Rural mobility and climate vulnerability: evidence from the 2015 drought in Ethiopia

In 2015, parts of Ethiopia experienced the worst meteorological drought in decades. Using this event as a natural experiment, I investigate vulnerability to drought in rural Ethiopia using a difference-in-differences strategy. I construct a Standardised Precipitation Index from 35 years of satellite rainfall data to exogenously measure local drought intensity. I combine this with nationally representative household panel data, collected before and soon after the drought. Results show that households experiencing at least a one in 20-year drought suffer, on average, from 12 percent lower annual consumption and 38 percent lower agricultural production than they would otherwise have in a typical year. Results are robust to varying sets of counterfactuals, placebo treatments and identification using the change-in-changes method. Drought has a greater impact on poorer households, female headed households and larger producers. Production is sensitive to drought severity. In a context of increasing drought frequency and severity, these findings imply lower expected returns to investment in agriculture, hindering rural development. Results also suggest drought induces positive production spillover effects to nearby areas, which subsequently support consumption for affected households. This mechanism may be facilitated by increased factor mobility and market interactions between villages during times of drought. Evidence from rural Ethiopia indicates that transport services, mobile phones and social networks are important for resilience, but the effect of road infrastructure alone is less clear. Public investment in these services may have untapped potential to reduce climate vulnerability.