Replication Data for Chapter 4 - Weathering shocks

Poverty reduction in Paraguay has stalled since 2014 due to a deceleration in economic growth, which has in part been associated with a series of climate-related shocks. Nevertheless, there is little empirical evidence on the impacts of climate-related shocks on the poor. This chapter analyses the extent to which short-term weather shocks have affected incomes and poverty in Paraguay between 2004 and 2019. It combines data from the yearly household survey series, the Encuesta Permanente de Hogares (EPH); the fifth generation European Centre for Medium-Range Weather Forecasts atmospheric reanalysis of the global climate temperature data; and Climate Hazards Group InfraRed Precipitation with Station data. We exploit variation in weather shocks across districts and time, using ordinary least squares pooled regression analysis. The results show that heat shocks led to significant household income reductions: 5% in urban areas and up to 8.8% in rural areas, on average. Heat shocks also increased poverty by 1.7 and 4.2 percentage points in urban and rural areas, respectively. Floods primarily affected urban areas, increasing poverty by 1.9 percentage points. The impacts vary substantially across regions and household characteristics: female-headed households in rural areas are particularly vulnerable to heat shocks, while households that are active in the primary sector suffer most from both heat and drought shocks. The results highlight the need to promote adaptation and climate risk strategies tailored to sub-populations that are vulnerable to weather shocks in order to enhance overall resilience in the country.