What Is the Impact of Weather Shocks on Prices? : Evidence from Ethiopia

The impact of drought on household welfare is the cumulative effect of crop losses and price changes in a local economy that are triggered by these initial losses. This paper combines data on monthly grain prices and wages in 82 retail markets over...

Full description

Bibliographic Details
Main Authors:	Hill, Ruth, Fuje, Habtamu
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2020
Subjects:	WEATHER SHOCKS GRAIN MARKET SEAONALITY TRANSFERS ROADS CROP PRICE CROP LOSS SAFETY NETS
Online Access:	http://documents.worldbank.org/curated/en/840771599657255297/What-is-the-Impact-of-Weather-Shocks-on-Prices-Evidence-from-Ethiopia http://hdl.handle.net/10986/34475

id	okr-10986-34475
recordtype	oai_dc
spelling	okr-10986-344752022-09-20T00:11:22Z What Is the Impact of Weather Shocks on Prices? : Evidence from Ethiopia Hill, Ruth Fuje, Habtamu WEATHER SHOCKS GRAIN MARKET SEAONALITY TRANSFERS ROADS CROP PRICE CROP LOSS SAFETY NETS The impact of drought on household welfare is the cumulative effect of crop losses and price changes in a local economy that are triggered by these initial losses. This paper combines data on monthly grain prices and wages in 82 retail markets over 17 years with data on district-level weather shocks to quantify the impact of drought on local prices and how this impact varies by month after harvest. The results show that price increases occur immediately after the completion of harvest and then dissipate so that inflationary effects are quite low during the lean season, contrary to commonly held views. The impact of shocks on prices is quite low now in Ethiopia -- 4 percent at its peak post-2005 compared with 12 percent before 2005. In areas of the country where infrastructure investments have been high, there is now almost no inflationary impact of drought on prices. It is not clear whether it is infrastructure investments or something else that has driven that, but it shows that it is possible for rainfall shocks to have no inflationary impacts in low income economies. Inflationary impacts were also reduced more in districts where the Productive Safety Net Program was introduced. Comparing inflationary effects in districts with food versus cash transfers suggests that cash transfers do not have inflationary effects on grain prices during times of drought. 2020-09-17T19:09:37Z 2020-09-17T19:09:37Z 2020-09 Working Paper http://documents.worldbank.org/curated/en/840771599657255297/What-is-the-Impact-of-Weather-Shocks-on-Prices-Evidence-from-Ethiopia http://hdl.handle.net/10986/34475 English Policy Research Working Paper;No. 9389 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Africa Ethiopia
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	WEATHER SHOCKS GRAIN MARKET SEAONALITY TRANSFERS ROADS CROP PRICE CROP LOSS SAFETY NETS
spellingShingle	WEATHER SHOCKS GRAIN MARKET SEAONALITY TRANSFERS ROADS CROP PRICE CROP LOSS SAFETY NETS Hill, Ruth Fuje, Habtamu What Is the Impact of Weather Shocks on Prices? : Evidence from Ethiopia
geographic_facet	Africa Ethiopia
relation	Policy Research Working Paper;No. 9389
description	The impact of drought on household welfare is the cumulative effect of crop losses and price changes in a local economy that are triggered by these initial losses. This paper combines data on monthly grain prices and wages in 82 retail markets over 17 years with data on district-level weather shocks to quantify the impact of drought on local prices and how this impact varies by month after harvest. The results show that price increases occur immediately after the completion of harvest and then dissipate so that inflationary effects are quite low during the lean season, contrary to commonly held views. The impact of shocks on prices is quite low now in Ethiopia -- 4 percent at its peak post-2005 compared with 12 percent before 2005. In areas of the country where infrastructure investments have been high, there is now almost no inflationary impact of drought on prices. It is not clear whether it is infrastructure investments or something else that has driven that, but it shows that it is possible for rainfall shocks to have no inflationary impacts in low income economies. Inflationary impacts were also reduced more in districts where the Productive Safety Net Program was introduced. Comparing inflationary effects in districts with food versus cash transfers suggests that cash transfers do not have inflationary effects on grain prices during times of drought.
format	Working Paper
author	Hill, Ruth Fuje, Habtamu
author_facet	Hill, Ruth Fuje, Habtamu
author_sort	Hill, Ruth
title	What Is the Impact of Weather Shocks on Prices? : Evidence from Ethiopia
title_short	What Is the Impact of Weather Shocks on Prices? : Evidence from Ethiopia
title_full	What Is the Impact of Weather Shocks on Prices? : Evidence from Ethiopia
title_fullStr	What Is the Impact of Weather Shocks on Prices? : Evidence from Ethiopia
title_full_unstemmed	What Is the Impact of Weather Shocks on Prices? : Evidence from Ethiopia
title_sort	what is the impact of weather shocks on prices? : evidence from ethiopia
publisher	World Bank, Washington, DC
publishDate	2020
url	http://documents.worldbank.org/curated/en/840771599657255297/What-is-the-Impact-of-Weather-Shocks-on-Prices-Evidence-from-Ethiopia http://hdl.handle.net/10986/34475
_version_	1764480977374019584

What Is the Impact of Weather Shocks on Prices? : Evidence from Ethiopia

Similar Items