Consequences of climate change and El Niño cycles for agricultural livelihood choices and wealth in Mozambique

Weather risks affect agricultural livelihood choices and outcomes in fundamental ways. Influenced by experience, farmers make production choices and take precautions based on weather expectations, and adapt when weather outcomes differ. In places where formal credit and risk markets are absent, the precautions poor farmers take can also keep them poor when risk-mitigating choices generate less income than risk-adjusted alternatives. Without sufficient wealth to self-insure, poor farmers rely on informal insurance mechanisms that often fail when adverse weather events are severe and systemic. When this happens, hard-won accumulations are lost, and family welfare is endangered. This persistent dynamic is likely to worsen if expert warnings prove true and extreme weather events, including heat waves, droughts, and typhoons, increase progressively as the planet warms.

In this paper we examine the consequences of extreme weather events on agricultural livelihood choices and welfare outcomes among rural households in Mozambique. We do so by first building a unique historical record of local (enumeration-area) weather events that we match with household survey data. We build the event history by drawing on daily spatial datasets from the Climate Hazards Group InfraRed Prescription with Station and Modern-Era Retrospective and Applications for rainfall and temperature from 1981 to 2015. We build a spatial history of agricultural droughts in Mozambique, based on crop water requirements, that account for regional differences in growing seasons. We also utilize for the first time a dataset that maps the impact of all named tropical storms affecting Mozambique from 1968 to 2015. We use geo-referenced household data from 7,400 households in Mozambique to identify production technology choices and measure asset accumulations.

We confirm earlier research showing the influence of the El Niño Southern Oscillation (ENSO) on the formation of tropical storms affecting Mozambique. We report new evidence showing a dramatic increase in areas of Mozambique affected by storms since 1990, due in part to an increase in storm intensity. We find small, but statistically significant changes in local weather patterns when we compare the first and second halves of our temperature and rainfall data. Taken together, these findings indicate an escalating risk exposure for most rural Mozambican households, whose livelihoods rely primarily on agriculture. Exploiting spatial cross-sectional variations, we show how weather risks adversely affect household choices about production technologies and input use. We show how past exposure to extreme weather events, including typhoons and droughts, adversely impact productive stock accumulations and household wealth.