Scandinavian Working Papers in Economics

EfD Discussion Paper,
Environment for Development, University of Gothenburg

No 23-12: Drought, Livestock Holding, and Milk Production: A Difference-in-Differences Analysis

Meseret B. Abebe () and Yonas Alem ()
Additional contact information
Meseret B. Abebe: Addis Ababa University
Yonas Alem: University of Gothenburg and Jameel Poverty Action Lab (J-PAL)

Abstract: We identify the effects of the 2015-16 El-Niño-induced large-scale drought on smallholder farmers’ livestock holding and milk production. The drought reduced milk production and livestock holding by 28.5% and 8.7%, respectively. Heterogenous impact analysis suggests that asset-rich households sold livestock and financed feed purchases, likely insulating milk production from the drought. In contrast, assetpoor households kept their livestock at all costs and absorbed all the decline in milk production. Our findings have important implications for formulating safety net and adaptation programs targeting smallholder farmers and the livestock sector in a rapidly changing climate.

Keywords: Drought; diff-in-diff; climate change; livestock holding; Ethiopia

JEL-codes: D13; O13; O44; Q18; Q54

Language: English

38 pages, July 17, 2023

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