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When it Rains, it Pours: Estimating the Spatial Spillover Effect of Rainfall

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  • Farzana Hossain

    (Monash University)

  • Reshad N. Ahsan

    (University of Melbourne)

Abstract

A large fraction of the world’s poor rely on rain-fed agriculture, which makes them vulnerable to changes in rainfall patterns. In this paper, we examine whether spatial correlation in rainfall results in these households also being vulnerable to an adverse spatial-spillover effect. In particular, we use household-level panel data from India along with high-resolution meteorological data to show how rural household consumption varies with own-region rainfall as well as rainfall in neighboring areas. We find that while greater own rainfall has a positive effect on rural household consumption, greater rainfall in neighboring regions has an adverse spatial-spillover effect. Our results suggest that when this spillover effect is taken into account, the positive impact of own-region rainfall on household consumption falls by 38 percent.

Suggested Citation

  • Farzana Hossain & Reshad N. Ahsan, 2022. "When it Rains, it Pours: Estimating the Spatial Spillover Effect of Rainfall," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 82(2), pages 327-354, June.
    • Handle: RePEc:kap:enreec:v:82:y:2022:i:2:d:10.1007_s10640-022-00680-3
    DOI: 10.1007/s10640-022-00680-3
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    More about this item

    Keywords

    Rainfall; Rural households; Climate;
    All these keywords.

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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