Climate change and household welfare in sub-Saharan Africa: empirical evidence from Swaziland
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ORIGINAL PAPER
Climate change and household welfare in sub-Saharan Africa: empirical evidence from Swaziland Abdoul G. Sam 1 & Babatunde O. Abidoye 2,3
&
Sihle Mashaba 4
Received: 7 February 2020 / Accepted: 5 October 2020 # The Author(s) 2020
Abstract The fifth assessment report of the Intergovernmental Panel on Climate Change and several studies suggest that climate change is expected to increase food insecurity and poverty in many parts of the world. In this paper, we adopt a microeconometric approach to empirically estimate the impact of climate change-induced hikes in cereal prices on household welfare in Swaziland (also Kingdom of Eswatini). We do so first by econometrically estimating expenditure and price elasticities of five food groups consumed by households in Swaziland using the Almost Ideal Demand System (AIDS), based on data from the 2009/2010 Swaziland Household Income and Expenditure Survey. Second, we use the estimated expenditure and compensated elasticities from the AIDS model, food shares from the household survey, and food price projections developed by the International Food Policy Research Institute (IFPRI) to estimate the proportionate increase in income required to maintain the level of household utility that would have prevailed absent an increase in food prices. Our results show increases in cereal prices due to climate change are expected to double extreme poverty in urban areas and increase poverty in rural areas of the country to staggering levels - between 71 and 75%, compared to 63% before the price changes. Income transfers of between 17.5 and 25.4% of pre-change expenditures are needed to avoid the welfare losses. Keywords Climate change . Welfare . Extreme poverty . Demand system . Swaziland JEL codes Q54 . Q56 . O13 . O15 . C34 . D12
1 Introduction The fifth assessment report of the Intergovernmental Panel on Climate Change (IPCC 2014) concluded that human interference with the climate system is occurring, and climate change
* Babatunde O. Abidoye [email protected] 1
Department of Agricultural, Environmental and Development Economics, The Ohio State University, Columbus, OH, USA
2
Grantham Research Institute, London School of Economics, London, UK
3
University of Pretoria, Pretoria, South Africa
4
Ministry of Economic Planning and Development, Finance Building, Lusutfu Rd, Mbabane, Eswatini
poses risks for human and natural systems alike.1 The 2014 report also serves as one of the first efforts by IPCC to present a case for the impact of climate change on poverty. Several other studies have addressed the nexus between climate change, food production, and poverty in developing countries. For example, a review by Hertel and Rosch (2010) of research studies using crop growth simulation models and statistical estimations of climate change effects indicates that rising temperatures are expected to significantly reduce cereal yields in low income countries with an attendant increase in household poverty. Results of climate simulations up to 2080 in Onyutha (2019) po
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