Too little too late: welfare impacts of rainfall shocks in rural Indonesia

We use regression analysis to assess the potential welfare impacts in rural Indonesia of two types of shock: a delay in monsoon onset; and a significant shortfall in rain during the 90-day post-onset period. Focusing on households with family farm businesses, we find that a delay in monsoon onset does not have a significant effect on the welfare of rice farmers. However, rice farm households located in areas exposed to low rainfall following the monsoon are negatively affected. Such households appear to be able to protect their food expenditure in the face of weather shocks, but at the expense of their non-food expenditure. We also use propensity score matching to identify community programs that might moderate the impact of this type of shock. We find that access to credit and public works projects has the strongest moderating effect. This is an important consideration for the design and implementation of adaptation strategies.