Drought and Farm Output : An Analysis of Common-Pool Water and the Role of Ethnic Fractionalization in Rural Pakistan

This paper posits that when hit with drought, a household's ability to cope with the shock will be affected by its use of canal water and that any adverse effects will be exacerbated if the farm is located in an ethnically fractionalized community. Using indicator variables to represent use of canal water and to categorize villages where only one language is spoken as homogeneous, the paper performs an OLS analysis. The results first establish that drought has a significant and negative impact on standardized farm output, and that this effect is higher when considering the proportion of sampled households in the village affected by drought. The results also consistently show that headenders tend to see significant positive effects, and that households using canal water tend to be significantly worse off than non-irrigated households during drought conditions. Finally, for the sub-sample of irrigated farmlands, those situated in heterogeneous communities that are inhabited by drought affectees tend to see a greater negative impact on standardized crop yield than those irrigated farmlands located in homogenous communities with drought affectees. The main results then suggest that farmers using canal water and living in heterogeneous communities are hit hardest when water becomes scarce