more pronounced in croplands during growing season Higher-than-usual temperatures leads to an increase points toward the measurement error explanation. in conflict activity both measured at the district level However, this relation could to some extent also be and the more detailed grid cell level. The same is true spuriously driven by temperatures affecting both NDVI for observed greenness anomalies, an effect that becomes and conflict. More precise rainfall data, for instance from stronger when focusing on anomalies during the growing the Global Precipitation Measurement Mission (GPM) season in cropland areas. However, rainfall (CHIRPS) might shed more light on this puzzle. and SPEI are not showing similar relationships with conflict. Two possible explanations for these apparently contradictory findings stand out: The first possibility is that conflict in the Lake Chad region is, in fact, affected much more by temperature anomalies than rainfall anomalies. This would be in line with the hypothesis that there the channel through which the relationship operates is more physiological than depending on agricultural income. A second possible explanation for the seemingly opposite results could simply be measurement errors in the SPEI and CHIRPS data sets. Both of these data sources are (partly) interpolated from weather station observations, and the distance to the nearest weather station is sometimes large. Figure A.1 in the appendix shows the distribution of weather stations used by CHIRPS and CRU (the database behind SPEI) respectively in the Lake Chad Region. There are around 12 (CHIRPS in 2010) and 7 (CRU in all years 2000-2014) weather stations in the region with observations that feed into the Chirps and SPEI data sets. This compares to 90 districts and 5,369 cells. So for a large majority of the observations in this analysis, rainfall and the SPEI will be based entirely on interpolations. On the contrary, the spatial resolution of NDVI and Temperatures is higher than the cells used, so in that case, the observed values are more valid. Likewise, conflict data is aggregated from high precision geographical coordinates, so there is also high confidence that the conflicts actually took place in the recorded locations. 6.5 Conclusion 255 Lake Chad Regional Economic Memorandum  |  Development for Peace References Christopher Blattman and Edward Miguel. Civil war. Journal of Economic Literature, 48(1):3–57, March 2010. doi: 10.1257/jel.48.1.3. URL https://www.aeaweb.org/articles?id=10.1257/jel.48.1.3. Marshall Burke, Solomon M. Hsiang, and Edward Miguel. Climate and conflict. Annual Review of Economics, 7(1):577–617, 2015. doi: 10. 1146/annurev-economics-080614-115430. URL https://doi.org/10.1146/ annurev-economics-080614-115430. Marshall B. Burke, Edward Miguel, Shanker Satyanath, John A. Dykema, and David B. Lobell. Warming increases the risk of civil war in africa. Proceedings of the National Academy of Sciences, 106(49):20670–20674, 2009. ISSN 0027- 8424. doi: 10.1073/pnas.0907998106. URL https://www.pnas.org/content/ 106/49/20670. Ulrich J. Eberle, Dominic Rohner, and Mathias Thoenig. Heat and Hate: Climate Security and Farmer-Herder Conflicts in Africa. CEPR Discussion Papers 15542, C.E.P.R. Discussion Papers, December 2020. URL https://ideas.repec.org/p/cpr/ceprdp/15542.html. Mariaflavia Harari and Eliana La Ferrara. Conflict, climate, and cells: A disaggregated analysis. The Review of Economics and Statistics, 100(4):594– 608, 2018. doi: 10.1162/rest\_a\_00730. URL https://doi.org/10.1162/ rest_a_00730. Janani Vivekananda, Dr Martin Wall, Dr Florence Sylvestre, and Chitra Nagara- jan. Shoring up stability: Addressing climate fragility risks in the Lake Chad Region. adelphi research gemeinnützige GmbH, 2019. 256 References Technical Paper 5. Conflict and Climate in the Lake Chad Region Appendix Table A6.1: Data sources Indicators Data format Spatial resolution Temporal coverage Source Number of people Raster (tiff) 30 arc seconds 2000, 2020 World Pop Population per cell (~1 km) Intensity of Raster (tiff) 500 m pixels Monthly - Visible Infrared Night-time lights here April Imaging (average radiance) 2012 (earliest Radiometer available) and Suite (VIIRS) Infrastructure April 2019 Accessibility to Raster (tiff) 1 km 2015 (update and Malaria Atlas cities (travel time improvement to Project to nearest urban 2000 dataset) center) Precipitation Raster (tiff) 2.5 arc minutes Monthly, Chirps (~4 km) 2000–2018 Climate Greenness (NDV) Raster (HDF) 0.05 degrees Monthly, Modis Terra, and temperature (~5 km) 2000–2018 mod13c2 Projected Raster (tiff) 2.5 arc minute 2014–2060 Worldclim temperature and (~4 km) Climate Change precipitation (CMIP6, SSP2.5) Number of events Geo- GPS points 2015–2019 and ACLED + Fatalities referenced aggregated to change between Conflict (Battles, protests, event (point) district level 1014 and 1519 riots, violence data against civilians) Appendix 257 Lake Chad Regional Economic Memorandum  |  Development for Peace  aseline results with time lags, district Table A6.2: B  aseline results with time lags, district Table A6.3: B level level (1) (1) (2) 0.192*** -0.168*** Temp. anom. (day) NDVI anom. (0.034) (0.025) 0.132*** -0.055 L.Temp. anom. (day) L.NDVI anom. (0.031) (0.067) 0.201*** -0.058 L2.Temp. anom. (day) L2.NDVI anom. (0.047) (0.048) 0.065* -0.118 L3.Temp. anom. (day) L3.NDVI anom. (0.038) (0.076) -0.022 0.321*** Rainfall anom. (mean) spei06 (0.026) (0.043) -0.080*** 0.206*** L.Rainfall anom. L.(mean) spei06 (0.027) (0.034) -0.018 0.206*** L2.Rainfall anom. L2.(mean) spei06 (0.026) (0.030) -0.086*** 0.110** L3.Rainfall anom. L3.(mean) spei06 (0.030) (0.045) 0.769*** 0.673*** 0.942*** Constant Constant (0.028) (0.032) (0.044) N 1410 N 1,316 1,410 r2 0.17 r2 0.06 0.11 Note: Standard errors in parentheses. * p<0.10, ** p<0.05, *** p<0.01 Note: Standard errors in parentheses. * p<0.10, ** p<0.05, *** p<0.01 258 Appendix Technical Paper 5. Conflict and Climate in the Lake Chad Region Figure A6.1:  Distribution of weather stations in the Lake Chad region Appendix 259 Lake Chad Regional Economic Memorandum  |  Development for Peace Technical Paper 6. Building Rural Development in the Lake Chad Region Brian Blankespoor (World Bank) 260 Technical Paper 6. Building Rural Development in the Lake Chad Region 7.1 Introduction Limited market accessibility, and more recently Yaoundé. Unpaved roads continue to pose challenges conflict, hinder agricultural production and therefore during the rainy season. pose major challenges to the economic recovery and development of the Lake Chad region. More than Connectivity is very important to the local economy 250 million people live in the four countries of the and cross-border trade. Previous literature demonstrates Lake Chad region, where the vast majority of the people that road infrastructure is conducive to regional trade depend on agricultural activities for their livelihoods. and growth where it can facilitate local economic growth Compounding limited paved roads in agricultural areas with the reduction in input and transportation costs, is the occurrence of numerous violent events from the while connecting the potential for higher prices of crops decade long insurgence of Boko Haram near Lake Chad. (Crawford et al., 2003; Redding and Turner, 2015; Berg Displaced and conflict-affected households face limited et al., 2017; Aggarwal, 2018; Henderson et al., 2017; market access and economic opportunities to earn income Jedwab and Storeygard, 2020; Storeygard, 2016; Jedwab (FEWS NET, 2021). Therefore, it is very timely and and Storeygard, 2019). In Nigeria, roads can facilitate crucial to understand the links between these challenges growth of the non-agricultural sector (Ali et al., 2015) and agricultural activities. and improve access to market that has been linked to the adoption of modern technologies (Damania et al., 2017). The objective of this paper is to gain insight on the Even so, Chamberlin et al. (2014) show that suit able current state of rural development in the Lake Chad land remains uncultivated in Sub-Saharan Africa due countries by examining the relation between road to limited transport access. Using panel methods over investments and cropland expansion  over the past three which significant road development took place from decades following the framework in Berg et al. (2018) 1970 to 2010 in Sub-Saharan Africa, Berg et al. (2018) and then by investigating rural development in proximity demonstrate a modest impact of improved market access to conflict events arisen by the insurgence of Boko Haram on cropland expansion and suggestive evidence of impacts this past decade. on the local intensity of croplands. Over the past several years, roads have improved in Not only are roads crucial to the Lake Chad region, the Lake Chad region  (Magrin et al., 2018), yet limited but these countries are also linked to the water paved roads and road maintenance continues to be a resources of Lake Chad, which is a large area natural challenge. Nigeria has one of the largest road networks transboundary resource that supports local livelihoods in West Africa in terms of length of roads. However, including farming, livestock, and fisheries ( Déby Itno the percentage of national roads in a bad state increased et al., 2015). Due to environmental changes and human from 23 percent in 1985 to 60 percent in 2010 (Federal activities, Lake Chad has shrunk approximately 90 percent Government of Nigeria, 2010). The other three countries from 1960 levels, when it was the world’s sixth largest have less paved roads. The concentration of roads in inland water body. The region is subject to droughts as Niger is mainly in the south along the West-East route well as human activities have altered the hydrology of this of Niamey to Nguime via Diffa as well as the a triangle endorheic lake by stream flow modification and water including Agadez, Tahoua and Zinder. Chad has limited diversion (Lemoalle et al., 2012), which contributes to paved roads, which are mainly concentrated in the capital the water scarcity and fragility of the region (Okpara region. The roads in Cameroon connect the main port of et al., 2015). Droughts can challenge agricultural Douala and the administrative cities including the capital production and correspond to an increase in violence 7.1 Introduction 261 Lake Chad Regional Economic Memorandum  |  Development for Peace against civilians (Bagozzi et al. 2017). In addition to the Although an explicit strategy by Boko Haram to attack administrative challenges of a transboundary resource, markets is not known, markets are still a key location the fluctuations in interannual and seasonal water impede to disrupt trade and target civilians. Using conflict event the development of stable resources exploitation rights data Van Den Hoek (2017) reports 38 direct attacks on (Sarch, 2001) and reduce groundwater discharge along markets in Borno state, Nigeria, between November 2014 with loss in biodiversity (Odada et al., 2003). and December 2016, which is nearly two market attacks per month. The paper also finds seasonality in the timing Along with the environmental changes over the past of the attacks, which occur prior to the lean season and just few decades, the fragility of the region has increased after the harvest. Both of these periods have the potential in the past decade due to the insurgency from Boko to disrupt agricultural production and trade by various Haram in northern Nigeria that contributes to channels: impeding physical access, access to inputs, the humanitarian challenges in the region. Conflict can timing of planting and harvesting, and abandoning of drive population displacement, impede the normal fields. Adelaja and George (2019) examine the effect of activity of local markets, and constrain household access the Boko Haram conflict on agricultural productivity to livelihood, food and income. Conflict events from Boko using a nationally representative panel dataset and Haram started in 2009 have caused massive displacement micro data from the ACLED database.358 They do not of people and disruption to the agricultural sector find a decrease in the total hectares of agricultural land including market activities (Awodola and Oboshi, 2015; harvested, however they do find a significant reduction Van Den Hoek, 2017; Jelilov et al., 2018). The conflict in total output and productivity from the Boko Haram has displaced a large number of individuals who have attacks. Adebisi et al. (2016) find negative impact on experienced significant income shocks with an increase agribusiness in Borno state, Nigeria. Barra et al. (mimeo) of over 40 percent chance of having no income based on examine the relationship between conflict and poverty in an analysis of Nigeria (UNHCR and World Bank, 2016). Nigeria considering the connectivity where they find that From a recent report by OCHA (2020), the Lake Chad decreasing transportation costs with less multidimensional region has 2.6 million Internally Displaced People with poverty. Ali et al. (2015) find that reducing transportation 256 thousand refugees, and 5.2 million people are severely costs in Nigeria increase measures of welfare. food insecure as of 16 September 2020. FAO (2017) recently reported that nearly 50 percent of the 704,000 This paper examines the relationship between access people in Niger are in dire need of humanitarian assistance to markets and land cultivation following Berg et al. and nearly 20 percent are facing issues of food security. (2018) using panel methods. Then, I contextualize these For Nigeria, nearly 70 percent of the 12 million people results within the broader recent development challenges are in need of humanitarian assistance with 43 percent of the Lake Chad region. The results provide evidence facing issues of food insecurity. Employing a Difference that an increase in market access is associated with an in Differences framework with panel household survey increase in cultivated land and is positively associated data, Agwu (2020) finds that exposure of households with an increase in local agricultural GDP. Even so, to conflict events from Boko Haram is associated with conflict from the rise of Boko Haram in the past decade significant downward movements in food security. In a can attenuate gains whereby the proximity to conflict study of Africa, Maystadt et al. (2020) find evidence of events in the previous year is associated with less cropland agricultural expansion near refugee-hosting areas, whereas across the entire region and less night time lights from Salemi (2021) finds evidence of small increases of forest over a hundred local markets nearby Lake Chad. loss (intensive margin and not extensive margin) in areas near refugee camps in Sub Saharan Africa. 358 They use the Living Standard Measurement Study Integrated Study on Agriculture dataset with three waves: 2010–11, 2012–13 and 2015–16. 262 7.1 Introduction Technical Paper 6. Building Rural Development in the Lake Chad Region This paper makes two contributions. First, the The rest of this paper is structured as follows. Section importance of market access as part of economic 2 describes the data sources while section 3 presents the development is well known, yet advancements in empirical framework, section 4 presents the results, and measurement of agricultural activity derived from section 5 concludes. satellite data and recent data are necessary to gain current insight given developments in the region. Following Berg et al. (2018) who examine Sub-Saharan Africa during the period 1970 to 2010, I examine market access for rural development in the Lake Chad countries over a period during which changes in cultivated area and modest road improvements took place. I provide contemporary insights with a higher spatial resolution measure of cropland derived from satellite data at 300m from 1992 to 2019 building on the findings in Berg et al. (2018).359 In addition, I use a newly available data set on agricultural GDP (Blankespoor et al., forthcomingc) to examine the impact of market access on local agricultural GDP.360 Similarly, I examine the local conditions in each grid cell to determine if areas of increased cultivated land are exposed to more suitable agricultural production conditions. I focus on the extensive margin of cropland expansion (rather than intensification) given the strong dependence on rainfed agriculture and the relatively small share of cropland that is classified as irrigated. Second, this paper contextualizes the findings of market access with local conditions given the numerous conflict events in the past decade from Boko Haram. First, I examine the impact of proximity of conflict events on cropland expansion during the period 2009 to 2019 for the entire region. Second, I build on the market level analysis by Van DenHoek (2017) who examines agricultural market activity for 104 markets nearby Lake Chad. I examine the impact of conflict by adding more recent observations of market status in a new framework that includes local night time lights as a proxy for local economic activity and a measure of proximity to Boko Haram events. 