How does climate-induced variability in agricultural production contribute to consumption inequality among rural households?
Agricultural productivity growth represents a key pathway out of poverty for rural people in sub-Saharan Africa and has been shown to be more effective in reducing poverty than comparable growth in other economic sectors. Its impact on poverty is both direct, flowing immediately from growth in agriculture by raising incomes of poor farm and nonfarm households, and indirect, leading to job creation in upstream and downstream nonfarm sectors.
However, climate change is threatening the opportunities that agriculture offers for escaping poverty. Climate change is making agricultural productivity more uncertain and climate shocks such as droughts and erratic rainfall can compromise agricultural yields in the region. Nevertheless, climate change does not affect all rural households in the same way. While some might be better equipped to respond to climatic shocks, others risk falling further below the poverty line.
In his recent publication in Agricultural Economics, IFPRI Research Fellow Dr. Mulubrhan Amare addresses this question using evidence from Nigeria and Uganda. Using nationally representative panel data collected between 2009 and 2015, he shows how rainfall shocks affect the variability of agricultural productivity and, in turn, impact household consumption and inequality in rural areas. Climate shocks increase consumption inequality through their heterogeneous effect on agricultural productivity, which is likely to undermine the ability of smallholder farmers to benefit from agricultural productivity changes. Considering the current pattern of technological change in sub-Saharan Africa, without complementary investments to reduce the effect of climate shocks, variability in agricultural productivity is likely to increase and the gaps and levels of consumption inequality in rural areas will increase correspondingly.
Based on the results, Dr. Amare discusses policy options to mitigate the impact of climatic shocks on poor and smallholder producers and to reduce income inequality in the region. These policies include:
- Targeted subsidies for risk-reducing inputs (e.g., drought-tolerant improved seeds) and improved soil and water management.
- Microinsurance accompanied by social safety nets, which could help reduce rural income inequality.
Learn more through Dr. Amare’s full publication in Agricultural Economics, “Variability in agricultural productivity and rural household consumption inequality: Evidence from Nigeria and Uganda” or view his presentation at the FAO Technical Network on Poverty Analysis webinar.
Mulubrhan Amare is a research fellow in the Development Strategy and Governance Division at the International Food Policy Research Institute (IFPRI). His research focuses on rural institutions and agricultural transformation, poverty and livelihood diversification, and migration and development.
