Reported weather shocks and rural household welfare : Evidence from panel data in Northeast Thailand and Central Vietnam

Abstract

Extreme weather events are reported to have severe effects on rural households in the developing world. This study uses a unique and comparable panel dataset of about 4000 rural households collected in three years (2010, 2013, and 2016) from Northeast Thailand and Central Vietnam to examine and compare the welfare effects of floods, droughts, and storms reported to be experienced by rural households. Our results show that these weather shocks have significant effects on household income, consumption, and poverty in both countries, though the levels of severity are different. Drought is the common extreme weather event in these two countries with significant and negative effects on household income, consumption and poverty. In Thailand, floods have higher impacts on rural households in terms of income and poverty than storms do. Compared to Thailand, Vietnam is more exposed and significantly affected by storms. In addition to weather shocks, the welfare of rural households is significantly affected by other factors representing their livelihood platforms. Promoting farm mechanization and rural education should be given high priority in both countries. In Thailand, the accumulation of farmland should also be encouraged. In Vietnam, accelerating internet access and supporting livestock production would contribute to increasing household income and consumption and consequently decreasing poverty.