Publication: Weathering Shocks: Unraveling the Effects of Short-Term Weather Shocks on Poverty in Paraguay
Loading...
Published
2024-11-18
ISSN
Date
2024-11-18
Editor(s)
Abstract
In Paraguay, poverty reduction has stalled since 2014 due to a deceleration in economic growth, which has been argued to be partly due to a series of climate-related events. Nevertheless, little is known about the impacts of climate-related shocks on the poor. This study analyzes the extent to which short-term weather shocks have affected incomes and poverty in Paraguay. It combines data from the yearly household survey series, the Permanent Continuous Household Survey; the fifth generation European Centre for Medium-Range Weather Forecasts atmospheric reanalysis of the global climate temperature data; and Climate Hazards Group InfraRed Precipitation with Station data from 2004 to 2019. The research design exploits variation in weather shocks across districts and time, using ordinary least squares pooled regression analysis. The results show that heat shocks led to significant household income reductions: 5 percent in urban areas and up to 8.8 percent in rural areas, on average. Heat shocks also increased poverty by 1.7 and 4.2 percentage points in urban and rural areas, respectively. Floods primarily affected urban areas, increasing poverty by 1.9 percentage points. The impacts vary substantially across regions and household characteristics: female-headed households in rural areas are particularly vulnerable to heat shocks, while households that are active in the primary sector suffer most from both heat and drought shocks. These findings evidence the disproportional impacts of short-term weather shocks on income and poverty across regions and household characteristics. The results highlight the need to consider actions to promote adaptation and climate risk strategies tailored to subpopulations that are vulnerable to climate, to enhance overall resilience in the country.
Link to Data Set
Citation
“Janz, Teresa; Gassmann, Franziska; de Ervin, Lyliana Gayoso. 2024. Weathering Shocks: Unraveling the Effects of Short-Term Weather Shocks on Poverty in Paraguay. Policy Research Working Paper; 10970. © World Bank. http://hdl.handle.net/10986/42431 License: CC BY 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Publication The Economic Value of Weather Forecasts: A Quantitative Systematic Literature Review(Washington, DC: World Bank, 2025-09-10)This study systematically reviews the literature that quantifies the economic benefits of weather observations and forecasts in four weather-dependent economic sectors: agriculture, energy, transport, and disaster-risk management. The review covers 175 peer-reviewed journal articles and 15 policy reports. Findings show that the literature is concentrated in high-income countries and most studies use theoretical models, followed by observational and then experimental research designs. Forecast horizons studied, meteorological variables and services, and monetization techniques vary markedly by sector. Estimated benefits even within specific subsectors span several orders of magnitude and broad uncertainty ranges. An econometric meta-analysis suggests that theoretical studies and studies in richer countries tend to report significantly larger values. Barriers that hinder value realization are identified on both the provider and user sides, with inadequate relevance, weak dissemination, and limited ability to act recurring across sectors. Policy reports rely heavily on back-of-the-envelope or recursive benefit-transfer estimates, rather than on the methods and results of the peer-reviewed literature, revealing a science-to-policy gap. These findings suggest substantial socioeconomic potential of hydrometeorological services around the world, but also knowledge gaps that require more valuation studies focusing on low- and middle-income countries, addressing provider- and user-side barriers and employing rigorous empirical valuation methods to complement and validate theoretical models.Publication The Macroeconomic Implications of Climate Change Impacts and Adaptation Options(Washington, DC: World Bank, 2025-05-29)Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.Publication Rigging the Scores: Corruption through Scoring Rule Manipulation in Public Procurement Auctions(Washington, DC: World Bank, 2025-12-02)Public procurement is highly susceptible to corruption, especially in developing countries. Although open auctions are widely adopted to curb it, this paper finds that corruption remains prevalent even within this procurement format. Procurement officers can collaborate with firms to manipulate scoring rules, ensuring predetermined winners, while corrupt firms submit noncompetitive bids to meet minimum bidder requirements. Using extensive data from Chinese public procurement auctions, the paper introduces model-driven statistical tools to detect such corruption, identifying a corruption rate of 65 percent. A procurement expert audit survey confirms the tools’ reliability, with a 91 percent probability that experts recognize suspicious scoring rules when flagged. Firm-level analysis reveals that local, state-owned, and less productive firms are favored in corrupt auctions. Lastly, the paper explores policy implications. Analysis of the national anti-corruption campaign since 2012 suggests that general investigations may be insufficient to address deeply ingrained corrupt practices. Using counterfactuals based on an estimated structural model, the paper shows that implementing anonymous call-for-tender evaluations could improve social welfare by 10 percent by eliminating suspicious rules and encouraging broader participation.Publication Labor Demand in the Age of Generative AI: Early Evidence from the U.S. Job Posting Data(Washington, DC: World Bank, 2025-11-18)This paper examines the causal impact of generative artificial intelligence on U.S. labor demand using online job posting data. Exploiting ChatGPT’s release in November 2022 as an exogenous shock, the paper applies difference-in-differences and event study designs to estimate the job displacement effects of generative artificial intelligence. The identification strategy compares labor demand for occupations with high versus low artificial intelligence substitution vulnerability following ChatGPT’s launch, conditioning on similar generative artificial intelligence exposure levels to isolate substitution effects from complementary uses. The