Heterogeneity in Household Welfare Responses to the Climate Shocks : Evidences from the Ethiopian Socioeconomic Survey Data Using the Instrumental Variable Approach

Using the socioeconomic survey data from the Central Statistical Authority (CSA), this paper examines the heterogeneity in welfare responses to the climate shocks. Along with this the key objective of the study is to analyze the climate shock impacts on the welfare of the household. The study applied the instrumental variable (IV) approach and the result of the study shows that there is heterogeneity in climate shock in influencing the welfare of households. Because climate change is unavoidable, the government should strengthen and sustain the mainstreaming adaptation measures to support overall economic performance, among which work should be done. There should be a means to clearly identify the numerous climatic shock triggers and relate them to the appropriate cope up mechanisms (shock reactions) in the short and long term. Furthermore, there should be a mechanism to educate households on alternative ways to manage their environment and to accept the integration of agriculture, meteorology (access to weather information), and information communications