Gauging the welfare effects of shocks in rural Tanzania

Luc Christiaensen, Vivian Hoffmann and Alexander Sarris

No 4406, Policy Research Working Paper Series from The World Bank

Abstract: Studies of risk and its consequences tend to focus on one risk factor, such as a drought or an economic crisis. Yet 2003 household surveys in rural Kilimanjaro and Ruvuma, two cash-crop-growing regions in Tanzania that experienced a precipitous coffee price decline around the turn of the millennium, identified health and drought shocks as well as commodity price declines as major risk factors, suggesting the need for a comprehensive approach to analyzing household vulnerability. In fact, most coffee growers, except the smaller ones in Kilimanjaro, weathered the coffee price declines rather well, at least to the point of not being worse off than non-coffee growers. Conversely, improving health conditions and reducing the effect of droughts emerge as critical to reduce vulnerability. One-third of the rural households in Kilimanjaro experienced a drought or health shocks, resulting in an estimated 8 percent welfare loss on average, after using savings and aid. Rainfall is more reliable in Ruvuma, and drought there did not affect welfare. Surprisingly, neither did health shocks, plausibly because of lower medical expenditures given limited health care provisions.

Keywords: Health Monitoring&Evaluation; Crops&Crop Management Systems; Access to Finance; Rural Poverty Reduction (search for similar items in EconPapers)
Date: 2007-11-01
New Economics Papers: this item is included in nep-afr, nep-agr and nep-dev
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Citations: View citations in EconPapers (19)

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