Vulnerability to Drought and Food Price Shocks

Evidence from Ethiopia

Ruth Hill, Catherine Porter

Research output: Working paper

Abstract

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.
Original languageEnglish
Place of PublicationWashington, DC
PublisherWorld Bank
Number of pages28
Publication statusPublished - Dec 2016

Publication series

NamePolicy Reseach Working Paper
PublisherWorld Bank
No.7920

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poverty
vulnerability
drought
food
inflation
urban area
rainfall
household survey
price
household
rural area
weather
consumption
climate
rate

Cite this

Hill, R., & Porter, C. (2016). Vulnerability to Drought and Food Price Shocks: Evidence from Ethiopia. (Policy Reseach Working Paper ; No. 7920). Washington, DC: World Bank.
Hill, Ruth ; Porter, Catherine. / Vulnerability to Drought and Food Price Shocks : Evidence from Ethiopia. Washington, DC : World Bank, 2016. (Policy Reseach Working Paper ; 7920).
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Hill, R & Porter, C 2016 'Vulnerability to Drought and Food Price Shocks: Evidence from Ethiopia' Policy Reseach Working Paper , no. 7920, World Bank, Washington, DC.

Vulnerability to Drought and Food Price Shocks : Evidence from Ethiopia. / Hill, Ruth; Porter, Catherine.

Washington, DC : World Bank, 2016. (Policy Reseach Working Paper ; No. 7920).

Research output: Working paper

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Hill R, Porter C. Vulnerability to Drought and Food Price Shocks: Evidence from Ethiopia. Washington, DC: World Bank. 2016 Dec. (Policy Reseach Working Paper ; 7920).