Gone with the Storm: Rainfall Shocks and Household Well-Being in Guatemala

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E S ABSTRACTGone with the Storm: Rainfall Shocks and Household Well-Being in Guatemala * This paper investigates the causal consequences of Tropical Storm Agatha (2010) -the strongest tropical storm ever to strike Guatemala since rainfall records have been kept -on household welfare. The analysis reveals substantial negative effects, particularly among urban households. Per capita consumption fell by 12.6%, raising poverty by 5.5 percentage points (an increase of 18%). The negative effects of the shock span other areas of human welfare. Households cut back on food consumption (10% or 43 to 108 fewer calories per person per day) and reduced expenditures on basic durables. These effects are related to a drop in income per capita (10%), mostly among salaried workers. Adults coped with the shock by increasing their labor supply (on the intensive margin) and simultaneously relying on the labor supply of their children and withdrawing them from school. Impact heterogeneity is associated with the intensity of the shock, food price inflation, and the timing of Agatha with respect to the harvest cycle of the main crops. The results are robust to placebo treatments, household migration, issues of measurement error, and different samples. The negative effects of the storm partly explain the increase in poverty seen in urban Guatemala between 2006 and 2011, which national authorities and analysts previously attributed solely to the collateral effects of the global financial crisis.JEL Classification: I3, J2, O1

The Varying Income Effects of Weather Variation: Initial Insights from Rural Vietnam

“…For example, more rain may be beneficial in a dry month and dry locations, but harmful in wet months and wet locations. Existing studies define unusual weather conditions as the deviation from the long-term mean (Hidalgo et al, 2010;Baez et al, 2015;Noack et al, 2015). These studies put the calculated deviation into the context of the locationspecific variability by normalizing by the location's long-term standard deviation (Lobell et al, 2011).…”

“…Other studies use weather variables to explain household income in order to test income effects on other variables (Feng et al, 2010;Hidalgo et al, 2010;Yang and Choi, 2007). Interesting new studies estimate current weather impacts on incomes and living conditions (Baez et al, 2015;Noack et al, 2015;Park et al, 2015). Yet results from these micro-level studies have not yet been used to simulate income effects under future climate change.…”

“…To capture this nonlinearity, some studies break rainfall and temperature levels into different intervals or only measure them above or below a certain threshold (Deryugina and Hsiang, 2014;Deschênes and Greenstone, 2011;Schlenker and Lobell, 2010). 3 To control for abnormal values, some studies measure the deviation from the long-term mean normalized for location-specific variability (Baez et al, 2015;Hidalgo et al, 2010;Noack et al, 2015). Weather extremes measured by minimum and maximum temperature and rainfall levels matter too (Welch et al, 2010).…”

Weathering Storms: Understanding the Impact of Natural Disasters in Central America

“…In Guatemala, Bustelo (2011) analyzed the impact of Storm Stan and found that the probability of child labor increased by 7.3 percent in departments hit by the storm. Also in Guatemala, Baez et al (2017) looked at the consequences of Tropical Storm Agatha (2010) on household welfare, finding that consumption per capita fell by 12.6 percent and poverty increased 5.5 percentage points (an 18 percent increase).…”

How is the Slowdown Affecting Households in Latin America and the Caribbean?

“…Research has shown that catastrophic events have led to drops in household consumption per capita, compelling individuals to decrease calorie consumption, sell vital assets, work longer hours and pull children out of school (for example,Baez et al 2015). SeePerry et al (2006) for a review of the evidence and channels through which poverty might lead to lower growth, among which are: low accumulation of human capital (education and health), lower accumulation of physical capital, and lower rates of innovation.…”