Inferring Informal Risk-Sharing Regimes: Evidence from Rural Tanzania

This paper studies informal risk-sharing regimes in a unified framework by examining intertemporal consumption behavior of rural households in Tanzania. We exploit  a theoretically-consistent link between interest rates and cross-sectional consumption moments to test alternative risk-sharing models without requiring data on interest rates or assuming a restriction to eliminate the need for such data, which are often unavailable in developing economies. We specify tests that allow us to distinguish among models even with temporal dependence in income shocks. Our analysis shows that the consumption pattern in rural Tanzania is consistent with the self-insurance regime, and that risk aversion varies substantially across districts. Imposing a strict condition on interest rates, as often done in prior literature, misses their intertemporal heterogeneity and biases the estimation of risk aversion

Supply and Effects of Specialty Crop Insurance

The federal government has developed a large number of programs to insure various “specialty crops” over the last two decades; a given program is peculiar to a particular county and crop. This development has been particularly notable in California, because of its size and the diversity of crops produced there. If the extension of federal crop insurance programs to cover fruit and vegetable production has affected either producer or consumer welfare, then we would expect to see this reflected in output and prices. Exploiting variation in the timing of program introduction in different locations for different crops to estimate the effect of crop insurance on the output and prices of the insured crops. We find that the supply of and demand for insurance for tree crops is much larger than for non-tree crops. Crop insurance has a small but significant negative effect on prices of insured crops. This last finding is consistent with the view that demand for such highly disaggregated commodities is likely to be highly elastic. A consequence is that crop insurance for these specialty crops has little benefit for consumers, even when it generates a large supply response.

Can Growth Compensate Inequality and Risk?---a welfare analysis for Chinese households

It has been widely observed that China's break-neck growth has not been equally shared between rural and urban areas, with urban households' enjoying a much larger proportion. To further test whether regional inequality exists within urban areas, we measure urban households vulnerability in a risky environment and decompose this measure to quantify China aggregate risks, province-level risks and idiosyncratic risks faced by households situated in 31 provinces. Besides, under this framework of analysis, we are able to make welfare comparisons between growth, inequality and different risks. We find that inequality has very big negative effect on households' welfare, while growth is able to compensate nearly half of it; households seem to be able to smooth consumption against risk in both province and individual level, but unable to do so against China shocks, which affect all the households simultaneously.Community/Rural/Urban Development, Risk and Uncertainty,

QUALITY MEASUREMENT AND RISK-SHARING IN CONTRACTS FOR CALIFORNIA FRUITS AND VEGETABLES

We hypothesize that imperfect quality measurement in contracts for fresh fruits and vegetables results in a moral-hazard problem, and that the final price of the produce provides additional information regarding quality. As a consequence, growers are not shielded from all price risk. This hypothesis is tested informally with observations on actual contracts in California.Demand and Price Analysis, Risk and Uncertainty,

Vulnerability and Climate Change: An Analysis of the Eastern Coastal Districts of India

This paper attempts to construct a picture of socioeconomic context of vulnerability by focusing on indicators that measure both the state of development of the region as well as its capacity to progress further. The first aspect is reflected through agricultural and industrial development, while the second through infrastructure and others. In this study, the climate change impacts are examined from agriculture, infrastructure and demographic characteristics. The analysis is carried out at the district level. Vulnerability of a particular district is measured by the frequency of occurrence of extreme events, in this case the occurrence of cyclones, storms and depressions. From the data on the frequency of occurrence of extreme events it is clear that the districts in the states of Orissa and Andhra Pradesh are highly vulnerable than the other states. The study aims to build a vulnerability index and rank the various coastal districts of these highly vulnerable states in terms of their performance on the index. The index tries to capture a comprehensive scale of vulnerability by including many indicators that serve as proxies. The analysis carried out in this paper points out that the clusters of districts of poor infrastructure and demographic development are also the regions of maximum vulnerability. Some districts exhibit very low rate of growth in infrastructure, alongside a high growth rate of population. Also these districts show a higher density of population. Hence any occurrence of extreme events is likely to be more catastrophic in nature for the people living in these districts. People living in absolute poverty [those who cannot afford US $2 a day] will not be able to cope up with the challenges posed by climate change. Therefore, the analysis carried out in this paper suggests that climate change policies have to be integrated with sustainable development strategies in general, and poverty alleviation measures, in particular.Vulnerability, Climate Change, IPCC, India

On the Efficacy of Contractual Provisions for Processing Tomatoes

This paper uses extensive data on production outcomes for processing tomato growers in California to examine the efficacy of explicit incentives observed in grower-processor contracts. Our data include all deliveries of tomatoes to some 51 processors over a period of 7 years in which at least 65 unique types of contracts are employed. Results indicate that incentives account for a significant proportion of observed variation in production outcomes, and that complementarities across different sorts of "incentive instruments" play a prominent role in contract design. Although explicit incentives explain a substantial portion of the variation in production outcomes relative to that which could be explained by incentives (as captured by processor/year fixed effects), there remains considerable variation which might be accounted for by unobserved or implicit incentives. Finally, we control for a quite exhaustive set of factors other than incentive provisions that might conceivably affect expected production outcomes, yet are still left with a substantial amount of unexplained variation.Crop Production/Industries,

Measuring Vulnerability: The Director's Cut

vulnerability, risk, Bulgaria

Trade Openness and Vulnerability in Central and Eastern Europe

international trade, vulnerability, volatility, Central and Eastern European countries