Transfers, Diversification and Household Risk Strategies: Experimental Evidence with Lessons for Climate Change Adaptation

38 Pages Posted: 20 Apr 2016

See all articles by Karen Macours

Karen Macours

Paris School of Economics (PSE)

Patrick Premand

World Bank

Renos Vakis

The World Bank

Multiple version iconThere are 2 versions of this paper

Date Written: April 1, 2012

Abstract

While climate change is likely to increase weather risks in many developing countries, there is little evidence on effective policies to facilitate adaptation. This paper presents experimental evidence on a program in rural Nicaragua aimed at improving households' risk-management through income diversification. The intervention targeted agricultural households exposed to weather shocks related to changes in rainfall and temperature patterns. It combined a conditional cash transfer with vocational training or a productive investment grant. The authors identify the relative impact of each complementary package based on randomized assignment, and analyze how impacts vary by exposure to exogenous drought shocks. The results show that both complementary interventions provide full protection against drought shocks two years after the end of the intervention. Households that received the productive investment grant also had higher average consumption levels. The complementary interventions led to diversification of economic activities and better protection from shocks compared to beneficiaries of the basic conditional cash transfer and control households. These results show that combining safety nets with productive interventions can help households manage future weather risks and promote longer-term program impacts.

Keywords: Safety Nets and Transfers, Regional Economic Development, Rural Poverty Reduction, Housing & Human Habitats

Suggested Citation

Macours, Karen and Premand, Patrick and Vakis, Renos, Transfers, Diversification and Household Risk Strategies: Experimental Evidence with Lessons for Climate Change Adaptation (April 1, 2012). World Bank Policy Research Working Paper No. 6053. Available at SSRN: https://ssrn.com/abstract=2045949

Karen Macours (Contact Author)

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Patrick Premand

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Renos Vakis

The World Bank ( email )

1818 H Street NW
Washington, DC 20043
United States

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