Suchergebnisse

This dissertation consists of three chapters that analyze the effects of social development programs on productivity, risk management strategies, and energy consumption among the poorest population in Mexico. Weather shocks have important negative impacts on poor rural households' livelihood as they are not only closer to subsistence and more vulnerable but also depend on the weather for survival. Nonetheless, due to high administrative costs and information problems insurance markets tend to leave this part of the population unprotected. Similarly, poor rural households usually make use of cheap yet inefficient and potentially harmful sources of energy for cooking, lighting, and heating their homes. This situation does not only affect their health and daily activities, but also keeps them trapped in poverty. In the following chapters I discuss several ways in which government action can in fact improve this population's well-being. The first chapter entitled "Drought and Retribution: Evidence from a large scale Rainfall-Indexed Insurance Program in Mexico" studies the effects of the recently introduced rainfall-indexed insurance on farmers' productivity, risk management strategies, and per capita income and expenditures in Mexico. Weather shocks are a major source of income fluctuation and most of the world's poor lack insurance coverage against them. In addition, the absence of formal insurance contributes to poverty traps as investment decisions are conflicted with risk management decisions: risk-averse farmers tend to under-invest and concentrate in the production of lower yielding yet safer crops. Recently, weather-indexed insurance has gained increased attention as an effective tool providing small-scale farmers coverage against aggregate shocks. However, there is little empirical evidence about its effectiveness. According to the Ministry of Agriculture, 80 percent of agricultural catastrophic risk in Mexico stems from droughts. Therefore, in 2003 it implemented weather-indexed insurance as a pilot in five counties in the Mexican State of Guanajuato, and by 2008 it already covered almost 1.9 million hectares representing 15 percent of rain-fed agricultural land. The main identification strategy takes advantage of the variation across counties and across time in which the insurance was rolled-out. We find that insurance presence in treated counties has significant and positive effects on maize productivity. In fact, we find that insurance presence at the county level increases maize yields by more than 5 percent. Similarly, we find that insurance presence at the county level has had a positive effect on rural households' per capita expenditure and income of a magnitude close to 8 percent. However, we find no significant relation between insurance presence and the number of hectares destined to maize production.The second chapter entitled "Voters Response to Natural Disasters Aid: Quasi-Experimental Evidence from Drought Relief Payment in Mexico" estimates the effect of a government climatic contingency transfer allocated through the recently introduced rainfall indexed insurance on the 2006 Presidential election returns in Mexico. Using the discontinuity in payment based on rainfall accumulation measured on local weather stations that slightly deviate from a pre-established threshold, we show that voters reward the incumbent presidential party for delivering drought relief compensation. We find that receiving indemnity payments leads to a significant increase in average electoral support for the incumbent party of approximately 7.6 percentage points. Our analysis suggests that the incumbent party is rewarded by disaster aid recipients and punished by non-recipients. This chapter provides evidence that voters evaluate government actions and respond to disaster spending contributing to the literature on retrospective voting.The third and final chapter entitled "Conditional Cash Transfers schemes and Households' Energy Response in Mexico" analyzes the relationship between income and energy use in poor households in Mexico using household expenditure surveys that were collected to evaluate the poverty alleviation program "Oportunidades". We argue that Oportunidades cash transfers provide an income shock that is exogenous to a household's energy demand, allowing us to estimate short-run and long-run income elasticities for energy use. Short-run estimates hold household's appliance stock constant and long-run estimates model the household's decision to acquire new appliances. As a general estimation strategy households' fixed-effects are included. We also use instrumental variable estimation and a matching difference-in-differences estimator to check for robustness and correct for pre-selection unbalances between treatment and control groups. Results suggest significant differences between long-run and short-run elasticities as households emerging from poverty become first-time purchasers of energy-using appliances. In particular, we find small and not significant effects of cash-transfers on short-run energy consumption expenditure, but find significant and important effects of cumulative conditional cash-transfers on appliance acquisition (i.e. refrigerators and gas stoves). This has important policy implication since poverty alleviation programs like Oportunidades conditional cash transfers program, although not evident in the short run, have significant effects on energy demand.

