Document Abstract
Published:
2003
Food aid and informal insurance
Food aid programs contribute to better consumption outcomes
This paper looks into the extent to which food aid helps to smooth consumption by reducing the impact of negative shocks, taking into account informal risk-sharing arrangements.
The paper asks two questions:
- what determines the allocation rule of food aid in Ethiopia? The paper demonstrates that by studying the allocation rule, it is possible to address the issue of whether food aid is indeed used as a form of insurance and so, is responsive to negative shocks
- what is the impact on consumption of food aid transfers? The paper explicitly tackles the issue of how food aid might interact with informal sharing arrangements within the village
The paper further analyses food aid distribution in Ethiopia and the village-level and within village allocation rule for food aid. It presents a theoretical framework to test the impact of a safety net on households faced with income risk. An empirical model is developed and used.
The paper finds that despite relatively poor targeting of the food aid, the programs contribute to better consumption outcomes, largely via intra-village risk sharing.
