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Welfare impacts of climate shocks Evidence from Uganda

Year of publication 2016

Place of publication Rome, Italy ;

Pages 68 p.

Author FAO;

Publisher FAO ;

Product type Book (stand-alone)

ISBN No ISBN

Synopsis (short abstract) This paper evaluates the effects of weather/climate shocks on various measures of household welfare using a nationally representative panel data from Uganda National Panel Survey (UNPS) together with a set of novel climate variation indicators. We estimated generalized least square (GLS) random effects and quintile regression models to address the research questions. Our results point towards a consumption and income smoothing behaviour by the households since: we obtain very few significant results with respect to climate/weather shock variables togetherwith highly significant effects of the socio-demographic and wealth control variables. We also investigate if different shocks definitions, i.e the reference period used to define the shock, modifies our results. The latter are robust since the coefficients and the signs do not change with the reference period. We further test the hypotheses that policy-relevant mechanisms can be effective means of mitigating the negative welfare effects. For instance access to credit services and use of sustainable land management practices enables the households to contain the negative effects of climate shock on per capita food consumption from own produced crops but not the case for some of the outcome variables.

Language English

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    Sub-Saharan Africa (SSA) remains the world’s most food-insecure region characterized by high levels of child mortality and poverty and low levels of human and physical capital (FAO, 2009). Countries in SSA, including Tanzania, heavily depend on a smallholder-based agricultural sector, which makes their welfare and food security particularly vulnerable to climate change (Barrios et al., 2008). The goal of this study is to provide a comprehensive analysis of the impact of weather risk on rural hou seholds’ welfare in Tanzania using nationally representative household panel data together with a set of novel weather variation indicators based on interpolated gridded and re-analysis weather data that capture the peculiar features of short term and long term variations in rainfall and temperature. In particular, we estimate the impact of weather shocks on a rich set of welfare indicators (including total income, total expenditure, food expenditure and its share in total expenditure and calori e intake) and investigate whether and how they vary by different definitions of shocks - capturing changes in levels and variations over different time periods. We find that both rainfall and maximum temperature variability exert a negative impact on welfare (i.e. no consumption smoothing) and that households that have adopted SLM practices are able to achieve income-smoothing. We also find that the most vulnerable rural households are much more affected by a rainfall deficit compared to the hou seholds in the top income quantile. Results underline the key role extension services play in enhancing adaptive capacity to reduce vulnerability to adverse weather conditions, as well as the importance of targeting the most vulnerable households in policy interventions to improve food security in the face of weather shocks.
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    Rising temperatures due to climate change pose a significant threat to agricultural systems and the livelihoods of farmers across the globe. Identifying farm management strategies that reduce sensitivity to high temperatures is, therefore, critical for moderating the adverse effects of climate change. In this paper, we use spatially granular climate data merged with four waves of household survey data in Uganda to examine empirically the relationships between high temperatures, agricultural production outcomes, and the adoption (including its duration) of three sustainable agricultural practices (organic fertilizer adoption, banana-coffee intercropping and cereal-legume intercropping). We do this using a fixed-effect model, with instrumental variables to address potential endogeneity issues. Our findings indicate that, while exposure to high temperature does reduce farmers’ crop income, the adoption of these practices can offset the negative impact of high temperatures on such income. Indeed, we show that the benefits of adopting these practices on the total value of crop production increases monotonically astemperatures increase from their long-term averages. Moreover, the number of years a farmer adopts a practice is associated with higher total value of crop production, and this relationship holds across the full distribution of observed high temperature deviations. Taken together, the results suggest that organic fertilizer adoption, banana-coffee intercropping and cereal-legume intercropping are effective options to adapt to rising temperatures in Uganda, and these benefits increase with the duration of adoption. Adaptation policies and programmes must therefore be designed in ways that help farmers overcome initial barriers to adoption of these practices, as well as to support farmers to sustain adoption over time. This may require longer term funding horizons for adaptation programmes, and innovative support mechanisms to incentivize sustained adoption.
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