359 Before 2000, the HYDE 3.2 database methodology uses a weighting algorithm to estimate cropland including slope where as the measure from ESA is the result of supervised and unsupervised methods using satellite time-series data. 360 Berg et al. (2018) examine the impact of market access on total GDP; they did not examine the impact on the agricultural sector. 7.1 Introduction 263 Lake Chad Regional Economic Memorandum  |  Development for Peace 7.2 Data and Sample Given the challenges of data collection across multiple of agricultural suitability based on soil and climate countries, geospatial methods integrate a variety of data conditions for twelve major crops for the period 1981– at a consistent unit of 0.1 × 0.1 degrees (approximately 2010 from the ClimAfrica project (WP4).362 Another 11km × 11km at the equator) covering the four measure is a common drought index with the Standardized countries surrounding the Lake Chad. I intersect these Precipitation Evapotranspiration Index (SPEI) algorithm grids with the national border to create a total of 33,252 (Beguería et al., 2014) using the monthly precipitation pixels along with the corresponding area. The number and evapotranspiration 1950–2019 data version 4 from of observations depends on the locations and time-step the Climate Research Unit (Harris et al., 2020). I count included in the regression. The regional analyses with full the number of months in a cell that are considered severe geographic coverage includes all pixels times the number drought with values below or equal to -1.5 (Guenang and of years. The geographic definition of the Lake Chad area Kamga, 2014). Given the time scale over which water is from the World Bank Lake Chad Regional Recovery deficits accumulate for agricultural is important and I run and Development (PROLAC) project.361 The local the 18 month lag.363 market level analysis is limited to the pixels with field based observations of a 104 markets summarized at the pixel level by season. These datasets provide insight into 7.2.2 Land cover and agricultural activity agricultural activity given the limited official statistics and access to the field. Below is a description of the datasets. Land cover estimates from satellite data provide a geographically comprehensive and consistent measurement from which to identify trends in 7.2.1 Local conditions agricultural activity ( Weiss et al., 2020). Previous work by Berg et al. (2018) examined cultivated area from 1970 Agricultural production is subject to the local variation to 2010 using cropland estimates in the History Database in annual climate and initial conditions ( Zaveri et al., of the Global Environment (HYDE) 3.2 (Klein Goldewijk 2020). Figure 1 illustrates the shared boundary of Lake et al., 2017). A more recently released dataset is from Chad as well as major transboundary rivers including the the European Space Agency (2017, 2019) that provides Niger and Benue from the Global Lakes and Wetlands annual estimates of land cover at 300m from 1992–2019 Database (Lehner and Döll, 2004). Lake Chad has which are harmonized from two data products Land extensive floodplains and wetlands (Odada et al., 2005). Cover Maps - v2.0.7 and Land Cover Maps - v2.1.1.364 I aggregate the 38 categories into six: irrigated and rainfed I summarize mean annual precipitation and its square cropland, cropland mosaic, grassland, urban, bare land at the cell-year level from the CHIRPS dataset version and other.365 I summarize these data by pixel into the share 2 (Funk et al., 2015). FAO (2013) provides a measure of cropland per pixel.366 I also include another measure of 361 It includes the following administrative areas: Far North Region (Cameroon); Lac, Kanem, Hadjer Lamis, and Chari Baguirmi Regions (Chad); Diffa and Zinder Regions (Niger); and Borno, Adamawa and Yobe States (Nigeria). Notably, the definition excludes N’Djamena in Chad. 362 FAO GAEZ version 4 was unavailable at the time of analysis to measure high agricultural suitability following (Berg et al., 2018). 363 The 18 month SPEI provides information of precipitation patterns over a medium to long time scale. 364 Liu et al. (2018) examine the correlation between cropland area in FAOSTAT and ESA-CCI-LC. 365 Specifically, I aggregate the landcover classes 10–12 into cropland; 20 as irrigated, 30 as mosaic cropland; 150 as grassland, 190 as urban and the remaining codes defined as other. 366 The area considered irrigated is significantly smaller than cropland. 264 7.2 Data and Sample Technical Paper 6. Building Rural Development in the Lake Chad Region cropland that includes more than 50 percent mosaic crop measures below at the season level. Another measure to lands with less than 50 percent natural vegetation (tree, gain insight on agricultural activity is from a measure of shrub, herbaceous cover) to include mixed land use with burned areas derived from satellite. Burning agricultural smallholder agriculture. fields is a common practice in Central and West Africa and can reduce post-harvest fires as well as provide short- The land cover model provides an estimate of annual term nutrients (Bucini and Lambin, 2002; Kull and Laris, agricultural land use, however it aggregates any 2009). I summarize the area from the MODIS Burned seasonal variation. So, following Blankespoor et al. Area data product (v6) in a cell, which provides a burned- (forthcomingb) and a calendar with the seasons of major area estimate per 500m pixel by month (NASA, 2020a). crops for each country from FAO (2020a,b,c,d) I define The intensity of land use is measured from a greenness each month into three seasons: (i) land preparation; (ii) measurement called Normalized Difference Vegetation sowing and growing; and (iii) harvest. I summarize the Index (NASA, 2020b). Another measure of vegetation  his map illustrates the distribution and type of waterbodies from Lehner and Döll Map 7.1: T (2004) and the Lake Chad area within the solid black line 7.2 Data and Sample 265 Lake Chad Regional Economic Memorandum  |  Development for Peace growth is Net Primary Productivity that captures on the road types and topography between locations i the solar energy absorbed by plants or other primary and j at time t through the values τi,j–σ and excluding producers (Running et al., 2004). Previous work shows itself and cells within 20km. Following previous studies a strong positive correlation between these estimates and (Berg et al., 2018; Jedwab and Storeygard, 2020), I use crop yields (e.g. Strobl and Strobl, 2011; Zaveri et al., the value for the elasticity of trade σ equal to 3.8 from 2018). The source is from the MODIS satellite product Donaldson (2018) who derived it for the case of India. (MOD17A2H) as summarized by monthly mean of a The travel time is calculated based on a time cost raster cumulative 8-day composite with a 500m resolution method using the Dijkstra algorithm as the minimum (NASA, 2020c). Cross-sectional spatial distribution of time result from the roads and offroad speeds. For the crops such as cotton are from the Spatial Production years 1983, 1992, 2001 and 2010, I assign a speed based Allocation Model (SPAM) (Yu et al., 2020). on road categories similar to Berg et al. (2018); Jedwab and Storeygard (2020)368 and offroad speed based on the In addition to cropland, the livestock and fishing hiking function from (Tobler, 1993). trade are important activities in the Lake Chad region, especially near Lake Chad. The spatial distribution of Hiking = 6 * e–3.5*|s+0.05| * 0.6 livestock ca. 2010 is from Gilbert et al. (2018). They provide estimates livestock including cattle and goat where s is mean slope from Verdin et al. (2007).  based on agricultural census data with equal weights.367 Lake Chad was once one of the great fisheries. Graaf et For panel roads, I use the georeferenced panel roads al. (2014) in FAO (2017) estimate of fishing activities data from 1983 to 2010 from(Jedwab and Storeygard, in the region at a value of USD 54 to 220 million. 2019). The length of paved roads increased in Chad However, current indiscriminate fishing practices are not along with Cameroon, while Niger and Nigeria does not sustainable, yet employed as a coping strategy for survival increase significantly (See Map 7.2). (Eriegha et al., 2019). The size of the market is based on urban population data from the consolidated urban population database 7.2.3 Market Access (Blankespoor et al., 2017). The population has increased over the past decades. The distribution of population in Following Jedwab and Storeygard (2019) and Berg the Lake Chad area has high variation, where Nigeria has et al. (2018), I calculate the local market access for a much higher population than the other three countries. given location as a function of the weighted sum of the populations of all other locations, with a weight that The regional analysis also considers other important decreases with travel time. Formally, I define market infrastructure and markets. Ports provide an important access in a location i at time t: connection to the international market. The location of marine ports is from the World Ports Index (National M Ai,t = ∑j≠i Pj,t τi,j–σ   (1) Geospatial-Intelligence Agency, 2014). The busiest marine port in Cameroon is Douala followed by Limbé.  here Pj,t is the population in location j at time t, τi,j is w Nigeria has major ports including: Lagos, Calabar, Onne, the travel time between locations i and j at time t, and Port Harcourt and Warri. I construct a variable estimating σ is a trade elasticity parameter. Market access depends the minimum travel time to a port. The locations of 367 They also provide a version as the result of statistical models with dasymetric weighting. 368 Specifically, highway speed is 80kph; paved is 60kph; improved is 40kph and earthen is 12kph. 266 7.2 Data and Sample Technical Paper 6. Building Rural Development in the Lake Chad Region  ap illustrating highway (red), paved (black) and improved (pink) roads from (Jedwab and Storeygard, Map 7.2: M 2020) cotton ginning factories are digitized from a map on below status into a combined below normal category for a Cotton Zones, Ginning Factories and Exports of West Africa total of three categories. They produced this report every in OECD (2006). The locations of regional livestock few months starting with the earliest publicly available markets are from FEWS NET (2009) for Chad and market activity report in January 2015, which focused Niger FEWS NET (2008) for Nigeria and from Motta et on market activities in December 2014. I summarize the al. (2019) for Cameroon. Within the Lake Chad region, most restrictive category during the season and I exclude the trade routes depend on connectivity of infrastructure 32 missing observations during the six year period of across borders, especially Chadian livestock along with record (N = 104 * 3 * 6 - 32 = 1840); including a one the collection of Cameroonian livestock on the way to year lagged variable reduces the number of observations Nigeria (Magrin et al., 2018). equal to 1533. For local markets near Lake Chad, the Famine Early Warning Systems Network (FEWS NET) reports 7.2.4 Economic activity provide both time and place of the operational status, which are based on field-based investigations, into Night time lights can proxy total local economic activity four qualitative categories:(i) normal activity/operating (Henderson et al., 2011) and human development normally (ii) some disruption, reduced activity/operating (Bruederle and Hodler, 2018). I use two night time lights slightly below normal, (iii) significant disruption, limited datasets due to the time-step. For annual trends across the activity/operating well below normal or (iv) minimal region from 1992–2018, I use the dataset that harmonizes or no activity/not operating. Following Van Den Hoek two data sources DMSP-OLS and VIIRS data from Li (2017) I use the closed and normal operational status et al. (2020).369 The second source is the monthly data and then I aggregate the well below normal status and from VIIRS available from April 2012 until 2020.370 369 DMSP-OLS (1992–2013) is used for temporal calibration with a simulation of VIIRS data (2014–2018). These satellites measure light at night at different times of day. 370 I calculate these values using the Stray Light Corrected Nighttime Day/Night Band Composites Version 1 product. 7.2 Data and Sample 267 Lake Chad Regional Economic Memorandum  |  Development for Peace After visual inspection and inline with previous work by data fusion method based on cross-entropy optimization Li et al. (2020), I calculate the sum of the radiance values that disaggregates administrative level agricultural GDP above 0.3 by pixel.371 Even with the striking correlation of into grids depending on satellite-derived indicators of night time lights and total GDP, these measures require the components that make up agricultural GDP, namely areas to emit light at night to relate to economic activity, crop, livestock, fishery, hunting and timber production. which is not prevalent in many rural areas (Thomas et Map 7.3 illustrates the distribution of agricultural GDP al., 2019). So, it does not account well for a significant circa 2010. The cropland component takes advantage of contribution to the economy from the agricultural sector. the SPAM model to inform the prior allocation of cropland Over the past two decades, Chad, Niger and Nigeria production value and does not directly use infrastructure have a higher share of agricultural GDP than the Sub- data (Yu et al., 2020). The level of agricultural GDP in Saharan Africa regional aggregate.372 To fill this local Nigeria is considerably higher compared to Cameroon, data gap, (Blankespoor et al., forthcomingc) employ a Chad and Niger.  his map illustrates main roads along with the distribution of Agricultural GDP (2010) Map 7.3: T from (Blankespoor et al., forthcomingc), where darker red represents relatively higher agricultural GDP and light blue or transparent has little estimated value 371 Values less than 0.3, which include negative values, are considered background noise such as large areas of the Sahara desert. 372 The World Bank World Development Indicators reports that the share of agricultural added-value GDP is in a range of 15–42 percent. 