analysis uses 285 million job postings collected by Lightcast from the first quarter of 2018 to the second quarter of 2025Q2. The findings show that the number of postings for occupations with above-median artificial intelligence substitution scores fell by an average of 12 percent relative to those with below-median scores. The effect increased from 6 percent in the first year after the launch to 18 percent by the third year. Losses were particularly acute for entry-level positions that require neither advanced degrees (18 percent) nor extensive experience (20 percent), as well as those in administrative support (40 percent) and professional services (30 percent). Although generative artificial intelligence generates new occupations and enhances productivity, which may increase labor demand, early evidence suggests that some occupations may be less likely to be complemented by generative artificial intelligence than others.Publication Investment Policy Reforms and Foreign Direct Investment Inflows(Washington, DC: World Bank, 2025-12-01)Foreign direct investment has the potential to introduce much-needed capital and expertise in emerging and developing economies. To attract foreign direct investment, many countries have eased restrictions on foreign ownership in various sectors, reformed their institutions, and set up investment promotion agencies. Until the mid-2010s, Ethiopia remained one of the few countries that resisted this trend, with several stringent restrictions in place on foreign direct investment entry and operations in the country. This study employs a synthetic control method to examine patterns in foreign capital inflows following a series of investment policy reforms that were substantively introduced in the mid-2010s (circa 2015). The study offers evidence that investment policy reforms contributed to a significant foreign direct investment inflow in Ethiopia, compared to what would have occurred in the absence of these policies. An alternative strategy that conservatively specifies the donor country pool using an AI-assisted deep search technique changes the donor pool weighting matrix of the synthetic control method, but the estimated policy effects largely remain robust to this specification. The findings highlight the importance of targeted reforms in promoting foreign direct investment inflow in developing countries.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Understanding the Distributional Impacts of Increases in Fuel Prices on Poverty and Inequality in Paraguay(World Bank, Washington, DC, 2022-12)The recent global increases in fuel prices threaten the gains in poverty reduction that countries like Paraguay have achieved over the past few decades. Therefore, policy makers must understand the potential distributional impacts of increases in fuel prices to evaluate the implementation of alternative measures that could mitigate these impacts. This paper analyzes the potential effects of fuel prices on poverty and inequality in Paraguay. Using microsimulation methods and based on the Commitment to Equity framework, it estimates the impact of higher fuel prices on welfare, poverty, and inequality based on three scenarios: (a) increases in gasoline prices, (b) increases in diesel prices, and (c) simultaneous increases in gasoline and diesel prices. The results obtained suggest that the total impact of increasing fuel prices tends to be more regressive in Paraguay. At the same time, the results of the simulations indicate small effects on income inequality.Publication Uneven Waters: Examining Poverty and Urban and Rural Households' Exposure to Flood Risk in Paraguay(Washington, DC: World Bank, 2025-09-15)Floods are becoming more frequent and severe due to climate change, population growth, and land cover changes. In Paraguay, floods are the most common weather-related hazard and disproportionately impact poor and vulnerable populations. This study contributes to understanding household-level exposure to flood risk in Paraguay by combining geolocated household survey data with novel flood hazard maps. The study estimates that more than 23 percent of households are exposed to flood risk, with exposure varying by geography and household characteristics. Urban households living in poverty are among the most exposed, facing depths of flooding nearly four times higher than non-poor households, in smaller, more common flood events. The approach provides valuable insights for targeting flood risk reduction efforts and highlights the importance of considering socioeconomic vulnerability in disaster risk management. These findings underscore the multidimensional nature of vulnerability to flood risk, particularly in rapidly urbanizing areas, and the need for integrated urban planning and poverty reduction strategies to address flood risk disparities effectively, particularly in rapidly urbanizing areas.Publication Psychological Distress One Year into the COVID-19 Pandemic(World Bank, Washington, DC, 2022-06)The outbreak of COVID-19 coincided with a period of significant economic, social, and political challenges in Sudan. The most significant of these were related to the recent establishment of a transitional government in August 2019 after the fall of the ruling regime due to the revolution that started in December 2018 and succeeded in toppling the government in April 2019. But the optimism around the political developments were accompanied by marked fluctuations in the economy that were further exacerbated by the pandemic. Between March 2020 (the first wave of the pandemic) and June 2021 (the time of this survey) inflation went from 81.64 percent to 412.75 percent, and the Sudanese pound severely depreciated. While the government introduced a package of reforms aiming at restoring macro-economic stability, soaring commodity prices and shortages of power and fuel, are some of the economic challenges that fueled social and political unrest during this period. The first COVID-19 case in Sudan was confirmed on March 13 of 2020, and soon after, cases started to increase. As in many developing countries, evidence suggests that COVID-19 exposure was significantly more prevalent than that indicated by officially reported cases. The speed of propagation of the coronavirus and the uncertainty around how to prevent it led to the implementation of different preventive and control measures in the first quarter of 2020, including restrictions on activities and the promotion of preventative health measures. 