Covariate Shocks Increase Calorie Consumption: Unraveling the Paradox

Meseret B. Abebe () and Yonas Alem ()
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Meseret B. Abebe: Addis Ababa University
Yonas Alem: University of Cape Town and University of Gothenburg

No 25-7, EfD Discussion Paper from Environment for Development, University of Gothenburg

Abstract: Extensive previous literature documents that poor households in developing countries reduce food consumption (i.e., calorie intake) in response to a major covariate shock, such as drought. We utilize rich panel data from rural Ethiopia to demonstrate that drought increases calorie consumption and reduces the diversity of households’ diets. We show that a one-standard-deviation decrease in the previous year’s rainfall increases per capita calorie consumption by approximately 5.5%. The key pathway through which drought affects calorie consumption is through households substituting relatively expensive food items (e.g., fruits, vegetables, and pulses) with cheaper alternatives (e.g., grains) and reallocating resources from other basic expenditures, such as health and education, to food consumption. Consistent with this mechanism, we show that a one-standard-deviation decrease in lagged rainfall reduces the household diet diversity score by about 3.1%. Heterogeneous analysis by consumption quartile suggests that households in the highest consumption quartile drive increased calorie consumption in response to drought. We find similar results for urban households who increase their calorie consumption in response to a food price shock. Our findings have important implications for weather forecasts and safety net interventions.

Keywords: Drought; Nutrition; Food Security; Food Inflation (search for similar items in EconPapers)
JEL-codes: D12 O13 Q18 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2025-07-01
New Economics Papers: this item is included in nep-dev and nep-env
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