The impacts of climate variability on household welfare in rural Mexico

In light of the expected increase in weather variability from climate change, we examine the impact of weather shocks, defined as rainfall or growing degree days more than a standard deviation from their respective long-run means, on household consumption per capita. The analyses suggest that both rainfall and temperature shocks affect both food and non-food consumption. Furthermore, the results show that a household's ability to protect its consumption from weather shocks depends on the climate region and when in the agricultural year the shock occurs. Especially, households in arid climates are not fully protected from weather shocks occurring during the beginning of the wet season (April, May, June). The results highlight the necessity to account for the underlying climatic variation as well as to carefully define the shocks.