3,4 The government implemented two lockdowns aiming to restrict mobility. The first lockdown implemented from March to June 2020 was strict. Initially it only allowed activity until 10am, and it gradually extended to 1pm and eventually to 6pm. The second lockdown (September - December) was more lax. Furthermore, adherence to the timeframes set by the government was highly correlated with socio-economic status. Middle-class segments of Sudanese society were able to comply more readily than their less economically privileged counterparts. As a result, only the major thoroughfares were empty. In contrast, gatherings, public prayers, social life, and market congregations were largely maintained in neighborhoods of lower socioeconomic status.Publication Extreme Weather Shocks and Firms in the Middle East and North Africa(Washington, DC: World Bank, 2024-12-19)The Middle East and North Africa is the most water scarce region in the world. Although studies have explored the effect of extreme weather events on agriculture, much less is known about the effect on businesses. Using geocoded firm-level data from the World Bank’s Enterprise Surveys across the Middle East and North Africa region, this study analyzes the effects of precipitation shocks on firm performance. The findings show that firms in areas that experience negative precipitation shocks have lower sales, labor productivity, and investment. The study tests a number of channels identified in the literature. Poor infrastructure, such as water and electricity outages, and lower access to finance that occur as a result of negative precipitation shocks are found to be key channels. Negative precipitation increases the share of temporary workers, possibly explaining the drop in labor productivity. A new channel of governance is also uncovered—negative precipitation shocks increase the time spent by senior management in dealing with regulations and expectations of solicitations of bribes. The results also show that firms respond to precipitation shocks by adopting greener practices, suggesting scope for adaptation in the region.Publication Kyrgyz Republic : Minimum Living Standards and Alternative Targeting Methods for Social Transfers(World Bank, Washington, DC, 2013-06)The objective of this report is twofold: first, analyze and discuss the linkages between different minimum standards currently used in the Kyrgyz Republic and with the Monthly Benefit for Poor Families (MBPF), and, secondly, to analyze the potential of alternative targeting methods and benefit levels. The analysis in this report mainly draws on data from the Kyrgyz Integrated Household Survey (KIHS) 2010. The report is structured as follows: the next section analyzes and compares different minimum living standards as currently used in the Kyrgyz Republic. Subsequently, we simulate different targeting options using static micro-simulation. Categorical targeting, proxy-means testing and the current means-test given a higher Guaranteed Minimum Income (GMI) are analyzed and eventually compared in terms of cost efficiency. The last section concludes. One of the objectives of the Strategy for Social Protection Development 2012-2014 of the Government of the Kyrgyz Republic (GoKG) is to improve the targeting performance of the MBPF. The MBPF is the only last-resort social transfer program in the Kyrgyz Republic aimed at providing a guaranteed minimum income to the population. Currently, eligibility for the MBPF is determined by a means-test. A second objective of the strategy, which is closely linked to the first, aims at improving the poverty reduction effectiveness of the transfer. The size of the MBPF is defined by the difference between family income per capita and the level of the GMI. The main purpose of a national poverty line is to analyze they extent and nature of poverty in the country, and to assess the (distributional) outcomes of public policies. The objective of the food poverty line is to identify the extremely poor households and individuals in the society.
Users also downloaded
Showing related downloaded files
Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.Publication Common Sense and Economic Aid(World Bank, Washington, DC, 1956-02-18)Eugene R. Black, President of the International Bank for Reconstruction and Development, spoke about America economic aid to other countries. He described in detail the Bank’s business of economic development. The Bank can help developing countries to make a choice in their own interests. He described a hydroelectric power project in Egypt.Publication Address Presenting the Fourth Annual Report(World Bank, Washington, DC, 1949-09-13)Eugene R. Black, President of the International Bank for Reconstruction and Development, spoke about the plight of the underdeveloped member countries. Bank has greatly enlarged its knowledge of their economic problems and needs, their capacity to absorb and service external loans, and the merits of particular development projects. He discussed the most constructive contributions the Bank can make to the progress of development, especially in the least advanced countries, is to help make available to them the experience of other nations. He closed on a note that the Bank can start on the way towards equilibrium, it may find the effects of returning confidence highly cumulative and the difficulties dispelled more quickly than they dared hope.Publication Address before the Foreign Policy Association, Minneapolis, January 19, 1949(World Bank, Washington, DC, 1949-01-19)John J. McCloy, President of the International Bank for Reconstruction and Development, spoke about the elusive matter of international economic recovery. He reviewed the policy environment for the European Recovery Program (Marshall Plan), economic integration, and international trade imbalances. Europe’s dollar problem is America’s dollar problem.Publication The Italian NDC Scheme(World Bank, Washington, DC, 2019-04)Starting from a reconstruction of the political context in which the Italian 1995 pension reform took shape, this paper reviews the essential features of the 1995 and post-1995 legislation and assesses its fundamental shortcomings. A straightforward theoretical discussion highlights both the targets and the instruments representing the hallmark of the nonfinancial defined contribution (NDC) model. The contrast of such theoretical premises with the Italian legislation points out the persistent original mistakes together with the necessary remedies.