The impact of adverse climatic, and other, income shocks on household and individual welfare in
developing countries is an issue of considerable policy interest. Understanding the magnitude and
importance of income shocks in causing and perpetuating poverty is critical to designing measures aimed
at building resilience, contributing towards the goal of ending poverty. A growing body of literature
provides empirical evidence of the micro‐level impacts of adverse shocks in developing countries. Dercon
and Krishnan (2000), Dercon (2004), and Porter (2012) find that weather shocks have a negative and longlasting
effect on consumption outcomes in rural Ethiopia. Hill and Porter (2016) and Makoka (2008) show
that drought and price shocks reduce consumption and especially farm income, while increasing
vulnerability to poverty in rural Ethiopia and Malawi, respectively. Similarly, Alem and Soderbom (2012)
conclude that high food prices adversely affect households in urban Ethiopia, especially those relying on
casual work and with low asset levels. Hill and Mejia‐Mantilla (2017) find negative effects of drought,
conflict, and prices on poverty levels in Uganda, and Pape and Parisotto (forthcoming) find a large and
significant impact of conflict on poverty in South Sudan. Hoddinott and Kinsey (2001) and Alderman et al.
(2006) show the causal relation between rainfall shocks and reduced human capital formation.