Social Network Capital, Economic Mobility and Poverty Traps

The paper explores the role social network capital might play in facilitating poor agents’ escape from poverty traps. We model endogenous network formation among households heterogeneously endowed with both traditional and social network capital who make investment and technology choices over time in the absence of financial markets and faced with multiple production technologies featuring different fixed costs and returns. We show that social network capital can serve as either a complement to or a substitute for productive assets in facilitating some poor households’ escape from poverty. However, the voluntary nature of costly social network formation also creates both involuntary and voluntary exclusionary mechanisms that impede some poor households’ efforts to exit poverty. The ameliorative potential of social networks therefore depends fundamentally on the underlying wealth distribution in the economy. In some settings, targeted public transfers to the poor can crowd-in private resources by inducing new social links that the poor can exploit to escape from poverty

Rainfall index insurance as an approach to manage climate change induced drought

Our study will explore the possibility of using rainfall index insurance as an adaptation mechanism to deal with climate induced drought in Australia with specific reference to the wheat crop

Viability of weather index insurance in managing drought risk in Australia

In this paper, we look into the risk management strategies adopted by farmers to manage revenue shortfall resulting from drought-induced yield losses. We survey literature on traditional indemnity–based insurance and weather index insurance. Some challenges facing the indemnity-based insurance were discussed and the prospects of resolving these challenges by using an index based risk transfer product called weather index insurance was analysed. The particular weather variable of interest was rainfall. Basis risk and methodological challenges were recognized as some of the major challenges to the uptake of weather index insurance. We showed the relationship between yield and cumulative precipitation indices using regression analyses. The hedging efficiency of the product was analysed using the Mean Root Square Loss (MRSL) and Conditional Tail Expectation (CTE) while the systemic nature of the risk was captured with Loss Ratios. We concluded that a strong relationship between the rainfall index and yield does not necessarily lead to high hedging efficiency and other variables would have to be taken into consideration in order to make the design of weather index insurance more robust. We found that the MRSL is more resistant to strike levels of the contracts than the CTE. The results from the Loss Ratio Analysis showed that spatial and temporal pooling of insurance contracts reduce the risk to the insurer

Measuring social networks' effects on agricultural technology adoption

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An integrated agro-ecosystem and livelihood systems approach for the poor and vulnerable in dry areas

More than 400 million people in the developing world depend on dryland agriculture for their livelihoods. Dryland agriculture involves a complex combination of productive components: staple crops, vegetables, livestock, trees and fish interacting principally with rangeland, cultivated areas and watercourses. Managing risk and enhancing productivity through diversification and sustainable intensification is critical to securing and improving rural livelihoods. The main biophysical constraints are natural resource limitations and degradation, particularly water scarcity and encroaching desertification. Social and economic limitations, such as poor access to markets and inputs, weak governance and lack of information about alternative production technologies also limit the options available to farmers. Past efforts to address these constraints by focusing on individual components have either not been successful or are now facing a declining rate of impact, indicating the need for new integrated approaches to research for development of dryland systems. This article outlines the characteristics of such an approach, integrating agro-ecosystem and livelihoods approaches and presents a range of empirical examples of its application in dryland contexts. The authors draw attention to new insights about the design of research required to accelerate impact by integrating across disciplines and scales