268 7.2 Data and Sample Technical Paper 6. Building Rural Development in the Lake Chad Region Livelihood zones for each country are from FEWS. 7.5).374 The ACLED database includes over 4,800 events NET. These geographic zones group people with similar with more than 35,000 fatalities that are associated patterns considering how people gain access to food with Boko Haram as an actor from 2009 to December and income as well as markets. The map data include 2020. Many conflict events are in close proximity to the following number of zones: 36 in Nigeria (FEWS Maiduguri, which is the state capital of Borno and major NET, 2018), 9 in Chad, (FEWS NET, 2011a), 15 commercial center in the Lake Chad region. According in Niger (FEWS NET, 2011b) and 17 in Cameroon to a news source in 2013, approximately 5,000 hectares (FEWS NET, 2019a).373 I aggregate these categories into of agricultural plots with wheat and rice were abandoned 29 categories based on the first or dominant crop listed in near Marte in Borno state, Nigeria. This translated to the description with multiple crops (See Map 7.4). roughly 200 metric tonnes of wheat according to Abubakar Gabra Iliya, head of the Lake Chad Basin Development Agency.375 After 2013, conflict events continued to 7.2.5 Conflict data increase in occurrence and spread to include the area across the Nigerian border in the Lake Chad area (See The insurgency by Boko Haram in the Lake Chad area Map 7.5). In Niger, Boko Haram activities target Diffa, has led to an increase in the number of conflict events Bosso and the small villages along the river Komadougou. and fatalities since 2009 with a notable concentration In Chad, Boko Haram is present in the islands of Lake in the three states of Northeastern Nigeria (See Map Chad as well as attacks in N’Djamena, Guitté, Bo and  his map illustrates the livelihoods of the four countries, which clusters similar Map 7.4: T livelihood patterns into a zone 373 The zones for Cameroon were digitized given the lack of response of FEWS NET to provide the georeferenced data and may include small digitizing errors. 374 Violence from Boko Haram increased most notably after the execution of its leader Mohammed Yusuf in July 2009. 375 https://www.pmnewsnigeria.com/2014/03/25/food-supply-crisis-imminent-in-nigeria/ 7.2 Data and Sample 269 Lake Chad Regional Economic Memorandum  |  Development for Peace  hese maps in the panel show the evolution of the number of events from 2009–2020 defined as Boko Map 7.5: T Haram Source: ACLED (Raleigh et al., 2010) (downloaded 2020-05) and author’s calculations. Baga Sola. More recently, Boko Haram has taken refuge in the Sambisa forest, which is South East of Maiduguri, and the swamps of Lake Chad (Magrin et al., 2018). Conflict has taken place, especially in the area in close proximity to Lake Chad. I use the location of conflict events from the Armed Conflict Location & Event Data Project (ACLED) (Raleigh et al., 2010). I summarize the number of events and fatalities by cell. 270 7.2 Data and Sample Technical Paper 6. Building Rural Development in the Lake Chad Region 7.3 Empirical Framework In a framework following Berg et al. (2018), I first to the international market. To account for heterogeneous explore the links between market access and two effects, I include an interaction of the natural logarithm measure of agriculture: cropland area and a local measure of the market access index with a measure of agricultural of agricultural economic activity. I examine the impact of suitability and a measure of shrinking land. The market access on cropland area using a panel framework regressions include country fixed effects, time dummies, and a second model exploring the association between and the interaction between the two as a control for any cropland area and local agricultural activity (Agricultural remaining unobserved heterogeneity. GDP). Given numerous conflict events have occurred in the past decade, I also examine agriculture activity amidst conflict in a panel framework examining the association 7.3.2 Local agricultural activity across of the proximity of conflict on cropland area across the the region entire region as well as night time lights for a sample of local markets nearby Lake Chad. I also explore the association between cropland area and a measure of local agricultural activity (local agricultural GDP) at the grid cell level w  ith the 7.3.1 Cropland expansion across the following regression estimated in levels. The regression is region defined as follows: The cropland regression in levels is defined as follows:  lnAgGDPi,t = β0lnCropi,t–9 + β1lnM Ai,t–9 + X'i,t–90 + D'iπ + δt + ϵit  (4) InCropi,t = α0InM Ai,t–9 + X'i,t–9θ  here InAgGDPi,t is natural logarithm of the local w + D'iπ + δt + ϵi,t  (3) agricultural GDP in pixel i for time period t (2010),  here InCropi,t is natural logarithm of the area of cropland w InCropi,t–9 is natural logarithm of the area of cropland in pixel i for time period t, InMAi,t–9 is the lagged natural in the previous period of 9 years, InMAi,t–9 is the lagged logarithm of the market access indicator is the result of natural logarithm of the market access indicator is the Equation (1), Xi,t–9 is a vector of control variables at time result of Equation (1), Xi,t–9 is a vector of control variables t, D'i is a vector of time invariant dummies, and ϵi,t is the at time t, D'i is a vector of time invariant dummies, and error term. ϵi,t is the error term. Using the same approach to address concerns of reverse The other controls are similar to Equation (3). The causality I employ a lag in the market access index travel time to livestock markets accounts for proximity by one period (9 years) as cultivation may influence to livestock trading. The regressions include country the placement of new road investments as well as the dummies given the agricultural GDP dataset is only changes in local population. To account for the local level available for one time step. A cautionary note is the local of population, I include population density estimated by agricultural GDP is the result of a cross-entropy model UNEP-GRID Geneva and The World Bank. The travel that leverages spatial detail in the subcomponents of time to the nearest major port is a measure of proximity agricultural GDP.376 376 See Thomas et al. (2019) for more details and model comparisons. 7.3 Empirical Framework 271 Lake Chad Regional Economic Memorandum  |  Development for Peace 7.3.3 Agriculture amidst conflict nearby the market operational status on the natural logarithm Lake Chad of night time lights. Then, I introduce a distance to the nearest conflict event from the previous year into the The previous analyses examine the impact of market regressions as follows: access over the past three decades; this framework does not account for the lived reality of access to markets lnNTLi,t + α0Marketi,t + α1distConflicti,t–3 + X'i,t–1θ + D'iπ + δt + ϵi,t  (6) given the insurgency of violence on an annual or seasonal basis. The next section focuses on examining  here InNTLi,t, is natural logarithm of the sum of night w agricultural activity amidst conflict. time lights in pixel i for time period t, which is defined as a season of the year (land preparation, sowing and growing, or harvest). Market is the operational status 7.3.3.1 Cropland expansion amidst conflict of the local market as normal, below normal or closed. distConflict is the distance to the nearest conflict event in  examine the association of distance to nearest conflict I pixel i during the same season of the previous year, Xi,t is a event or fatality on local cropland extent during the vector of control variables at time t, D'i is a vector of time period 2009 to 2019 for the entire region. invariant dummies, and ϵi,t is the error term. I include the mean precipitation and its square along with mean lnCropi,t = α0lnDistConfi,t–1 + lnDistConfi,t–1 greenness during the season as a control, which is used as × Yi + lnNTLi,t–1 + lnNTLi,t–1 × Si,t–1 + lnNTLi,t–1 × lnM Ai,2008 + X'i,t–1θ a proxy for local agricultural productivity. + X'i,t–10 +D'iπ + δt + ϵi,t  (5)  here lnCropi,t, is the natural logarithm of the cropland w area in pixel i for time period t in years, lnDistConf is the natural logarithm of the nearest distance to a conflict event or an event with a fatality from pixel i in the previous year t – 1, Xi,t–9 is a vector of control variables at time t, D'i is a vector of time invariant dummies, and ϵi,t is the error term. I use a lag in the conflict variables to address reverse casualty. I address the concern about modeling error of local population estimates due to displacement by taking advantage of the annual frequency and high correlation of night time lights with population density. I include lagged night time lights variables to control for size effects. Then, I interact night time lights with shrinking cropland, market access in the previous base year (2008) and natural logarithm of the travel time to nearest livestock market in 2008. 7.3.3.2 Operational status of markets amidst conflict For a set of markets in the area nearby Lake Chad with reported operational status, I examine the impact of 272 7.3 Empirical Framework Technical Paper 6. Building Rural Development in the Lake Chad Region 7.4 Results 7.4.1 Trends in Agriculture sorghum as well as irrigated crops such as Komadougou Irrigated Peppers and Violet de Galmi onions (FEWS Agriculture is the main sector of economic activity NET, 2011b). Northern Nigeria has cultivated areas for households and individuals living in the Lake with diverse crops including millet and sorghum as well Chad region. For the four countries, Map 7.4 illustrates as livestock. The area nearby Lake Chad includes flood dominant livelihoods with similar patterns considering retreat cultivation and fishing activities. Major cash crops how people gain access to food and income as well as include cotton in the Sahel region where many cotton markets. The northern areas of Niger and Chad are ginn factories are located (See Map 7.6). Other rainfed sparsely populated with activities including salt, dates and cash crops such as bananas and coconuts are located near trading activities in oases along with nomad pastoralism the ports outside of the Lake Chad area. Maize, cassava, and transhumance. In southern Niger, where most of the sorghum and millet provide staple crops and are among population lives, is an agropastoral belt with millet and the highest production in the Lake Chad region.377  his map illustrates cotton production from SPAM ca. 2010 (Yu et al., Map 7.6: T 2020) and ginning factories (OECD, 2006) 377 These results are summarized from the SPAM circa 2017. 7.4 Results 273 Lake Chad Regional Economic Memorandum  |  Development for Peace In the region, agricultural production is typically rain- the lesser intensity one in the 00s, where the Lake Chad fed and thus dependent on the climate. The levels of area typically has a higher share of drought compared to rainfall have varied over the past several decades. One can the remaining are in the country. However, the period consider three periods of climate since 1960 in the Lake from the 1980s until present has seen some greenness Chad area: a period of high rainfall in the 1960’s, low growth as measured from satellite (e.g. Dardel et al., rainfall in 70s to the 90s and the recent period with more 2014). As shown above, some seasons drought persists, variability than the two previous periods. Droughts can however the opposite case is also true. In 2019, flooding impact food availability and timing and a households’ occurred in an area with approximately 220,000 people ability to consume. Figure 7.1 displays the share of area as the result of heavier-than average rainfall in the fall that exceeds a drought threshold, which is measured by of 2019. USAID (2020) reported the damage from the SPEI with 18 month lag, for the Lake Chad study region floods included infrastructure, crops and restricted access. "inside" and the remaining area in the country "outside". The area nearby Lake Chad is rural and dependent on One can see the major drought in the 70s and 80s378 and hydro-climatic conditions (Nilsson et al., 2016).  his graph shows the share of area considered a drought identified from the Standardized Figure 7.1: T Precipitation Evapotranspiration Index (SPEI) at an 18 month time lag (with a value less than or equal to -1.5). This is the result of the algorithm provided by Beguería et al. (2014) using the monthly precipitation and evapotranspiration data version 4 from the Climate Research Unit (Harris et al., 2020) 378 Rivers did not flow into the lake in 1973 and 1984 as the result of Sahelian drought (Raji, 1993). 274 7.4 Results Technical Paper 6. Building Rural Development in the Lake Chad Region  hese maps illustrate the location of livestock markets (black dots) from FEWS NET (2009); Motta et al. Map 7.7: T (2017) and distribution of cattle from Gilbert et al. (2018) (left) and goat (right) in 2010 from Gilbert et al. (2018) where a darker shade represents higher livestock density  his map illustrates land use (Nachtergaele et al., 2010) (Version 1.1) Map 7.8: T 7.4 Results 275 Lake Chad Regional Economic Memorandum  |  Development for Peace Over the past two decades, arable or cropland areas Harcourt-Enugu (See Map 7.3). The natural logarithm increased although irrigated lands are limited as of the distance to nearest paved road in 2008, which is measured from satellite imagery. Total cropland area constrained by country, has a negative correlation with has increased by almost 43,000 km2 between 1992– natural logarithm of local agricultural GDP of 0.70. 2019, where Cameroon and Nigeria have the most relative gain in cropland area compared to Chad and In closer proximity to Lake Chad, road transport Niger. Irrigated areas represent approximately 5 percent connects key local agricultural markets  of (i) Bol of the cropland area during this period with little growth, and N’Djamena in Chad, (ii) Kousseri in Cameroon, which is the likely result of little new investment. The (iii) N’guigmi and Diffa in Niger and (iv) Bosso, Niger annual growth rate of cropland area for the four countries along with Marte and Monguno via Madiguri in Nigeria. started at 0.42 percent during the 1992–2001, lessened at Maiduguri is an important connection for the trade 0.31 percent during 2001–2010, and was lower at 0.03 corridors between Nigeria and Cameroon (Kousseri or during 2010–2019.The annual growth rate of cropland Maroua) (See Map 7.9). This was especially important area for the four countries inside the area nearby Lake in the commercialisation of fishing in Lake Chad linked Chad started at 0.29 percent during the 1992–2001, to the development of road infrastructure (Stauch, A., lessened at 0.24 percent during 2001–2010, and was 1960). For the fishing trade, a number of fish markets slightly negative during 2010–2019. exist; the largest fish market was Baga Kawa in Nigeria (prior to Boko Haram), which is a key market town in In addition to cropland, the livestock trade is vital for close proximity of Lake Chad (Magrin et al., 2018). the region and cross-border trade has long played a role in trade in livestock markets in Africa  (de Haan  his map illustrates local markets in close Map 7.9: T proximity to Lake Chad by type et al., 1999). The distribution of livestock markets and a subnational estimate of cattle is notable in the Lake Chad area (See Map 7.7). Over half of the livestock markets are within 100km of the border and 16 of the 97 livestock markets are located in the Lake Chad area. Nearby Lake Chad, agricultural activities benefit from the connection to markets. Fish routes supply several tonnes of fish everyday to regional hubs of N’Djamena and Maiduguri with an annual estimate of 50,000 to 100,000 tonnes of fish per year (Lemoalle and Abdullahi, eds, 2017). Similarly, livestock trade routes from Chad and Niger pass through Maiduguri onto regional markets and are an important part of the goat and millet trade (WFP, 2016). Mapping the cropland, livestock, forestry, fishing across the landscape illustrates a mosaic of agricultural activity and management of land  (See Map 7.8). The agricultural economy of Nigeria is notably higher than the other three countries. The development of highways Source: Déby Itno et al. (2015). in Nigeria coincides with the area with relatively higher agricultural GDP circa 2010; they are the three corridors of Kaduna-Kano (North Central), Lagos-Benin City (South West) and the delta region corridor of Port 276 7.4 Results Technical Paper 6. Building Rural Development in the Lake Chad Region 7.4.2 Market Access market access is associated with a 3.9 per