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Working Paper

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

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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World Bank, Washington, DC
Africa | Ethiopia
2016-07-07T21:06:19Z | 2016-07-07T21:06:19Z | 2016-06

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.

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