Weather risk, social capital and household wellbeing in an agrarian economy

Ethiopia’s economy is predominantly agrarian. Much of the country’s agricultural production activities are rainfed. As a result, fluctuations in weather conditions have serious implications on the overall wellbeing of smallholders. Furthermore, there is a growing concern that climate change is increasing the frequency of these fluctuations. Using a panel dataset of rural farm households covering fifteen villages of Ethiopia during 1994-2004, this book is concerned with assessing the impact of rainfall variability on smallholders’ food security and examining how households adjust their participation in off-farm activities to cope with weather risk. Moreover, the book attempts to empirically explore the role of social capital in the economic wellbeing of households. In Ethiopia, given that the rural population is endowed with few productive assets and markets are not well developed, social networks may play essential roles in households’ resource access and risk management thereby promoting households’ overall wellbeing. Based on the insights gained from the results of the study, the book provides several policy conclusions and wider implications which are pertinent for rural households in Ethiopia as well as other places with a similar socio-economic setting.