Resource information
Studies of risk and its consequences
tend to focus on one risk factor, such as a drought or an
economic crisis. Yet 2003 household surveys in rural
Kilimanjaro and Ruvuma, two cash-crop-growing regions in
Tanzania that experienced a precipitous coffee price decline
around the turn of the millennium, identified health and
drought shocks as well as commodity price declines as major
risk factors, suggesting the need for a comprehensive
approach to analyzing household vulnerability. In fact, most
coffee growers, except the smaller ones in Kilimanjaro,
weathered the coffee price declines rather well, at least to
the point of not being worse off than non-coffee growers.
Conversely, improving health conditions and reducing the
effect of droughts emerge as critical to reduce
vulnerability. One-third of the rural households in
Kilimanjaro experienced a drought or health shocks,
resulting in an estimated 8 percent welfare loss on average,
after using savings and aid. Rainfall is more reliable in
Ruvuma, and drought there did not affect welfare.
Surprisingly, neither did health shocks, plausibly because
of lower medical expenditures given limited health care provisions.