Although weather shocks are a major source of income fluctuation, most of the world's poor lack insurance coverage against them. Absence of formal insurance contributes to poverty traps, as investment decisions are conflicted with risk management ones: risk-averse farmers tend to underinvest and produce lower yielding yet safer crops. In the past few years, weather index insurance has gained increasing attention as an effective tool to provide small-scale farmers coverage against aggregate shocks. However, there is little empirical evidence about its effectiveness. This paper studies the effect of the recently introduced rainfall-indexed insurance on farmers' productivity, risk management strategies, as well as per capita income and expenditure in Mexico. The identification strategy takes advantage of the variation across counties and across time in which the insurance was rolled-out. The analysis finds that the presence of insurance in treated counties has significant and positive effects on maize productivity. Similarly, there is a positive association between the presence of insurance in the municipality and rural households' per capita expenditure and income, although no significant relation is found between the presence of insurance and the number of hectares destined for maize production.

Recently, Weather Index Insurance (WII) has received considerable attention as a tool to insure farmers against weather related risks, particularly in developing countries. Donor organizations, local governments, insurance companies, development economists as well as agricultural economists are discussing the costs and benefits of WII. While the literature on WII has mainly focused on many cases in Africa and Asia, in this article we analyze the WII program in Mexico, which is one of the largest WII programs worldwide. In this context we discuss potentially important spill-over effects on related markets which so far have not been considered in the academic literature. First, we argue that WII creates disincentives to invest in other non-insured crops leading to potential overspecialization and monoculture. Secondly, WII generates disincentives to invest in irrigation systems because farmers are insured only as long as production takes place on non-irrigated land. Third, in case of catastrophic events food prices can potentially inflate with indemnity payments at the expense of the uninsured poor. We also suggest that in Mexico the thresholds of the weather index be (continuously) re-calibrated in order to adjust for the development of drought resistant seeds. Finally, the index could relatively easily be extended to account for precipitation variances. We argue that these factors and spillover effects should be accounted for in cost benefit analysis of WII.

The results in this report for the Russian Federation support the use of tobacco taxation as an effective means to reduce tobacco consumption, raise government revenues, increase public health and promote income equality.

Tobacco taxes are considered an effective policy tool to reduce tobacco consumption and produce long-run benefits that outweigh the costs associated with a price increase. Through this policy, some of the most adverse effects and economic costs of smoking can be reduced, including shorter life expectancy, higher medical expenses, added years of disability among smokers, and the effects of secondhand smoke. Nonetheless, tobacco taxes are often considered regressive because low-income households tend to allocate a larger share of their budgets to purchasing tobacco products. This paper uses an extended cost-benefit analysis to estimate the distributional effect of tobacco taxes on household welfare in South Africa. The analysis considers the effect on household income through an increase in tobacco prices, changes in medical expenses, and the prolongation of working years. The results indicate that a rise in tobacco prices initially generates negative income variations across all groups in the population. If benefits through lower medical expenses and an expansion in working years are considered, the negative effect is reduced, particularly in medium- and upper-bound elasticities. Consequently, the aggregate net effect is progressive and benefits the bottom deciles more than the richer ones. Overall, tobacco tax increases exert a small, but positive effect in the presence of low conditional tobacco price elasticity. If the population is more responsive to tobacco price changes (or participation elasticity estimates are included), then they would experience even more gains from the health and work benefits. More research is needed to clarify the distributional effects of tobacco taxation in South Africa.

We study household decisions to acquire energy-using assets in the presence of rising incomes. We develop a theoretical framework to characterize the effect of income growth on asset purchases when consumers face credit constraints. We use large and plausibly exogenous shocks to household income generated by the conditional-cash-transfer program in Mexico, Oportunidades, to show that asset acquisition is nonlinear, depends, as predicted in the presence of credit constraints, on the pace of income growth, and both effects are economically large among beneficiaries. Our results may help explain important worldwide trends in the relationship between energy use and income growth. (JEL D12, I32, I38, O12, O13, Q47)