cent increase in cropland area. Given the approximate total of cropland Table 7.1 presents the panel results of market access in the four countries is nearly 600,000 km2, this result on cropland area (in levels). The baseline estimation implies a growth of around 23,400 km2 given a 1 percent of equation (3) of market access does have a significant increase in market access over 9 years. Following Berg positive effect on an increase in cropland across OLS et al. (2018), I examine spatial heterogeneity with (Columns 1–3) and FE specifications (Columns 4–6) interactions of market access with yield and a shrinking during the period from 1992 to 2019.379 cropland dummy. The sign of the yield interaction is positive, providing a positive association of the growth The results from new and updated measurements with a in cropland where the land has higher yield of cotton.380 focus on the Lake Chad region are in line with previous Also, it is important to note that the area near Lake Chad research by Berg et al. (2018). Given the modest gain in is landlocked. The results show a connection of cropland length of paved road, the growth in population, which area to external markets measured in travel time to the is a proxy for the size of the market, is the main driver nearest port that are located in Nigeria and Cameroon. for the increase in market access. A 1 percent increase in  stimates of the impact of market access on cropland area Table 7.1: E (1) (2) (3) (4) (5) (6) 0.317*** 0.0420** 0.0374 0.274*** 0.0385* 0.0434* Ln MAt–9 (18.96) (2.72) (1.80) (16.50) (2.39) (1.99) 0.0701** 0.0630* Ln MAt–9 × Yield (2.71) (2.31) -0.0920*** -0.0841*** -0.0826*** -0.0706*** Shrinking (-14.04) (-11.65) (-12.65) (-9.83) -0.0322* -0.0486*** Ln MAt–9 × Shrinking (-2.43) (-3.58) -0.109*** -0.107*** -0.0355*** -0.0332*** Ln time to portt–9 (-14.97) (-14.75) (-4.40) (-4.09) 0.359*** 0.359*** 0.135*** 0.133*** Ln pop densityt–9 (97.01) (97.03) (36.73) (36.34) -0.114*** -0.111*** -0.187*** -0.182*** Mean Precipitationt (-6.33) (-6.16) (-10.42) (-10.21) -0.0119* -0.0114* 0.0269*** 0.0274*** (Mean precipitationt)2 (-2.22) (-2.13) (5.12) (5.18) Country x Year dummies Y Y Y Y Y Y Observations 133,008 133,008 133,008 133,008 133,008 133,008 R-squared 0.0528 0.532 0.533 0.0528 0.449 0.450  statistics in parentheses; * p < 0.05, ** p < 0.01, *** p < 0.001 t Notes: This table presents estimates of OLS (column 1-3) and FE (column 4-6) regressions of the natural logarithm of the sum of rainfed and irrigated cropland area at time t on the natural logarithm of the lagged market access index during the period between 1992 and 2019. The controls included in the OLS regressions (column 3-4 and 5-6) include a dummy variable indicating a decrease in cropland during the previous period (shrinkingt-9), the lagged natural logarithm of time to nearest major port (Ln time to major portt-9), the average rainfall over the previous five years / 1000 (Mean precipitationt) and its square, and country × year dummies. Constants are not shown. 379 Specifically, the panel includes the following years: 1983, 1992, 2001, 2010 and 2019. 380 The yield of cotton is a constant value circa 2010 from the SPAM model. Regressions (not shown) of market access on cropland provide similar results with a positive and significant interaction with the agricultural suitability. 7.4 Results 277 Lake Chad Regional Economic Memorandum  |  Development for Peace A 1 percent decrease in this time is associated with a without market access. I find a positive and significant 3.6 percent increase in cropland area. coefficient for market access even beyond the effect of cropland expansion controlling for time to port and time Next, Table 7.2 presents the results examining to nearest livestock market. the association of cropland expansion on local agricultural GDP from the Equation (4). As mentioned These two analyses provide suggestive evidence for earlier, this result is a descriptive association due to the positive impact of market access on cropland potential endogeneity concerns about the modeling expansion and local agricultural economic activity of the local agricultural GDP measure. Cropland does in the countries comprised of the Lake Chad region. have a significant positive effect on an increase in local Given the conceptual framework, these results used a agricultural GDP in OLS specifications.381 Following lagged approach with a period of 9 years. Remarkably, the Berg et al. (2018), I examine the relationship with and current development status in the region has changed since the onset of Boko Haram in 2009. In the next section, I  stimates of the impact of market access on Table 7.2: E examine the association of the location of conflict events Agricultural GDP on cropland and the association of operational status of (1) (2) (3) markets on night time lights. 0.950*** 0.342*** 0.342*** Ln cropt–9 (245.43) (71.44) (71.50) 0.0872*** 7.4.3 Market status and conflict nearby Ln MAt–9 Lake Chad (3.92) -0.312*** -0.302*** Ln time to portt–9 Recent developments with the variation in (-21.67) (-20.46) environmental conditions and conflict pose challenges Ln time to -0.0232*** -0.0242*** livestock for agricultural activity. From the suggestive evidence marketst–9 (-3.27) (-3.41) above, market access is associated with an increase in Ln population 0.316*** 0.315*** cropland area (extensive margin), however this result does densityt–9 (41.44) (41.19) not incorporate short-term shocks or the uncertainty to 1.234*** 1.245*** travel to market, especially related to the proximity of Mean precipitationt (37.78) conflict events.382 The discussion below focuses on the (37.74) Boko Haram conflict regionally and then geographically (Mean -0.259*** -0.261*** on an area in close proximity to Lake Chad with more precipitationt)2 (-27.54) (-27.54) detailed data (e.g. market data) to contextualize current Country x Year development with remotely sensed measures. Y Y Y dummies Observations 33,252 33,252 33,252 R-squared 0.602 0.878 0.878 7.4.3.1 Cropland amidst conflict  statistics in parentheses; * p < 0.05, ** p < 0.01, *** p < 0.001 t Notes: This table presents estimates of OLS (column 1–3) regressions of the natural logarithm of Agricultural GDP (ca. 2010) on the natural logarithm of the sum of rainfed and irrigated cropland area (Ln croplandt-9) and the lagged market access index (Ln MAt-9). The As stated above, the Boko Haram insurgency started controls included in the OLS regressions include the lagged natural logarithm of time to nearest major port (Ln time to major portt-9), the lagged natural logarithm of time to nearest livestock market (Ln time to livestockt-9), the lagged natural logarithm of time to nearest near Maiduguri in 2009(see Map 7.5). Numerous reports ginn factory (Ln time to ginn factoryt-9), the average rainfall over the previous 5 years * 1000 (Mean precipitationt) and its square, population density (Ln pop densityt-9), and country × year state the destruction of cropland and infrastructure as dummies. Constants are not shown. 381 The local agricultural GDP data are only available circa 2010. 382 The travel time assumes fastest route and does not include any measures of delays or road blocks. For example, Van Der Weide et al. (2018) incorporate road closure obstacles in the travel time analysis to quantify the impact of market access on local GDP in the West Bank. 278 7.4 Results Technical Paper 6. Building Rural Development in the Lake Chad Region  stimates of the impact of the proximity of conflict on cropland area Table 7.3: E (1) (2) (3) (4) 0.0154*** 0.0176*** 0.0139*** 0.0163*** Ln NTLt–1 (4.50) (5.12) (4.04) (4.73) 0.00413*** 0.00576*** Ln dist to eventt–1 (9.60) (13.38) 0.00237*** 0.00162*** Ln dist to eventt–1 × Yield (17.26) (12.04) -0.0223*** -0.0222*** -0.0225*** -0.0223*** Ln NTLt–1 × Shrinkingt–1 (-15.70) (-15.63) (-15.77) (-15.71) 0.00711* 0.00721* 0.00686* 0.00688* Ln NTLt–1 × Ln MA2008 (2.50) (2.54) (2.40) (2.42) -0.00250*** -0.00289*** -0.00223*** -0.00262*** Ln NTLt–1 × Ln time to livestock2008 (-4.06) (-4.68) (-3.62) (-4.25) 0.0126* 0.0182*** -0.0127** -0.00844 Mean precipitationt (2.55) (3.66) (-2.65) (-1.75) -0.00551*** -0.00724*** 0.00113 0.000184 (Mean precipitationt)2 (-3.54) (-4.62) (0.74) (0.12) Country x Year dummies Y Y Y Y Observations 365772 365772 365772 365772 R-Squared 0.326 0.327 0.180 0.199 t statistics in parentheses; * p < 0.05, ** p < 0.01, *** p < 0.001 Notes: This table presents estimates of OLS (1-2) and FE (3-4) regressions of the natural logarithm of cropland area at time t (in years) on the natural logarithm of the distance to the nearest conflict event (Ln dist to eventt-1), night time lights (Ln NTLt-1), the average rainfall (Mean precipitationt) and its square. Constants are not shown.  his panel set of maps shows the evolution of cropland for three distinct periods: 1992–2000 (left Map 7.10: T map); 2000–2009 (center map); 2009–2018 (right map) Source: ESA. 7.4 Results 279 Lake Chad Regional Economic Memorandum  |  Development for Peace  wo figures illustrating the seasonality of the number of conflict events with NDVI (a) and NPP (b) Figure 7.2: T  his graph displays the monthly frequency of (a)  T  his graph displays the monthly frequency of (b) T conflict events from Boko Haram and the mean conflict events from Boko Haram and the mean level of greenness of vegetation, as measured by level of Net Primary Productivity, as measured by NDVI. NPP. Sources: Raleigh et al. (2010); NASA (2020b) and author’s calculations. Sources: Raleigh et al. (2010); NASA (2020c) and author’s calculations. well as the undermining the supply routes of agricultural Recent research finds that the rise of Boko Haram inputs (e.g. FAO, 2017; Jelilov et al., 2018). I find results in more agricultural burning  ( Jedwab et al., suggestive empirical evidence of the decrease in cropland forthcoming), which has been associated with agricultural as derived from satellite land use classification in areas activity due to the common practice of burning fields near conflict events. During the period 2009 to 2018, for clearing and (short-term) nutrients (Blankespoor cropland area in North East Nigeria decreased, even et al., forthcomingb). Map 7.11 shows the change in though the previous two periods indicated some growth burning activity since 2001 in four time periods. The in cropland area (See Map 7.10). Table 7.3 presents the first period shows the variation in burned areas before results of the OLS and FE regression of the impact of the Boko Haram, whereas the second panel map illustrates proximity of conflict from Boko Haram on cropland area a reduction in burned density. Notably, the third panel from 2009 to 2019. The results highlight an association shows a concentration of burned area nearby Maiduguri of an increase of cropland area away from the natural and Dikwa in Nigeria that may be attributable to both logarithm distance to the nearest event or fatality during clearing of fields and conflict events (e.g. the burning the previous year. of buildings), whereas Northern Cameroon indicates reduction in activity relative to 2013. The last panel of Given the seasonality of agricultural production, data (2017–2019) shows an attenuation of these burned Figure 7.2 shows measures of crop phenology along areas. So, it is important to note that this measure can with the frequency of Boko Haram conflict events. capture both agricultural activity and conflict, so it is Focusing on the three Northeastern states in Nigeria, necessary to examine the description of the conflict these events have two peaks: one during the harvest and events.383 another in the land preparation stage. 383 The ACLED database include a description of conflict events that note burning of buildings or razing village(s). 280 7.4 Results Technical Paper 6. Building Rural Development in the Lake Chad Region  his panel map illustrates the distribution of burned density during the harvest season Map 7.11: T Source : MODIS. 7.4.3.2 Markets amidst conflict recommendations for some markets to close given the sites are targets for attacks (on civilians) (FEWS NET, Previous analysis associated the impact of Boko Haram 2015). Markets in the Diffa region were officially shut on the operational status of local markets  (Van Den down to impede supply routes to the insurgents and Hoek, 2017). The spatial concentration of Boko Haram markets in the Far North of Cameroon closed in response events was primarily in Northeast Nigeria. Although the to repeated suicide bomber attacks (FAO, 2017). From monitoring of the markets from FEWS NET started only 2017–2020, several markets on the fringe operated with a in 2014, conflict events already took place by Boko Haram slightly below or normal status. Notably, markets in close at local markets in Nigeria, especially in Borno state proximity to Lake Chad were well below or not operating. (Awodola and Oboshi, 2015).384 Map 7.12 illustrates the More recently in 2020, markets in Chad near the border evolution of market status using market data from 2014– with Cameroon and Nigeria were not operating. Food 2020 based on FEWS NET in Van Den Hoek (2017) and Agriculture Organization of the United Nations with additional digitized time periods from FEWS NET (FAO) reports that the conflict situation continue to pose (2019b, 2020).385 Before 2014, nearly all of the conflict challenges for household to access land and agricultural events from Boko Haram took place in Nigeria (Raleigh inputs. et al., 2010; Jedwab et al., forthcoming). Many markets were not operating from 2014 to 2016 despite regained Table 7.4 presents the panel results of operational territory from some recovery efforts in 2015 from West status on the natural logarithm of the mean of monthly African troops. Physical damage also took place to market night time lights during the season of the year. The infrastructure, for example, over 650 shops were reported baseline estimation of equation (6) of the operational as damaged in Damaturu, Yobe, Nigeria (Mercy Corps market status compared to the reference closed market et al., 2017). In addition to the indirect and direct does have a significant positive effect on an increase in impacts of Boko Haram, the Nigerian government made night time lights for both normal and below normal 384 ACLED database has 23 events with "market" in the notes between 2012 and 2013. 385 The first available year is 2014 along with updates at irregular intervals. 7.4 Results 281 Lake Chad Regional Economic Memorandum  |  Development for Peace  his panel set of maps shows the evolution of market status in and near Northeast Nigeria with a Map 7.12: T selection for each year from 2014 to present with the month that the report was published Source : Van Den Hoek (2017); FEWS NET (2019b, 2020) and author’s calculations.  stimates of the operational status of local markets on night time lights Table 7.4: E (1) (2) (3) (4) 0.0122** 0.00699 0.0117** 0.00670 Market : belowt (0.00484) (0.00487) (0.00483) (0.00472) 0.0182** 0.0155** 0.0171** 0.0147* Market : normalt (0.00799) (0.00727) (0.00825) (0.00757) 0.00784* 0.00781* Ln dist. to conflict eventt–3 (0.00418) (0.00451) 0.170*** 0.195*** 0.176*** 0.202*** Mean NDVIt (0.0308) (0.0331) (0.0318) (0.0332) -0.531*** -0.677*** -0.532*** -0.676*** Precipitationt (0.0870) (0.107) (0.0911) (0.111) 0.662 1.224* 0.619 1.149 (Mean precipitationt)2 (0.643) (0.673) (0.674) (0.713) Country x Year dummies Y Y Y Y Observations 1,840 1,533 1,840 1,533 R-Squared 0.189 0.180 0.189 0.181  tandard errors in parentheses; * p<0.10, ** p<0.05, *** p<0.010 S Notes: This table presents estimates of OLS regressions (column 1-2) and FE (column 3-4) regressions of the natural logarithm of night time lights at time t (a season in a year) on the operational status of the local market Market: Normal and Market : below with the reference group defined as closed during the period between 2015 and 2020. The controls included in the regression include: greenness as measured by the mean Normalized Difference Vegetation Index Mean ndvi, precipitation Mean precipitation and its square Mean precipitation2 and country × year dummies. Constants are not shown. 