Temperature shocks, short-term growth and poverty thresholds: Evidence from rural Tanzania

Abstract

Using the LSMS-ISA Tanzania National Panel Survey by the World Bank, we study the relationship between rural household consumption growth and temperature shocks over the period 2008-2013. Temperature shocks have a negative and significant impact on household growth if their initial consumption lies below a critical threshold. As such, temperature shocks slow income convergence among households, at least in the short run. Crop yields and total factor productivity in agriculture are the main transmission channels. Extrapolating from short-term elasticities to long-run phenomena, these findings support the Schelling Conjecture: economic development would help poor farming households to reduce the impacts of climate change. Hence, closing the yield gap, modernizing agriculture and favouring the structural transformation of the economy are all crucial issues for adaptation of farmers to the negative effects of global warming.

Five Lessons from COVID-19 for Advancing Climate Change Mitigation

“…Regarding climate change, there is evidence that the poor will also be disproportionately affected by the related damages (IPCC 2018 ; Leichenko and Silva 2014 ; Letta et al 2018 ) while having fewer resources to adapt to a changed climate. This implies that climate change damages are likely to deepen existing inequalities even further (Ahmed et al 2009 ).…”

The heat never bothered me anyway: Gender‐specific response of agricultural labor to climatic shocks in Tanzania

“…A large body of empirical research examines the effects of weather shocks in developing regions on outcomes such as agricultural production, productivity, technology adoption, migration, and household consumption expenditure (Asfaw & Maggio, 2018;Haile et al, 2018;Kubik & Maurel, 2016;Letta et al, 2018). An important lesson that has emerged from this research is the existence of gender differences in vulnerability and responsiveness to climatic shocks (Bryan et al, 2017;Goh, 2012;Kristjanson et al, 2017).…”

“…We also control for precipitation to reduce possible omitted variables bias (Dell et al, 2014;Letta et al, 2018). Cross-model Hausman tests for equality of coefficient estimates associated to heat stress indicator between the models for male labor ( c β M 2 Þ and female labor ( c β F 2 Þ are also conducted.…”

Resilience Thresholds to Temperature Anomalies: A Long-run Test for Rural Tanzania

“…Moreover, it is still a predominantly rural country where agriculture accounts for about half of gross production, employs about 80 percent of the labour force, and is primarily rainfed (Ahmed et al, 2011). Several empirical works documented a causal relationship between welfare dynamics and weather shocks in the country and particularly in rural areas (Ahmed et al, 2011;Bengtsson, 2010;Dercon, 1996;Hirvonen, 2016;Letta et al, 2018). Data on food consumption are obtained from the food consumption module available in both the LSMS-ISA and HBS survey.…”

“…In a subsequent step, in line with the literature on poverty traps, we employ a fixed-effect panel threshold model to detect a critical RCI threshold or tipping point that entails a change of regime of temperature impacts. In doing so, we follow the approach used by Carter et al (2007) and, more recently, Letta et al (2018) and opt for the use of the Hansen (1999) panel fixed-effect threshold estimator, as implemented by Wang (2015). This model replicates Equation (3) but distinguishes two impact regimes conditional to a critical value of the RCI:…”