Ethiopia : Risk and Vulnerability Assessment

Abstract

This study is a review of risks and how they are currently managed, by individuals, households, communities and the public in Ethiopia. It starts with the hypothesis that risks are important determinants o f poverty, and understanding how they are managed permits us to assess the prospects and strategies for poverty reduction and sustainable development in the future. The review focuses on the most common risks that affect individuals or communities. The report is organized as follows. The first two chapters summarize the report's approach and the effectiveness of social risk management strategies. Chapter 3 provides the context to the rest of the report by tracing recent developments in Ethiopia; providing a quick overview of the evolution of consumption and non-consumption measures of welfare; and extending these measures, especially the standard consumption poverty measure, to include the notion of vulnerability and providing a head count o f the vulnerable. Chapter 4 looks briefly at a few core risks that are perceived and experienced as compelling in the country. Chapter 5 discusses how these risks are managed by households (informal insurance) via markets and by the public sector, and assesses the effectiveness of these strategies. It also provides an estimate of welfare losses from inadequate management of risks. Chapter 6 provides an outline of a social protection strategy to help households better manage risks. Chapter 7 concludes with lessons learned and next steps.