282 7.4 Results Technical Paper 6. Building Rural Development in the Lake Chad Region market status across the OLS (Columns 1–2) and FE specifications (Columns 3–4). The normal market status has a higher coefficient than below normal market status, which is inline with expectations. These results show that a normal operation status is associated with a 1.8 percent higher night time lights compared to the reference closed status. The natural logarithm to the nearest conflict event in the same season of the previous year is positive, whereby market locations farther from the conflict have on average higher night time lights. I find similar results for a one year lagged market status (results not shown). A report by Mercy Corps et al. (2017) stated that destroyed market outlets can typically take 9 to 12 months to reopen. Furthermore, findings from the report include 80 percent of interviewed farmers responded that their preferred or most frequented market closed during the insurgency where women and IDP and returnee farmers experienced a slightly higher incidence of market closures compared to the overall average. At the time of writing, the number of conflict events nearby Lake Chad continues at high levels and limits economic opportunities of displaced and conflict- affected households to earn income and now typically include firewood sales, petty trade, and construction labor (FEWS NET, 2021). 7.4 Results 283 Lake Chad Regional Economic Memorandum  |  Development for Peace 7.5 Conclusion Agriculture is important for the economies of the countries in the Lake Chad region. Farming, herding and fishing provide essential economic activity for many households. Using over three decades of remotely sensed and geospatial panel data to gain insight on agricultural activities, these results provide evidence that an increase in market access is associated with an increase in cultivated land and local agricultural economic activity. Given the modest increase in length of paved road during this period, I find the increase in market access is mainly driven by the growth in population rather than an improvement in roads, which is suggestive that growth in cultivated land is responsive to local demand similar to the findings in Berg et al. (2018). The findings of heterogeneous effects that an increase in market access in areas of shrinking cropland will further reduce cropland area is inline with Berg et al. (2018). Similarly, I find a positive association of market access with agricultural GDP using newly available local estimates. Although more land is under cultivation, the satellite derived measures of rainfed and irrigated cropland show little gains in irrigated land since 1992. It remains an important question to investigate for further examination whether or not gains in yield have corresponded commensurately with the increase in cultivated land. Even so, conflict can attenuate gains with negative impacts whereby the proximity of conflict events in the previous year lessens cropland expansion over the entire region and lessens night time lights in local markets. I find that the normal and below normal operational status of markets is associated with higher night time lights compared to closed markets. 284 7.5 Conclusion Technical Paper 6. Building Rural Development in the Lake Chad Region References Adebisi, SA, OO Azeez, and R Oyedeji, “Appraising the Effect of Boko Haram Insurgency on the Agricultural Sector of Nigerian Business Environment,” Journal of Law and Governance, 2016, 11 (1). 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Trade Patterns and Trade Networks in the Lake Chad Region 8.1 Introduction The Lake Chad Region (LCR) is an economically taken by the government have severely affected interdependent area that encompasses parts of economic activity and cross-border trade in the LCR. Cameroon (Extrême-Nord), Chad (Chari Baguirmi, Official border crossings have been closed, the movement Hadjer Lamis, Kenam, and Lac), Niger (Diffa and of people has been limited, and the supply of agricultural Zinder), and Nigeria (Adamawa, Borno, and Yobe). inputs, such as N fertilizer and fuel, has been restricted. The region is characterized by strong historical, ethnic, These impediments and the insecurity of traditional cultural, and political ties, as well as commercial linkages trade corridors have triggered a shift toward alternative, that extend across its porous borders. Indeed, many if not longer trade routes, thereby increasing transaction costs. most of the cross-border exchanges are not recorded in Yet despite the insecurity-related challenges, cross- official import and export statistics. border trade continues at a reduced level through formal and informal channels with crops and livestock from Informal trade is widespread throughout Africa Cameroon, Chad, and Niger being supplied to markets (Bouet, Pace, and Glauber 2018; World Bank 2020), in Nigeria in exchange for cereals and semifinished or particularly if formal state institutions are under finished merchandise from Nigeria. stress. Traders try to avoid import or export declarations as well as border taxes, and customs and other border There is a risk that a vicious cycle will develop around agencies often tolerate the cross-border trade of small trade and conflict in the LCR. Conflict and insecurity consignments without the need to comply with formal reduce trade, with adverse consequences for economic procedures. This does not necessarily mean that these growth and household incomes. Increased poverty, in trade flows go untaxed, though. Border officials might turn, incites discontent and the willingness to join rebel levy fees that do not have a legal basis, and state or local groups, which further fuels conflict. Breaking this cycle authorities often ask for informal payments at roadblocks requires that the authorities encourage and support or in marketplaces. productive activities so that the population has prospects of an improving economic situation and, thus, a stake in The LCR is far from a seaport and, hence, heavily a peaceful future. landlocked. This condition means that the cost of connecting to international markets is high. As a result, The following analysis describes and assesses the trade consumers in the LCR pay a high price for imports from patterns and trade networks in the LCR on the basis global markets, whereas producers in the region get a low of available information from national authorities, price for their exports to international clients. The region international organizations, and academic observers. faces other challenges that stress its production base and The focus is thereby on comparisons between the current depress economic development. These challenges include situation, which is marked by the Boko Haram insurgency erratic weather patterns with frequent periods of drought, and countermeasures taken by the authorities, with the as well as environmental degradation of the lake. The most “normal,” pre–Boko Haram period. The paper aims to important threat to the well-being and the livelihood of highlight the effect of the conflict situation on economic the population in recent years has been the deteriorating activity and cross-border trade and thereby help identify security situation, though. strategies that can be used to improve the livelihood of the LCR population. Unfortunately, quantitative information Conflict and violence related to the rise of the Boko on economic activity and developments in trade flows in Haram movement and counterinsurgency measures the region is virtually absent, so the discussion has often 8.1 Introduction 291 Lake Chad Regional Economic Memorandum  |  Development for Peace to fall back to estimates or rely on anecdotal evidence. and CEMAC are not fully aligned, the aforementioned These data should be interpreted with care. provisions could be applied on a reciprocal basis. Given the preponderance of informal cross-border 8.1.1 Trade policies and institutions transactions in the LCR, official import and export procedures seem to be handled flexibly. A recent World The Lake Chad region extends across four countries Bank study reports that at the Figuil border crossing that use different currencies for trade transactions. between Cameroon and Chad, tariff levels are applied Nigeria uses the naira, and Cameroon, Chad, and differently depending on the officials in charge, the truck Niger use the franc. In practice, these different means of exchange do not pose a major obstacle to cross-border  verage MFN Applied Duties by Product Table 8.1: A Groups, 2019 trade, though, as traders in the LCR are used to operating in different currencies in parallel and will often accept Cameroon Niger Nigeria payment in a currency other than their own. Animal products 21.8 24.5 24.5 Dairy products 24.8 17.2 17.2 Another institutional difference is that the four Fruits, vegetables, 27.0 17.8 17.8 countries are members of different regional trading plants blocs. Cameroon and Chad are members of the Coffee, tea 29.9 18.5 18.5 Economic and Monetary Community of Central Africa Cereals and 21.4 13.6 13.6 (CEMAC) and the Economic Community of Central preparations African States (CEEAC), whereas Niger and Nigeria are Oilseeds, fats, and 19.8 11.1 11.1 oils part of the Economic Community of West African States Sugars and (ECOWAS). Whereas trade policies and procedures are 20.6 12.6 12.6 confectionery to a large extent harmonized within the regional trade Beverages and agreements (RTAs), this is not the case across RTAs. 27.3 17.4 17.4 tobacco For example, the import tariffs applied by Cameroon Cotton 10.0 5.0 5.0 (CEMAC) are generally higher than those charged on Other agricultural 16.4 9.6 9.6 imports into Niger and Nigeria (Table 8.1). The fact that products different trading blocs meet in the LCR makes formal Fish and fish 25.7 16.0 16.0 trade integration between the neighbors more difficult, as products other countries in the respective blocs would have to agree Minerals and metals 17.1 11.6 11.6 to any trade policy changes. That said, all four countries Petroleum 9.6 7.7 7.7 are signatories of the African Continental Free Trade Area Chemicals 11.4 7.2 7.2 (AfCFTA), which promises to reduce the remaining tariff Wood, paper 20.5 11.2 11.2 and nontariff barriers to intra-African trade and harmonize Textiles 19.7 16.1 16.1 trade procedures over time. To advance this longer- Clothing 30.0 20.0 20.0 term goal, members of ECOWAS and CEMAC could Leather, footwear 20.9 12.3 12.3 discuss and implement trade facilitation and integration Nonelectrical 12.1 6.8 6.8 measures in the region, which might, for example, lead machinery to the adoption of provisions similar to the ECOWAS Electrical machinery 17.2 11.2 11.2 Trade Liberalization Scheme (ETLS). The ETLS involves Transport 16.0 8.3 8.3 visa-free movement of persons and an exemption for equipment agricultural and livestock products as well as handicrafts Manufactures, n.e.s. 22.1 14.2 14.2 Source: WTO database on Tariff Profiles, 2019. from the requirement to provide a certificate of origin. Note: No data are available for Chad, but rates should be identical to Cameroon/CEMAC. CEMAC = Economic and Monetary Community of Central Africa; MFN = Most Favored Nation; As long as the tariff and nontariff measures of ECOWAS n.e.s. = not elsewhere specified. 292 8.1 Introduction Technical Paper 7. Trade Patterns and Trade Networks in the Lake Chad Region size and load, or the time of day (World Bank, 2018a). adjacent to the road, as it provides them with an Also, guidance notes from the customs authority leave opportunity to supply goods and services to transport substantial room for interpretation and, hence, digression operators. The performance of this corridor is, thus, by officials, which can facilitate trade but can also enable important for international trade and the prosperity of demands for informal payments. the LCR and also plays a key role for political, social, and economic integration in the region. According to Cantens and Raballand (2017), this flexibility is typical for fragile borderlands. Informal Almost 80 percent of Chad’s imports enter the agreements with headquarters provide leeway for local country through the Douala-Ndjamena corridor. The customs officers to adjust the fiscal burden on traders to deteriorating security situation and attacks by Boko Haram the prevailing circumstances. Importers meet regularly on the northern segment of the corridor have, therefore, with customs officials to negotiate and agree on an been a very serious concern for transport operators, who acceptable tariff and tax burden. These arrangements have explored the use of alternative transport routes to make it possible to reduce clandestine border crossings Ndjamena. In particular, a passage that avoids the Far and the associated risks of detection by border patrols North of Cameroon and runs on Chadian territory has or encounters with rebel fighters, while providing state gained interest and traffic, and the Chadian authorities authorities with a certain amount of tax revenues. and their developing partners are considering upgrading and developing the track (World Bank 2018b). Instead of going from Ngaoundere via Garoua and Maroua 8.1.2 International connectivity to Ndjamena, the alternative route would run from Ngaoundere east to Koutéré and then continue north to The Lake Chad region is heavily landlocked. The two Moundou and Ndjamena (Map 8.1). Parts of the road main consumption centers in the region, Maiduguri and still need to be reconstructed or rehabilitated to make Ndjamena, are located more than 1,300 kilometers (km) this alternative branch capable of handling a substantial from the nearest gateway seaport. The trade corridor from increase in traffic, but corresponding preparation and Port Harcourt to Maiduguri is 1,370 km long; the one work are in progress. from Lagos to Maiduguri, 1,530 km; and the one from Douala to Ndjamena, 1,800 km. For comparison, in West The new eastern branch of the Douala-Ndjamena Africa, the distance from Abidjan to Bamako amounts to corridor would provide transporters with an “only” 1,115 km, and in East Africa, the trade corridor alternative, more secure route to ship their goods from Mombasa to Kampala is “merely” 1,165 km long. to Ndjamena and thus mitigate the risk of Chad The remoteness of the LCR means that trade transaction being cut off from international markets by Boko costs are high and thus imported goods from Europe, Haram attacks in the Far North of Cameroon. On Asia, and the Americas will be relatively expensive in the other hand, the rerouting would drain traffic from local markets, while goods that are destined for export to the Ngaoundere-Garaoua-Maroua branch and, hence, global customers will fetch a relatively low price. deprive the population along the corridor of business opportunities. Moreover, there is significant risk of a The Douala-Ndjamena regional rail/road corridor hysteresis effect. Even once Boko Haram is defeated passes through the Far North region of Cameroon and and the Far North of Cameroon is safe again, it seems plays a critical role in linking secondary population unlikely that all the previous traffic would return to the centers, such as Garoua, Maroua, and Kousséri, to Ngaoundere-Garaoua-Maroua branch. The emergency- the capital cities Ndjamena and Yaounde, as well as inspired development of the Ngaoundere-Koutéré- to international markets via Douala. Strong transport Moundou branch could thus lead to further economic activity along the corridor also benefits the communities depression and isolation of the LCR in the longer term. 8.1 Introduction 293 Lake Chad Regional Economic Memorandum  |  Development for Peace Map 8.1: Alternative Routing of the Douala-Ndjamena Corridor Source: World Bank. Note: AFD/EIB/EC = African Development Bank, European Investment Bank and European Commission. 