1. 1
Economic Impacts of Extreme Weather Events on
Farm Households: Evidence from Thailand
November 4, 2013
Crawford PhD Conference
Crawford School of Public Policy, Australian National University
Sirikarn Lertamphainont
PhD student, ACDE

2. 2
Motivation
• The incidence of natural disasters or extreme weather
events has been growing over time everywhere in the world,
especially in Asia and the Pacific region.
• In a warming climate, there is convincing evidence that
extreme hydro-meteorological events like floods and
droughts will become more frequent and more forceful.
• Agricultural production in Thailand is dependent on natural
weather conditions because of poor irrigation system.
• Very little is known about the impacts of extreme rainfall
events for the case of Thailand nationwide.
• The study of the role of risk-coping mechanisms in Thailand
is still limited in general.
Introduction & Motivation
Data
Specification
Estimation Results
Conclusion

3. 3
Literature review
• The existing literature
o uses subjective measures of rainfall shocks which could
have endogeneity problem with measures of household
income and consumption expenditure (e.g. Kurosaki,
2006, 2013; Dercon et al., 2005; Makoka, 2008)
o Applies simple rainfall anomaly to represent shocks (e.g.
Asiimwe and Mpuga, 2007)
o uses only measure of household consumption expenditure
to represent household welfare (e.g. Thomas et al., 2010;
Skoufias et al., 2012)
o focuses on only one particular event in Thailand, the flood
in 2011 (Poapongsakorn et al., 2012)
o concentrates on the effects of climate change in 4 villages
of Sisaket province in Thailand (Felkner et al., 2009)
Introduction & Motivation
Data
Specification
Estimation Results
Conclusion

4. 4
Research questions
• Question#1
How do extreme rainfall conditions affect the farm
households’ welfare which is measured by income
and consumption expenditure?
• Question#2
How do these adverse effects of rainfall shocks vary
across subgroups of the sampled farm households
who are differentiated by their own endowment
factors and livelihood portfolios?
Introduction & Motivation
Data
Specification
Estimation Results
Conclusion

5. 5
Data
• Household socio-economic data
Five streams of repeated cross-sectional farm household
survey during 2006−2010 collected annually by the Office
of Agricultural Economics (OAE)
o Concentrating on the farm households who certainly
engage in agricultural production activities
o Nationwide survey throughout 76 provinces in Thailand
• Weather data
Provincial-based daily and monthly rainfall time-series
collected by the Thai Meteorological Department (TMD)
Introduction & Motivation
Data
Specification
Estimation Results
Conclusion

6. Q1: How do extreme rainfall conditions affect the
farm households’ welfare?
6
Empirical Specification-1
Equation [1] shows the average effects of exogenous rainfall
shocks on household income and consumption expenditure:
'
'
ln Qidpt  Wpt β  H idpt θ   d   t   idpt
• Qidpt is the level of household income or consumption expenditure
per adult equivalent of household i in district d and province p at time t
• Wpt is the set of constructed provincial-based measures of rainfall
shocks that occur in province p where household i lives at time t
• Hidpt is the collection of time-invariant production and household
characteristics of household i in district d and province p at time t
• γd represents district fixed effects
Expected result: 𝛃 < 0
and consumption smoothing
• δt represents time fixed effect
• 𝜀 idpt is a zero mean, heteroskedasticity-corrected, i.i.d error term
Introduction & Motivation
Data
Specification
Estimation Results
Conclusion

7. Q2: How do these adverse effects of rainfall shocks
vary across subgroups of the sampled farm households
having different endowment and livelihood?
Empirical Specification-2
Equation [2] shows the average effects of rainfall shocks on
household income and consumption expenditure when accounting
for the availability of risk-coping options (mainly asset/endowmentbased options) and means of livelihood:
'
'
ln Qidpt  Wpt φ  Hidpt ψ  (Wpt  Gidpt )' α   d   t  uidpt
• Gidpt is the collection of household-level characteristics of household i
in district d and province p at time t in representing (1) the availability
of risk-coping options and (2) livelihood portfolios
Expected result: 𝛃 < 0 and 𝛂 > 0
Introduction & Motivation
Data
Specification
Estimation Results
Conclusion
7

8. Estimation Results: Eq. [1]
8
Household income:
Household consumption expenditure:
Note: *, **, *** indicate statistical significance at 10%, 5% and 1%, respectively
Introduction & Motivation
Data
Specification
Estimation Results
Conclusion

9. Estimation Results: Eq. [2]
Household income and risk-coping options:
9

10. Estimation Results: Eq. [2]
Household expenditure and risk-coping options:
10

11. Estimation Results: Eq. [2]
11
Household income and livelihood portfolios:
Household expenditure and livelihood portfolios:
11

12. 12
Conclusion
• Crop income is highly sensitive to rainfall shocks as
compared with other sources of income.
o Compensation from livestock and non-farm income
• Consumption smoothing is evident
• Risk-coping options that could help the farm households
to smooth income and consumption:
o Savings and non-farm earnings
• Wealth-differentiated farm households have access to
effective risk-coping options differently.
Introduction & Motivation
Data
Specification
Estimation Results
Conclusion