Variability in agricultural productivity and rural household consumption inequality: Evidence from Nigeria and Uganda

The distributional implications of climate-induced variability in agricultural productivity on household consumption and inequality are examined in this study. The analysis uses multiple rounds of household survey panel data to assess the impact of climate-induced variability in agricultural productivity on household consumption and inequality. Climate-induced variability in agricultural productivity can have a significant impact on household consumption and inequality. The study finds that a 10 percent increase in the variability of agricultural productivity tends to decrease household consumption by 38 and 52 percent on average for Nigeria and Uganda, respectively. This suggests that variability in agricultural productivity can have a significant negative impact on household consumption, particularly in countries with high levels of inequality. The study also examines the impact of variability in agricultural productivity on consumption inequality. The results suggest that variability in agricultural productivity contributed to between 25 and 43 percent of consumption inequality between 2010 and 2015 for Nigeria, and 16 and 31 percent of consumption inequality between 2009 and 2011 for Uganda. This suggests that variability in agricultural productivity can have a significant impact on consumption inequality, particularly in countries with high levels of inequality. The study also finds that variability in agricultural productivity increases changes in consumption inequality over time. This suggests that variability in agricultural productivity can have a long-term impact on consumption inequality, and that policies aimed at reducing variability in agricultural productivity may be an important strategy for reducing consumption inequality. The study uses a conventional decomposition and a regression-based inequality decomposition to estimate the impact of climate-induced variability in agricultural productivity on household consumption and inequality. The results suggest that the benefits of productivity growth in agriculture often accrue to higher income households, and that growth among the wealthy does not always trickle down to the poor. This suggests that reducing inequality is an important development objective on its own merit. The study also highlights the importance of agricultural productivity growth in reducing poverty. Agricultural growth consistently has been shown to be more effective in reducing poverty than comparable growth in other economic sectors. Its impact on poverty is both direct, flowing immediately from growth in agriculture by raising real incomes of poor farm (and nonfarm) households, and indirect, due to increasing agricultural output inducing job creation in upstream and downstream nonfarm sectors in response to higher domestic demand. The study's findings have important implications for policymakers in Nigeria and Uganda. The results suggest that policies aimed at reducing variability in agricultural productivity, such as climate-resilient agricultural practices and investments in irrigation infrastructure, may be an important strategy for reducing consumption inequality. Additionally, policies aimed at promoting agricultural productivity growth, such as investments in agricultural research and extension services, may also be an important strategy for reducing poverty and inequality. Overall, the study provides new insights into the impact of climate-induced variability in agricultural productivity on household consumption and inequality in Nigeria and Uganda. The results suggest that variability in agricultural productivity can have a significant negative impact on household consumption and inequality, and that policies aimed at reducing variability in agricultural productivity may be an important strategy for reducing consumption inequality.