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Vulnerability to drought and food price shocks : evidence from Ethiopia (English)

Although the measurement and determinants of poverty have been widely studied, vulnerability, or the threat of future poverty, has been more difficult to investigate due to data paucity. This paper combines nationally representative household data with objective drought and price information to quantify the causes of vulnerability to poverty in Ethiopia. Previous estimates have relied on self-reported shocks and variation in outcomes within a survey, which is inadequate for shocks such as weather and prices that vary more across time than space. Historical distributions of climate and price shocks in each district were used to simulate the probable distribution of future consumption for individual households; these were then used to quantify vulnerability to poverty. The analysis shows that many Ethiopians are unable to protect their consumption against lack of rainfall and sudden increases in food prices. A moderate drought causes a 9 percent reduction in consumption for many rural households, and high inflation causes a 14 percent reduction in the consumption of uneducated households in urban areas. Vulnerability of rural households is considerably higher than that of urban households, despite realized poverty rates being fairly similar. This finding reflects that the household survey in 2011 was conducted during a year of good rainfall but rapid food price inflation. The results highlight the need for caution in using a snapshot of poverty to target programs, as underlying rates of vulnerability can be quite different from the poverty rate captured at one point in time. The results also suggest that significant welfare gains can be made from risk management in both rural and urban areas.

Details

  • Author

    Hill,Ruth, Porter,Catherine

  • Document Date

    2016/12/19

  • Document Type

    Policy Research Working Paper

  • Report Number

    WPS7920

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    Ethiopia,

  • Region

    Africa,

  • Disclosure Date

    2016/12/19

  • Disclosure Status

    Disclosed

  • Doc Name

    Vulnerability to drought and food price shocks : evidence from Ethiopia

  • Keywords

    representative household income;drought;Poverty and Equity;consumption;vulnerability to poverty;propensity score matching method;rural area;food price;price shock;crop loss;impact of weather;drought prone area;reduction in consumption;impact of shock;proportion of female;household head;national poverty line;expenditure on food;lack of rainfall;safety net program;impact of rainfall;proportion of male;square poverty gap;world food programme;headcount poverty rate;household survey data;job loss;urban household;education and literacy;Gender and Education;absolute poverty line;estimates of poverty;household dependency ratio;availability of data;household level data;per capita consumption;determinants of poverty;vulnerability to drought;demand for insurance;variability of rainfall;correlates of poverty;probability of occurrence;risk management instrument;consumption of households;food insecure household;emergency food aid;amount of land;distribution of rainfall;global food prices;food price inflation;source of shock;safety net intervention;terms of policy;impact on poverty;impact of climate;distribution of consumption;loss in consumption;depth of poverty;fall in consumption;future consumption;standard error;vulnerability measure;covariate shock;probability distribution;idiosyncratic shock;estimate impact;household consumption;Poverty measures;vulnerability analysis;household characteristic;robustness check;

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Citation

Hill,Ruth Porter,Catherine

Vulnerability to drought and food price shocks : evidence from Ethiopia (English). Policy Research working paper,no. WPS 7920 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/959471482167974723/Vulnerability-to-drought-and-food-price-shocks-evidence-from-Ethiopia