Social Protection and Vulnerability to Climate Shocks: a Panel Data Evidence from Rural Ethiopia

It is widely predicted that climate change will have an adverse impact on Ethiopian agriculture and exacerbate the problem of food insecurity. In this context, social protection schemes can potentially contribute to households’ autonomous adaptation by reducing vulnerability to climatic shocks. This paper examines the role of the Productive Safety Net Program in reducing vulnerability to climate related shocks and its impacts on autonomous adaptation strategies by taking the case of household income diversification into non-farm activities. The paper assesses vulnerability using index-based approach and the impact of the program using two non-experimental approaches namely; Difference-in-Differences combined with Propensity Score Matching for a panel of 1,306 rural households from the two recent rounds of the Ethiopian Rural Household surveys for the years 2004 and 2009. Taking advantage of the extensive data available on climate-induced shocks and a range of activities and incomes, the paper makes a conceptual distinction between non-farm and off-farm income, and uses the recent Adaptive Social Protection framework to examine the impact of the program. The results from the vulnerability assessment indicate that exposure and lack of adaptive capacity to climate-induced shocks explain the vulnerability of rural households and PSNP helps to decrease the vulnerability of households to climateinduced shocks. The results from the non-experimental estimations also indicate that receiving transfers from the PSNP, on average increases income from nonfarm activities. These results partly confirm the hypothesis that social protection can promote positive adaptation strategies and may serve as an effective means of reducing the vulnerability of smallholders to climate change-induced shocks.Keywords: climate change, difference-in-differences, diversification, Ethiopia, social protection, vulnerabilit