294 8.1 Introduction Technical Paper 7. Trade Patterns and Trade Networks in the Lake Chad Region 8.2 Violent conflict and international trade The Boko Haram insurgency that started in 2009 substantial damage might be inflicted on the economy. has severely affected economic activity in the LCR. Indeed, the containment measures might turn out to be Originating in northeast Nigeria, the conflict has spread counterproductive in the longer run if they lead to an across borders into Niger, Chad, and Cameroon. Boko impoverished population sympathizing with the rebels, Haram has repeatedly launched deadly attacks, including supporting them, and strengthening their ranks with new on economic targets such as commercial roads and recruits. markets, and has generally created an atmosphere of fear and insecurity. Key livelihood activities, such as fishing and harvesting cash crops, have been disrupted or 8.2.1 Border closures abandoned because of fear of reprisals from Boko Haram or the state’s response to the terrorist group. More than At the beginning of 2012, Nigeria closed its 2.6 million people within the region have been displaced international borders in the northeast part of the because of the hostilities. country to limit the movement of Boko Haram fighters, disrupt their supplies, and inhibit their ability to levy Conflict creates humanitarian tragedy and misery, informal taxes on traders. As the violence subsequently as well as representing an major impediment to intensified and spread to neighboring countries in development. Violence and insecurity have been shown the LCR, Cameroon, Chad, and Niger also imposed to disrupt and slow down economic growth (Blomberg stricter border controls and closures. The severity of the and Hess 2002) and can lead to affected countries falling situation has been further compounded since 2020 by into a so-called conflict trap if the hostilities are ongoing the COVID-19 pandemic, which led to the imposition or repeated (Collier et al. 2003). Trade itself can be either of additional cross-border travel restrictions and bans. a driver of conflict, by providing rebels with supplies from neighboring countries as well as a potential stream Data from the International Organization for of income from informal taxation, or a force of stability, Migration (Map 8.2) show that as of March 2021, by generating employment and prosperity that would be many border crossings in the northeast of Nigeria put at risk by disruptive violence or fundamental changes remain closed (red squares), w  hile almost all other in governance.386 border posts in the LCR are open only for commercial traffic (yellow squares). Very few crossings are described The response by the authorities to rebel or terrorist as open for entry and exit (green squares). violence can also cause trade and economic disruption. Measures such as border closures; restrictions on the Border closures have a severe impact on the local production, use, and sales of certain products; or curfews populations. They imply a drastic reduction in demand and other constraints to people movement can have a for transport and other trade-related services, which often profound effect on economic activity. Such actions might provide employment for a sizable share of the men and be necessary as emergency responses to rein in and defeat women of the border communities. the uprising, but if they stay in place for a long time, 386 In countries with point-sourced export commodities, such as oil or gemstones, there is also the risk that the concentrated export revenues will provide a trigger for the government and rebels to fight over control of the production locations (Calli 2015). 8.2 Violent Conflict and International Trade 295 Lake Chad Regional Economic Memorandum  |  Development for Peace Map 8.2: Border Status in the Lake Chad Region as of March 2021 Source: International Organization for Migration database, March 2021. 296 8.2 Violent Conflict and International Trade Technical Paper 7. Trade Patterns and Trade Networks in the Lake Chad Region Border closures also depress trade volumes and force 8.2.2 Transport impediments traders to make costly detours. This means longer transport times, more fuel and vehicle maintenance Trade in the LCR is slowed down and taxed by expenses, and higher payments to clear roadblocks and formal or informal checkpoints and roadblocks along checkpoints on the longer route. In some cases, there are transport routes. These controls by the police and also higher trade taxes involved. For example, the closure military are intended to impede the movement of Boko of borders in northeastern Nigeria has shifted trade flows Haram fighters and their supplies. In addition, bandits from Lagos and other Nigerian ports that are destined and terrorists operate their own informal checkpoints for Chad to pass through Niger. Nigerien customs has to extract payments from traders and travelers. A survey collected new transit fees on these trade flows to Chad, of 305 transporters in the LCR undertaken on behalf and goods have subsequently also been taxed by Chadian of the World Food Programme in 2016 found that customs. In 2016, Niger and Chad signed an agreement supply routes for cereals in Borno State are subject to to avoid this double taxation (Cantens and Raballand a particularly high number of checkpoints (Table 8.2), 2017). reflecting the intensity of Boko Haram activity and corresponding countermeasures in this region. Similarly, Yet despite the widespread border closures, interviews the total amount of payments demanded is very high in with local traders in June 2019 suggest that it is still Borno State and also in some other regions, such as Diffa possible to traverse into the neighboring country at in Niger. supervised border crossings if “facilitation payments” are made. An individual would have to pay US$12.50– The transporter survey also asked the respondents to 14.00 in bribes to cross from Cameroon into Nigeria identify the main constraints to their trading activity. (Sagagi and Thorburn 2019). For trucks, the unofficial Insecurity and poor road infrastructure were seen as the payments were reported to be at least 20 times higher. main impediments to trade and transport (Figure 8.1). In Hence, it is still possible—but expensive—to cross at the Chadian and Nigerian parts of the LCR, insecurity was closed border stations in the LCR. mentioned more than twice as often as infrastructure as the most serious concern, while in Cameroon and Niger, the poor state of the road network topped complaints about the lack of security. Figure 8.1: Principal Constraints Faced by Transporters in the LCR percent 60– 50– 40– 30– 20– 10– 0– Insecurity, Poor Availability Not enough Not enough Lack Family or banditry, road and price return transport of domestic harassment infrastructure of fuel cargo demand credit tasks J Cameroon J Chad J Niger J Nigeria Source: Brunelin and Renk 2016. Note: LCR = Lake Chad region. 8.2 Violent Conflict and International Trade 297 Lake Chad Regional Economic Memorandum  |  Development for Peace Table 8.2: Transport Impediments on Cereal Supply Routes Cameroon Chad Niger Nigeria Extrême- Hadjer Lac Diffa Adamawa Borno Yobe Nord Lamis Average distance (km) to main 93 50 178 109 34 249 92 cereal market supply Number of formal checkpoints 2 3 8 5 2 16 3 Number of informal checkpoints 5 1 2 2 1 8 3 Total number of checkpoints per 7.5 8.0 5.6 6.4 8.8 9.6 6.5 100 km Amount of taxes paid by pickup 1 11 11 40 1 3 2 driver (US$) Amount of taxes paid by truck 73 N/A 19 76 1 127 12 driver (US$) Source: Brunelin and Renk 2016. Note: km = kilometers. 8.2.3 Restrictions on fertilizer use and must be treated with particular chemicals, notably nitric acid, to produce an explosive. This transformation The authorities in the Lake Chad basin have into explosive materials requires advanced education in implemented strict limits on the use and trade of chemistry and specialized laboratory equipment, which nitrogen fertilizer (N fertilizer) because of fear that it might be difficult for a terrorist group in a field camp could be used by Boko Haram for bomb-making.387 In to procure and operate. Some observers have therefore Nigeria, imports of nitrogen fertilizers have been limited argued that it would be more effective and less disruptive to a positive list of “safe” products, and a comprehensive for farming if the authorities were to strictly control the tracing protocol has been put in place to govern the import and handling of nitric acid instead of restricting import, manufacture, distribution, and handling of a broad range of fertilizers that are by themselves not N fertilizer.388 Similarly, in Niger, farmers in the Diffa dangerous (Argus Consulting Services 2016). region have had to apply for licenses to buy nitrogenous fertilizer, and imports from Nigeria have been prohibited. These restrictions have resulted in higher fertilizer prices 8.2.4 Restrictions on access to farming and reduced application rates, with adverse consequences and fishing locations for crop yields. The presence of Boko Haram in certain zones and the Nitrogen fertilizer can and has been used by terrorist response by the authorities to militarize large areas groups to produce improvised explosive devices that has cut off some farmers and fishers from their land were later used in violent attacks. Some fertilizers, such or fishing grounds. Farmers in these areas have been as ammonium nitrate, can be used as explosives in their reluctant or unable to work their land because of fear of own right and are, therefore, on the list of banned imports encounters with Boko Haram or fear of being taken by in Nigeria. Others, such as urea, are chemically stable the military to fight Boko Haram. In addition, restrictions 387 Improvised explosive devices pose a significant threat. Bombs and land mines have been injuring or killing people in the LCR and restricting people’s access to agricultural land. The Mines Advisory Group reported that between January 2016 and March 2018, 439 casualties resulted from land mines and unexploded bombs in northeastern Nigeria. See Mines Advisory Group website, https://www.maginternational.org/what-we-do/where-we-work/nigeria/. 388 See End User Certificate Portal, “Guideline for Procuring Fertilizer Chemicals,” https://euc.nsa.gov.ng/fertilizers. 298 8.2 Violent Conflict and International Trade Technical Paper 7. Trade Patterns and Trade Networks in the Lake Chad Region on certain transport vehicles (for example, motorbikes in Niger) have impeded access to more remote farming locations. As a result, crop production has suffered and output of cash crops for export is down (see, for example, section 3.4 of this paper, “Dried red pepper exports from Diffa”). Similarly, bans on fishing boats, fishing, and fish selling have had a devastating effect on the fishing communities around the lake and on cross-border fish trade. The bans are intended to deprive Boko Haram of escape and supply routes across the lake and to cut the income stream that the terrorists supposedly derive from the fish trade. For the fishers, the ban has meant that they and their families had to look for alternative livelihoods or continue to fish clandestinely and thereby expose themselves to significant security risk or severe sanctions (see, for example, section 3.3, “Smoked fish exports from Diffa”). 8.2 Violent Conflict and International Trade 299 Lake Chad Regional Economic Memorandum  |  Development for Peace 8.3 Trade relationships The Lake Chad region has a history of lively cross- 8.3.1 Intraregional cereals trade border exchanges. Products from agricultural surplus areas supply towns and cities, while manufactured goods Nigeria is the origin of most grain supplies in the LCR. are shipped from the south of Nigeria or Cameroon to the Cereals are grown in rural areas throughout Adamawa, agglomerations of Maiduguri and Ndjamena, from which Borno, and Yobe States. In addition, substantial supplies they are distributed to the surrounding areas. Large urban come from Kano or even further afar. These supply centers and border towns feature important permanent streams continue, despite the Boko Haram insurgency, markets, as well as warehouses. The latter make it possible but local production has been adversely affected by to store surplus merchandise and later deliver it to other reduced N fertilizer availability and higher fertilizer localities. Smaller towns typically hold weekly markets. prices, restricted access to land in militarized zones, and direct regulation of selected agricultural activities. For The transport infrastructure to the south of Lake Chad example, the cultivation of “tall” crops, such as maize or is better developed than that on the lake’s northern sorghum, was banned because it was seen as decreasing shore ( Map 8.2). In fact, some cross-border trade of fish military visibility and potentially creating hiding grounds and other products used to occur across the lake using for the insurgents. pirogues, as this direct link is quicker and cheaper than road transport around the northern shore.  armer-Reported Typical Harvests before Table 8.3: F and during Conflict in Borno State Mutual trust is of fundamental importance in trade Typical Typical Farmer Crop harvest harvest Percent relationships, and many trader networks in the LCR ID planted (2004–08), (2009–13), change are based on regional or ethnic affiliations. Many of tons/ha tons/ha these networks among Hausa, Kanouri, Arab, Peul, or 1 1.0 0.3 -70 Cowpea Fezzanais extend across borders and facilitate import 2 2.0 0.5 -75 and export transactions. Research using high-frequency 1 2.8 0.4 -86 price data found that informal networks along the 2 Maize 4.8 1.0 -80 border between Niger and Nigeria are highly effective 3 15.0 2.2 -85 in integrating markets (Aker et al. 2014). Common 1 0.8 0.0 -100 ethnicity was reported to result in lower price dispersion Sorghum 4 20.0 6.4 -68 across countries than across regions of differing ethnic 3 Rice 3.0 1.5 -50 composition within countries. 4 Millet 5.0 1.1 -78 Source: Kimenyi et al. 2014. The following sections illustrate the cross-border trade Note: ha = hectare. relationships for several commodities in more detail. Some of the value chains are important across the entire Anecdotal information from interviews with four region (cereals, fish), while others illustrate sectors that farmers in Borno State suggests a major slump are of significance in individual countries or regions (red in agricultural output. Higher prices and reduced pepper in Diffa, Niger; onions in northern Cameroon; availability of farming inputs has depressed yields by cattle in Chad). more than 50 percent (Table 8.3). The magnitude of these changes is confirmed in a report by the Center for Strategic and International Studies’ Global Food Security 300 8.3 Trade Relationships Technical Paper 7. Trade Patterns and Trade Networks in the Lake Chad Region Program, which estimated changes in sorghum, rice, 8.3.2 Traditional trade flows for fish and millet production in Borno State between 2010 and 2015 to amount to, respectively, 82 percent, 67 percent, Two types of fish trade exist around and across Lake and 55 percent (CSIS 2020). These findings attest to Chad. The first type is the supply of fresh or processed the damage that the Boko Haram violence and the fish by fishers or merchants to markets in nearby villages countermeasures taken by the authorities have inflicted and towns for consumption in proximity to the fishing on the agricultural economy. grounds. The second type is the long-distance trade of dried or smoked fish. This second type of trade involves The Diffa region in Niger traditionally imports specialized traders and large transport vehicles, and it substantial amounts of cereals from Nigeria. Before connects to urban centers within countries or across the Boko Haram attacks, the axis Damasack–Diffa borders. In particular, large quantities of fish have was the major trade corridor. However, this route is no been shipped through Baga and Maiduguri to major longer used because it is no longer safe, and supplies have agglomerations in southern Nigeria (Map 8.3), such as instead been sourced along the Geidem-Gashua corridor. Abuja, Onitsha, Enugu, Lagos, and Ibadan. It should be According to reports by the World Food Programme, noted that most of these exports are informal and not these places of origin are providing almost 70 percent of recorded in official trade statistics. the traditional grains, maize, and cowpeas (niebe) found in markets in Diffa (Brunelin and Renk 2016).  