CONSUMPTION SMOOTHING AND VULNERABILITY IN THE ZONE LACUSTRE, MALI

This paper explores risk sharing in the Zone Lacustre, Mali, as viewed throughthe lens of consumption smoothing. We find that idiosyncratic shocks appear to havelittle impact on consumption, and that households respond to these shocks in a variety ofways. In general, nonpoor households are more likely to enter into new income-generatingactivities while poor households are more likely to engage in credit or giftexchange or to ration consumption. When we construct a stronger test for consumptionsmoothing, we find that changes in household income lead to modest changes inconsumption. Covariant shocks, as measured by village/round dummies, always lead tochanges in consumption. These results are robust to concerns regarding bias resultingfrom measurement error or endogeneity of changes in income. Lastly, we find thathouseholds with access to improved water control infrastructure are less vulnerable thanthose that rely on rainfall or the flooding of the Niger River.