The worst drought in the US in decades has been making many headlines.1
While crop yields are suffering drastically, the impact on crop farmers’ income is likely to be much more muted. With the vast majority of US crop farmers benefiting from higher prices and subsidised crop insurance, it is mostly the insurance companies that are taking the losses.
This is why much of the discussion has focused on the impact of the drought on world food and ethanol prices, on how the drought feeds into the climate change debate, or on its impact on US economic growth and the budget deficit.
Similar droughts are happening in much more disadvantaged parts of the world, for instance in India and in the Sahel. These have received less attention in the media, even if income and welfare consequences for those affected are dire. Indeed, empirical evidence from many parts of the developing world has established large welfare losses following weather shocks in developing countries (see Fafchamps et al. 1998, Jensen 2001, Dercon 2004, and many other studies).
Agricultural households are often particularly vulnerable, as weather shocks can wipe out a large part of their annual income. And there is a growing sense that exposure to risk is further increasing for many rural households in developing countries. Climate change is making weather more unpredictable. Temperatures are increasing, rainfall is becoming more variable, and extreme events (floods or droughts) are becoming more frequent. Moreover, changing weather patterns are disturbing traditional agricultural seasons. As a consequence, traditional rules of thumb on optimal practices, often passed on from generation to generation, might become useless guidelines for present-day farmers.
Read more: http://www.voxeu.org/article/helping-poor-farmers-help-themselves-against-drought
While crop yields are suffering drastically, the impact on crop farmers’ income is likely to be much more muted. With the vast majority of US crop farmers benefiting from higher prices and subsidised crop insurance, it is mostly the insurance companies that are taking the losses.
This is why much of the discussion has focused on the impact of the drought on world food and ethanol prices, on how the drought feeds into the climate change debate, or on its impact on US economic growth and the budget deficit.
Similar droughts are happening in much more disadvantaged parts of the world, for instance in India and in the Sahel. These have received less attention in the media, even if income and welfare consequences for those affected are dire. Indeed, empirical evidence from many parts of the developing world has established large welfare losses following weather shocks in developing countries (see Fafchamps et al. 1998, Jensen 2001, Dercon 2004, and many other studies).
Agricultural households are often particularly vulnerable, as weather shocks can wipe out a large part of their annual income. And there is a growing sense that exposure to risk is further increasing for many rural households in developing countries. Climate change is making weather more unpredictable. Temperatures are increasing, rainfall is becoming more variable, and extreme events (floods or droughts) are becoming more frequent. Moreover, changing weather patterns are disturbing traditional agricultural seasons. As a consequence, traditional rules of thumb on optimal practices, often passed on from generation to generation, might become useless guidelines for present-day farmers.
Read more: http://www.voxeu.org/article/helping-poor-farmers-help-themselves-against-drought
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