istorical Trade Flows for Fish in Lake Chad Map 8.3: H Region Similarly, the long land border between Nigeria and Cameroon used to see lively cross-border trade, mainly of an informal nature. Estimates put the value of exports from Cameroon to Nigeria of paddy rice, other agricultural products, and soap at US$64 million, while Nigeria exported US$176 million worth of cosmetics, plastics, footwear, and other general merchandise to Cameroon (World Bank 2013). A number of major trade routes link the two countries, several of which connect northeastern Nigeria to the Extreme North Region of Cameroon. These include the corridors from Maiduguri to Kousséri, Maiduguri to Maroua, Banki to Mora, Mubi to Guider, and Jimeta/Yola to Garoua. However, the northernmost of these corridors have become subject Source: Neiland and Béné 2004. to important security risks and are therefore avoided by transporters in favor of the more secure corridors from In Cameroon, a large share of fish production used Mubi to Guider, Jimeta/Yola to Garoua and routes to be exported to Nigeria. The main trade routes run running further south (Sagagi and Thorburn 2019). from the markets of Fotokol and Blangoua to the market centers at Baga on the western shore of Lake Chad in  n Chad, most cereal supplies for the food deficit region I Nigeria or directly to Maiduguri. of Hadjer Lamis originate in the Lac region or other domestic surplus regions. In Chad, major export trade used to occur across the lake. Fish caught in Chadian waters were transported and sold to the island markets of Kinasserom and Darrack, 8.3 Trade Relationships 301 Lake Chad Regional Economic Memorandum  |  Development for Peace from which they would continue their journey to Baga smoking process and local sales. Because of the difficulties in Nigeria. of stocking and transporting fresh fish in the climate of the Sahel, not much fish was sold fresh. Instead, the catch In Niger, exports of fish caught in Lake Chad or its was most often immediately smoked in traditional ovens tributary rivers also run through Baga and Maiduguri to make it storable. It was then packaged in 50 kilogram in Nigeria. boxes for marketing. The entrenchment of Boko Haram on the shores of Lake A small share of the fish caught used to be sold in local Chad, large-scale attacks such as the Baga massacre of markets for consumption by the local population, January 2015,  and containment and reprisal actions by but 80–90 percent of all fish caught was exported to the national and joint military forces have fundamentally consumption centers in Nigeria, notably Maiduguri. disrupted the aforementioned traditional trade routes for For this cross-border trade, fishers would work through fish. As a result, cross-border trade volumes have been specialized intermediaries. Wholesalers would send reduced, and longer, more costly trade corridors are being collection agents into the villages to buy up the fish and used. transport it to local market centers for consolidation into larger lots and subsequent truck-based export to Nigeria (Figure 8.2). In 2014, the value of fish production in 8.3.3 Smoked fish exports from Diffa the Diffa region was assessed as CFAF 20 billion or US$34.5 million (Sissons and Lappartient 2016), so if Exports of smoked fish from the Diffa region in Niger an estimated 85 percent of this production was exported, to Nigeria used to be of substantial importance. then the export value amounted to about CFAF 17 billion Estimates suggest that until 2014, about 14 percent of or US$29.3 million. the population on the shores of Lake Chad and alongside the Koumadougou River that separates Niger and Nigeria Before the imposition of the state of emergency in derived their livelihood from fishing, fish smoking, and February 2015, Boko Haram already had an adverse fish trade (Sissons and Lappartient 2016). The imposition effect on the smoked fish trade in the LCR. The of the state of emergency in the Diffa region in February terrorist group occasionally attacked transports on their 2015 and the subsequent surge in Boko Haram attacks way to Maiduguri, thereby increasing the risks of such have fundamentally disrupted fishing activity and stopped transports and augmenting transport costs. Moreover, smoked fish exports altogether. Boko Haram forced fishers on the lake shore to make informal payments, thus reducing the profitability of Lake Chad and the Koumadougou River are fertile their activity. Yet despite these criminal activities, fish inland fishing grounds. In the Diffa region, about production and trade continued. 15,000 fishers and their families used to make a living from fishing. It is notable that a large number of fishers In contrast, the declaration of the state of emergency were foreign citizens. The local chamber of agriculture for the Diffa region on February 10, 2015, quickly estimated that only 40 percent of fishers in 2010 were brought fishing and fish trade to a halt. It entailed a from Niger, while the remaining 60 percent were from curfew, a prohibition on motorbike transport, a stronger Cameroon, Chad, Nigeria, and other countries (Chambre military presence, and more frequent violent attacks from Régionale d’Agriculture de Diffa 2010a). Boko Haram, which was reinforcing its presence in the lake area. Moreover, fishing and fish selling were banned, Smoked fish production typically involved the entire as these activities were seen as a source of revenue for Boko family. The men would go out on the lake or river to Haram, and the lakeside population was evacuated inland catch the fish, and the women and children handled the 302 8.3 Trade Relationships Technical Paper 7. Trade Patterns and Trade Networks in the Lake Chad Region Figure 8.2: The Smoked Fish Market Chain in the Diffa Region Traditional DAN BANDA fishing (wholesalers) Large Export to households Collectors Nigerien/ transporters Nigeria Nigerian Sale Price 140,000 X0F Sale Price Market Small 90,000 X0F intermediaries traders Household- level consumers Sale Price 110,000 X0F Source: Sissons and Lappartient 2016. Note: XOF = West African CFA franc. or fled from their villages and camps to avoid encounters of smoked fish exports after the fishing ban was lifted is with Boko Haram. The border to Nigeria was closed. slow. The conflict with Boko Haram has destroyed a lot of physical, institutional, and social capital, and restoration The authorities have actively enforced the restrictions. will take time. In particular, the military has arrested fish transporters, seized fish transports, and subsequently burned the cargo and vehicles. For example, the regional authorities 8.3.4 Dried red pepper exports from Diffa destroyed 2.7 tons of smoked fish in April 2016 (van Lookeren Campagne and Begum 2017). Red pepper is an important cash crop in the Diffa region. Oxfam estimates that 80 percent of rural As all fishing-related activities became illegal, most households have been involved with pepper cultivation, actors in the value chain had to look for alternative processing, and sales (Sissons and Lappartient 2016). sources of income, such as petty trade, charcoal Annual production used to amount to 10,000 tons, production, or firewood and straw collection. Few with a market value of CFAF 8 billion or US$13 million individuals take the risk of fishing illicitly, and those who (Chambre Régionale d’Agriculture de Diffa 2010a). do so limit themselves to catching fish at night without About 80 percent of total production, with a value of boats for sale to local households. Smoked fish exports to US$10.4 million, was exported to Nigeria via Damasak Nigeria became marginal. Sissons and Lappartient (2016) and Maiduguri. The imposition of the state of emergency report that the income of the remaining, clandestine in February 2015 led to a significant reduction in dried fishers has dropped by more than 70 percent compared red pepper production and trade, as sales and transport with the revenues they had before the state of emergency. of the crop were initially banned and then (from June 2015) restricted to transactions within Niger only. These In March 2019, the authorities lifted the ban on fishing restrictions were motivated by the presence of Boko and fish trade. Yet as the supply of credit and inputs that Haram along the border between Niger and Nigeria and fishers used to get from their wholesalers disappeared, the fear that the terrorist group used informal taxes on red a lot of the fishing equipment has fallen into disrepair. pepper trade to finance its activities. This deterioration of the production base, together with the impoverishment of the fishing population and Also known as “red gold” because of its high market the disappearance of the network of traders and other value, red pepper used to be grown by 5,000 to 6,000 intermediaries in the value chain, means that the recovery pepper producers in the area that is irrigated by the 8.3 Trade Relationships 303 Lake Chad Regional Economic Memorandum  |  Development for Peace Koumadougou River. At harvest time, the pepper was The local border closure also means that farmers can sun-dried for 15 to 25 days and then packaged in jute no longer purchase fertilizer to nourish their crops bags that typically contain 17 kilograms of product. and fuel to operate their irrigation pumps from across Intermediaries that are operating at the village level on the river in Nigeria. Moreover, domestic purchases in behalf of pepper traders negotiated the prices with farmers Niger of fertilizer and fuel have been restricted for fear and organized the transport to market centers, where the that Boko Haram might use nitrogen fertilizer for bomb shipments were sold locally or consolidated onto large making and use fuel to propel the vehicles and motorbikes trucks for export to Nigeria. Consumers would typically of its fighters. Farmers need a permit to obtain fertilizer buy the product in powdered form to prepare sauces or to and fuel, and allocations are substantially below historical season meat and rice. levels of use, so pepper yields have suffered. The closure of the local border with Nigeria forced Moreover, the militarization of the border zone has traders to ship their product to Nigeria via trade routes meant that many farmers have been unable to access that are substantially longer(Map 8.4). Instead of taking their land. Military forces have established ad hoc camps a direct route of about 125 km from Diffa to Maiduguri, in the pepper production zone, and regular patrols of the traders are now diverting their trip through Geidem and border zone by national and multinational forces limit the Damaturu (430 km) or even pass through Zinder and possibility for farmers to work their fields. In addition, Kano (almost 1,300 km). The longer route exposes them many farmers have fled their villages because they fear to extra security risk for themselves and their cargo and that Boko Haram might attack them. As a result, the significantly augments their transportation costs. cultivated pepper area has dropped markedly. Map 8.4: Red Pepper Trade Routes from Diffa to Maiduguri Source: Sissons and Lappartient 2016. 304 8.3 Trade Relationships Technical Paper 7. Trade Patterns and Trade Networks in the Lake Chad Region The combination of the restraints on sales and trade is the transporters and not the traders who are most of red pepper, the restrictions on fertilizer and fuel seriously affected by and concerned about attacks, theft, use, and the limitations on land access have had a and violence (Brunelin and Renk 2016). profound effect on the pepper sector. Red pepper output in the Diffa region is estimated to be 50 percent  onstraints to Onion Marketing in Borno Figure 8.3: C State lower than before 2015, and farmers’ income from pepper Number of replies in market survey (out of 45) production is as much as 80 percent below the pre- 40– emergency level (Sissons and Lappartient 2016). Also, 35– intermediaries, such as transporters, have been adversely 30– affected by the reduced volumes and increased transaction costs. For example, transporters face a 50 percent drop in 25– their activity volume and income. 20– 15– 10– 8.3.5 Onion exports from Cameroon 5– 0– Onion production is an important branch of Inadequate Inadequate Lack of storage facilities transport facilities capital agriculture in some parts of Cameroon. It is estimated Source: Sulumbe, Shettima, and John 2015. that 85 percent of onion production is concentrated in the North and Far North regions of the country, where it is the most important cash crop (Kamdem, Kamga, and 8.3.6 Cattle exports from Chad Schreinemachers 2017). As a result of cultural norms, onion production is mostly controlled by male farmers Chad is a major exporter of animal products. Because (Kanga et al. 2016). meat requires refrigeration during transport, most trade takes place by transporting live animals. A significant Parts of the local onion production are sold in nearby share of Chad’s exports is thereby destined for Nigeria markets to local consumers, but a significant share and transits through the North or Far North region of is shipped to consumption centers in the south of Cameroon. Major transshipment points in Cameroon are Cameroon or exported to Nigeria and Chad from the cattle markets of Bogo and Adoumri (Engola-Oyep markets such as Kousséri and Amchide. Ndenkah and Herrera 1997). (2013) estimates that total formal and informal exports of onions from Cameroon to Chad amounted to 19,249 There are several marketing pathways  (Map 8.5). One tons, at a value of CFAF 3.4 billion. The main market for circuit crosses the Lake Chad region and supplies the onions on the Nigerian side of the Nigeria–Cameroon Maiduguri market. This export flow is particularly active border is Wulgo in Borno State (Magrin and Ngaressem in the dry season. The so-called northern circuit passes 2014). through Ngueli and also joins Maiduguri. It is active year-round and drains export herds from markets located In a survey of onion traders in Borno State, the lack of in the center and north of Chad. The center circuit passes adequate storage facilities and appropriate transport through Bongor to reach the Banki market via the Bogo facilities were identified as the most important relay market in Cameroon. This pathway brings animals challenges to onion marketing ( Figure 8.3). The lack from the center and the south of Chad. In addition, the of security was not mentioned as a primary problem in southern circuit crosses the area of Pala in the province this survey. However, this absence is consistent with other of Mayo-Kebbi Est and leads to the market of Mubi in survey findings on cereal markets in the LCR, where it 8.3 Trade Relationships 305 Lake Chad Regional Economic Memorandum  |  Development for Peace Nigeria after crossing Cameroon. It is supplied by flows Chad to Nigeria at 520,000 animals in 2000, of which from the southeast of Chad. only about 35 percent were declared and captured in official statistics (Duteurtre and Koussou 2002). More Map 8.5: Circuits of Cattle Exports from Chad recent estimates put the volume of live cattle exports from Chad to Nigeria at 300,000 animals (Koussou and Duteurtre 2013). Although these estimates might need to be treated with care, they suggest a marked slowdown in transit and trade between the pre–Boko Haram period and the period of insurgency. Moreover, the subsequent intensification of the conflict has led to further reductions in trade flows. Data from the customs authority in Yagoua, an important