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Potential for Application of a Probabilistic Catastrophe Risk Modelling Framework to Poverty Outcomes : General Form Vulnerability Functions Relating Household Poverty Outcomes to Hazard Intensity in Ethiopia

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World Bank (WB)

Abstract: This paper analyzes the potential to combine catastrophe risk modelling (CAT risk modeling) with economic analysis of vulnerability to poverty using the example of drought hazard impacts on the welfare of rural households in Ethiopia. The aim is to determine the potential for applying a derived set of damage (vulnerability) functions based on realized shocks and household expenditure/consumption outcomes, onto a forward-looking view of drought risk. The paper outlines the CAT risk modeling framework and the role of the vulnerability module, which describes the response of an affected exposure to a given hazard intensity. The need to explicitly account for different household characteristics that determine vulnerability within our model is considered, analogous to how a CAT risk model would differentiate damage functions for buildings by different classes of construction. Results for a regression model are presented, estimating ex-post drought impacts on consumption for heterogeneous household types (e.g. with cattle, safety-net access, illness). Next, the validity/generalizability of the derived functions are assessed, to infer applicability of the derived relationships within a CAT risk modelling framework. In particular, the analysis focuses on external validity: whether the relationships established in the dataset can be used for forecasting outside of the sample used for analysis. The model is stress-tested using statistical methods of resampling. This involves randomly splitting the data into “training” and "testing" datasets. The tests show consistency of results across the datasets. Finally, future plans are outlined with regard to developing a fuller catastrophe risk model to combine with the consumption results.
Type: Working Paper
Publications & Research
Publications & Research :: Policy Research Working Paper
Link: http://hdl.handle.net/10986/24634
Subject: POVERTY THRESHOLD
LIVING STANDARDS
RISKS
HOUSEHOLD SIZE
HOUSEHOLD SURVEY
POVERTY LINE
ECONOMIC GROWTH
STORM
EARLY WARNING
FARMER
WIND SPEED
FOOD CONSUMPTION
INCOME
SCHOOLING
POVERTY RATES
HOUSEHOLD CONSUMPTION
TOTAL POVERTY
AGRICULTURAL DEVELOPMENT
VULNERABILITY ASSESSMENT
NATURAL CATASTROPHES
DEATH
FOOD POLICY
POOR PEOPLE
CHILD LABOUR
DISASTER
SOLAR RADIATION
MEASURES
POVERTY ASSESSMENT
HURRICANES
REGION
INSURANCE COMPANY
POVERTY ANALYSIS
POVERTY INDICATOR
CROP YIELD
SAVINGS
CROP PRODUCTION
TSUNAMI
RURAL HOUSEHOLDS
HOUSEHOLD HEAD
INSURANCE MARKETS
POVERTY GAP
FLOODS
GEOGRAPHICAL REGIONS
VULNERABILITY‐ ASSESSMENT
FOOD PRICE
SHEEP
REGIONAL RESULTS
PUBLIC SAFETY
NATURAL HAZARD
NATURAL DISASTERS
HOUSEHOLD COMPOSITION
HOUSEHOLD FACTORS
FORECASTING
HOUSEHOLD INCOME
TYPHOON
DISASTERS
CONSUMPTION EXPENDITURE
INSURERS
FARMERS
DISASTER EVENT
FAMINE
COVARIATE SHOCKS
HOUSEHOLD HEADS
CLAIMS ASSESSMENT
INSURANCE CONTRACTS
UNEMPLOYMENT
REINSURANCE
CROP YIELDS
INFANT MORTALITY
DROUGHTS
CONSUMPTION
HUMAN CAPITAL
TROPICAL CYCLONE
EARTHQUAKE
RISK ASSESSMENT
FLOOD DAMAGE
FOOD SECURITY
DISASTER REDUCTION
DISASTER RISK
CLIMATE CHANGE
DROUGHT
ECOLOGICAL ZONES
NATURAL HAZARD
BANK
EXTREME EVENTS
INSURANCE CONTRACTS
FOOD CONSUMPTION
FLOOD DAMAGE
SAFETY NET
CLAIMS ASSESSMENT
DAMAGE
IMPACT OF SHOCKS
IMPACT OF DISASTERS
SMALLHOLDER FARMERS
RURAL
FLOOD
CROP LOSSES
PRODUCTION FUNCTION
DIVERSIFICATION
IDIOSYNCRATIC SHOCKS
INSURANCE
RURAL POLICY
SAFETY‐NET
REGIONS
PRODUCTION SYSTEMS
HURRICANE
IRRIGATION
RISK
FOOD CROPS
POVERTY
DROUGHT RISK
VULNERABILITY TO POVERTY
ABSOLUTE TERMS
CLIMATE CONDITIONS
PHYSICAL DAMAGE
HOUSEHOLD CONSUMPTION
AGRICULTURAL PRODUCTIVITY
RISK MANAGEMENT
IMPACT EVENTS
HOUSEHOLD WELFARE
HOUSEHOLDS WITH LIVESTOCK
POOR
WELFARE MONITORING
POVERTY ASSESSMENT
DISASTER RISK
WELFARE MEASURE
ASSET SALES
FOOD PRICES
CHILD LABOUR
CLIMATIC REGION
SAFETY
ECONOMIC GROWTH
RISK ASSESSMENT
POVERTY ANALYSIS
ENVIRONMENTAL DISASTER




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