Interdependence of rural household welfare measurement in the context of climate variability in Ethiopia

Abstract

The Ethiopian government and various stakeholders have made significant efforts to improve household consumption, poverty, and food security. However, the results have not met expectations. To ensure that programs are effective, it is critical to have a robust measure of well-being that considers social, economic, institutional and environmental challenges. Previous studies on welfare have focused on a single measurement, but it is important to recognize the interdependence between various well-being indicators to formulate comprehensive interventions and initiatives for rural households in the context of climate change and variability. This paper examines the dynamic link between unidimensional poverty, multidimensional poverty, and food security using panel data from Ethiopia. The interdependency of welfare measurements was estimated using a seemingly unrelated multivariate probit model with a conditional mixed process estimator with full information, a simulated maximum likelihood approach, and the presumption that different metrics can have various policy implications. The chances of interdependence wellbeing status were low for households that were simultaneously food insecure and poor or nonpoor. Multidimensional poverty has a higher success rate than food insecurity or consumption poverty. Unlike unidimensional poverty and food insecurity, multidimensional poverty has a higher chance of to be deprived. Policymakers must consider the synergies and trade-offs of different types of welfare and the dynamic linkage between climate-induced shocks and other covariates with household welfare to minimize households' vulnerability to climate-induced shocks for effective intervention for rural households to obtain a whole picture of wellbeing.

Keywords

• Welfare measurement
• Climate change
• Seemingly unrelated multivariate probit
• Ethiopia