livestock crossing point from Chad into Cameroon and Nigeria, suggests that cattle transit fell from 53,662 animals in 2015 to about 33,000 animals in 2016 and 2017, which corresponds to a reduction by about 39 percent (World Bank 2018a). In addition, the number of cross-border livestock theft incidents in Cameroon has increased on both Source: Duteurtre and Kousso 2002. the Nigerian and Chadian sides, depressing the usual intensity of cross-border transactions. Estimates Live cattle trade is highly organized along ethnic lines. indicate that during 2013–18, Boko Haram stole at least Animals are mainly sold at weekly markets. Transactions 17,000 heads of cattle and thousands of sheep and goats rely on the presence of guarantors (damin), who are in Cameroon, worth around US$6 million (World Bank appointed by the traditional chiefs of different groups of 2018a). The stolen animals were then sold in Nigeria to nomadic herders and are recognized as such by market finance the insurgency. authorities. Their role is to welcome the traders of the ethnic group concerned, to house them, to accompany Moreover, there have been a number of violent attacks their animals to the market, to put them in contact by Boko Haram on livestock markets. Cattle and other with buyers, to certify the origin of the animal, and to livestock sales involve large cash transactions, which guarantee the payment of official taxes. The guarantors makes traders who carry large amounts of currency an only intervene in the trade of their own ethnic group: attractive target for bandits. Fear of theft and violence has Missirie Arabs, Ouled Rached Arabs, or Peuls. The ethnic depressed market activity, in particular for cattle. Markets networks of traders rely primarily on a relationship of for smaller ruminants, such as sheep and goats, have been trust, which does not necessarily involve family ties. more resilient (Kimenyi et al. 2014). A large share of cattle trade is informal. Even if borders are formally closed, herders seem to have little trouble walking their cattle across into their destination country.389 Estimates put the annual cattle exports from 389 A saying among local transporters is “The ox has no border; the border was erected for human beings.” See Canalblog, http://neoindependance.canalblog.com/ archives/2014/11/12/30940857.html. 306 8.3 Trade Relationships Technical Paper 7. Trade Patterns and Trade Networks in the Lake Chad Region 8.4 Market activity and food supplies The preceding discussion has highlighted the adverse 8.4.1 Market activity effect that the deterioration of the security situation has had on cross-border trade and trade transactions The activity in many markets in the LCR remains costs. These higher costs will ultimately have to be borne below the level of the pre–Boko Haram period. Most by consumers in the form of higher prices. Indeed, markets in Nigeria east of Maiduguri faced significant field surveys undertaken in three major markets in disruption or had completely ceased to function as of Maiduguri—Monday market, Gomboru market, and February 2021 (Map 8.6). Also, all markets in the Diffa Baga market—reveal that some food prices have risen region of Niger showed significant disruption or reduced substantially since the start of the Boko Haram uprising activity. (Awodola and Obosh 2015). Vegetables (peppers, tomatoes, Irish potatoes) and livestock products (cattle, Map 8.6 also shows that the disruption of economic goats) are the products that showed the largest price and trade activity is not uniform across the LCR. It is increases in percentage terms (Figure 8.4). the area in Borno State to the east of Maiduguri that faces the most severe economic depression, as does the Diffa ncrease in Food Prices in Maiduguri Figure 8.4: I region in Niger (to a lesser extent). Conversely, the Far Markets, Pre–Boko Haram Uprising to December 2013 North of Cameroon and the Adamawa Region in Nigeria Percent are (again) operating at or near normal level. Pepper Cattle Tomatoes Millet Goat 8.4.2 World Food Programme operations Irish potatoes Maize Water melon The areas within the LCR where the market and trade Fish Wheat activities are most depressed are also the areas where Sweet potatoes the food security situation is the most critical. The Orange Soya beans World Food Programme (WFP) has relief operations in all Onions Red beans four countries of the LCR and has been providing food, White beans Groundnut oil nutrition, and livelihood aid to displaced communities or 0 20 40 60 80 100 120 140 160 180 otherwise severely affected parts of the population. WFP Source: Awodola and Oboshi 2015. tailors its operations to the local requirements and tries to supply relief aid to all areas within LCR that are in need, Similarly, analysis by the World Food Programme except for those zones where the insecurity is too high. For (2016) showed substantial food price inflation due to example, in Borno State in northeastern Nigeria, WFP insecurity and increased transport costs. Staple food has interventions throughout the state, except for a few prices in the Nigeria and Niger parts of the LCR were districts close to Lake Chad (Map 8.7). In October 2020, found to be 50 to 100 percent higher than the previous WFP and other food security sector partners supported five-year average. Moreover, in 2017, prices of staple 3.9 million people with food security interventions in cereals in the northeastern Nigeria were 70–124 percent Borno, Adamawa, and Yobe States, including 1.7 million higher than those in the previous year (George, provided with emergency food assistance and 2.2 million Adelaja,and Weatherspoon, 2019). with support for agricultural livelihoods (WFP 2020). 8.4 Market Activity and Food Supplies 307 Lake Chad Regional Economic Memorandum  |  Development for Peace Map 8.6: Market and Trade Route Activity, February 2021 Source: FEWS NET, February 2021. 308 8.4 Market Activity and Food Supplies Technical Paper 7. Trade Patterns and Trade Networks in the Lake Chad Region Map 8.7: World Food Programme Operational Presence in Northeast Nigeria, January 2021 Source: WFP 2020. Note: GFD = General Food Distribution; WFP = World Food Programme. For its emergency food assistance, WFP uses both assistance might need to be particularly carefully dosed in-kind food and cash-based transfers. The latter are and phased in to avoid strong price hikes that would disbursed as electronic vouchers or mobile money. In adversely affect consumers. 2016, WFP undertook an assessment throughout the LCR to determine the potential for private sector traders to quickly respond to increased demand (Brunelin and Renk 2016). A high-response capacity makes cash transfer programs effective without disrupting local markets to a significant extent. The survey found that in northeastern Nigeria and the Diffa region in Niger, traders estimated to have the capacity to respond quickly to a 100 percent increase in demand. In contrast, in the Far North region of Cameroon and in the Lac region of Chad, almost 40 percent of traders reported that they would not be able to meet a potential increase in demand by 100 percent in less than a week. In these regions, any cash-based transfer 8.4 Market Activity and Food Supplies 309 Lake Chad Regional Economic Memorandum  |  Development for Peace 8.5 Conclusions and recommendations The preceding discussion illustrated the adverse effect of trade flows and transport conditions along key that increased insecurity in the LCR has had on cross- corridors. border trade. Reduced trade flows and higher transaction • Investigate additional means to collect high-frequency costs are translating in higher prices for consumers in economic data on cross-border economic activities— a region that was already one of the poorest in Africa such as price data, surveys of border flows, and so before the Boko Haram conflict, while the region faces forth—in cooperation with other donors and to learn other challenges such as remoteness, environmental from prior experience in the region (for example, the degradation, and climate change. Part of the economic Permanent Interstate Committee for Drought Control damage can be directly connected to terrorist violence, in the Sahel and and Famine Early Warning Systems but another part is related to counteractions by the Network [FEWS NET] surveys). national and regional authorities to contain and eradicate • Promote the digitization of public data and information, Boko Haram. To counter the ongoing threat and such as farmer registries, to gain knowledge of who is respond to the immediate and longer-term needs of the producing and selling which crops. population, regional authorities need to look beyond • Support the collection of information on economic security cooperation and move to more significant civilian activity and trade to provide policy makers with a better components for economic development and regional information base. In addition to the compilation of integration. In this context, policy makers in national and more comprehensive and consistent market price data regional administration and their development partners as is currently available from FEWS NET and WFP, might want to consider the following issues as part of a data on traded quantities in markets and the sources of strategy to improve trade and help restore long-standing supplies could be collected and monitored. economic linkages. 8.5.2 Trade facilitation 8.5.1 Information The following are some short-term measures for Before listing desirable policy direction that Lake mitigating the costs of conflict: Chad countries could investigate, the paucity of reliable and comprehensive information about trade • Consider encouraging trade through trader groups or flows in the area must be underscored. Without good associations and provide military escorts, if necessary, trade data, it is difficult to form a picture of one of the key for convoys along key trade corridors to relaunch cross- drivers of the economy in the region and an economic border trade. dimension that is core to understanding the crisis and its • Collect information on illegal checkpoints and developments. Therefore, a first issue to consider is how other blockages; trade and share this information to improve economic intelligence of cross-border flows. across relevant agencies to improve enforcement and The following are some recommendations: to identify mitigating strategies that improve the performance of regional value chains where possible. • Consider digitizing and using available quantitative • Strengthen the capability of customs agencies to detect and qualitive information from all border agencies illicit trade while facilitating commercial transactions. (customs) in the region to draw a more precise picture Equip customs agencies with more modern equipment and intelligence techniques for improved surveillance 310 8.5 Conclusions and Recommendations Technical Paper 7. Trade Patterns and Trade Networks in the Lake Chad Region and better targeting of risk. Interconnect customs • Simplify measures at the border for small-scale traders agencies regionally to improve exchange of data and and invest in infrastructure tailored to the needs of information. small traders. • Ensure that traditional border agencies (instead of • Improve the performance of long-distance trade security forces) retain in control of border crossings; corridors, notably with respect to trade procedures, clarify the roles of border agencies; and minimize the reduction of harassment, and infrastructure quality. presence of multiple agencies to avoid rent seeking. • Arrange regular meetings between border agencies in neighboring countries to coordinate security issues, 8.5.3 Other policy issues address common challenges, and monitor progress on trade facilitation. The following are some short-term measures for mitigating the impact of conflict: The following are some long-term measures for rebuilding for growth: • Regularly assess the effectiveness and efficiency of economic and trade measures intended to counter • Strengthen and consolidate the provision of border Boko Haram, as these affect the livelihoods of export agency services, such as veterinary inspection services, producers and traders: at key border crossings to provide better service quality Ì Consider ways to allow gradual and safe access to for traders. Use border crossings as a place to build out parts of the lake to renew fishing and fish trading. and restore the provisioning of government services. Ì Reevaluate restrictions on movement, access • As security considerations allow, reconstruct damaged to farmland, and tall crops to balance the need infrastructure and markets that are instrumental for to contain and suppress Boko Haram with the relaunching regional trade. Maximize the returns desirability to restart the local economy. from investments in connective infrastructure (both Ì Critically evaluate and manage the risk that between and within countries) by coordinating with agricultural inputs, such as N fertilizer and fuel, regional partners. pose as potential weapons, with a view of improving • Because the new branch through Chad would likely farmers’ access to these inputs. Examples of possible have adverse effects on the prosperity of the LCR risk management approaches include trusted trader in the longer term, critically assess the effects of the programs that certify the intermediaries who can planned rerouting of the Douala-Ndjamena corridor trade in particular products. and identify mitigating measures where possible. • Provide support for communities that have been • Implement AfCFTA commitments and create a deprived of their traditional export production and cooperation framework to further facilitate trade at trade livelihoods, so that they remain stable and do not borders between ECOWAS and CEMAC members offer recruitment potential for Boko Haram. (for example, by allowing visa-free movement of • Promote the use of solar-powered irrigation pumps to persons and providing an exemption for trade in overcome fuel restrictions and shortages. agricultural and livestock products, as well as for • Advance the application of digital agriculture handicraft, from the requirement to be accompanied innovations, such as mobile money or animal tracing, by a certificate of origin). These measures are already to reduce the risk of theft. part of the ECOWAS Trade Liberalization Scheme and could possibly be applied at ECOWAS–CEMAC borders on a reciprocal basis. 8.5 Conclusions and Recommendations 311 Lake Chad Regional Economic Memorandum  |  Development for Peace The following are some long-term measures for mitigating the impact of conflict: • Provide additional public services close to borders or in cities and markets nearby to build trust in public authority. • Target support for specific value chains to improve key sources of livelihood in the region. One possible way could be to approach this regionally and thus focus on mutually beneficial value chains. 312 8.5 Conclusions and Recommendations Technical Paper 7. Trade Patterns and Trade Networks in the Lake Chad Region References Aker, Jenny C., Michael W. Klein, Stephen A. O’Connell, and Muzhe Yang. 2014. “Borders, Ethnicity and Trade.” Journal of Development Economics 107: 1–16. 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Monitoring Small-Scale Cross-Border Trade in Africa: Issues, Approaches, and Lessons. Washington, DC.: World Bank. WFP (World Food Programme). 2016. “Vulnerability Analysis Mapping Bulletin 5.” Rome. WFP (World Food Programme). 2020. “Nigeria Situation Report #59.” Rome. 314 8.5 Conclusions and Recommendations Ornaments by Maryam Umar Maigida (Nigeria) Le Pecheur de Kotoko (The Fisherman from Kotoko) by Abacar Abali Liman (Cameroon) Sultanate in breakdown by Alichina Allakaye (Niger) The Tears of a Lake by Djitara Tendjibaye (Chad) People forge ideas, people mold dreams, and people create art. To connect local artists to a broader audience, the cover of this report features art from the Lake Chad region.