Porter, CatherineWhite, Emily2016-07-072016-07-072016-06https://hdl.handle.net/10986/24634This paper analyzes the potential to combine catastrophe risk modelling (CAT risk modeling) with economic analysis of vulnerability to poverty using the example of drought hazard impacts on the welfare of rural households in Ethiopia. The aim is to determine the potential for applying a derived set of damage (vulnerability) functions based on realized shocks and household expenditure/consumption outcomes, onto a forward-looking view of drought risk. The paper outlines the CAT risk modeling framework and the role of the vulnerability module, which describes the response of an affected exposure to a given hazard intensity. The need to explicitly account for different household characteristics that determine vulnerability within our model is considered, analogous to how a CAT risk model would differentiate damage functions for buildings by different classes of construction. Results for a regression model are presented, estimating ex-post drought impacts on consumption for heterogeneous household types (e.g. with cattle, safety-net access, illness). Next, the validity/generalizability of the derived functions are assessed, to infer applicability of the derived relationships within a CAT risk modelling framework. In particular, the analysis focuses on external validity: whether the relationships established in the dataset can be used for forecasting outside of the sample used for analysis. The model is stress-tested using statistical methods of resampling. This involves randomly splitting the data into “training” and "testing" datasets. The tests show consistency of results across the datasets. Finally, future plans are outlined with regard to developing a fuller catastrophe risk model to combine with the consumption results.en-USCC BY 3.0 IGOPOVERTY THRESHOLDLIVING STANDARDSRISKSHOUSEHOLD SIZEHOUSEHOLD SURVEYPOVERTY LINEECONOMIC GROWTHSTORMEARLY WARNINGFARMERWIND SPEEDFOOD CONSUMPTIONINCOMESCHOOLINGPOVERTY RATESHOUSEHOLD CONSUMPTIONTOTAL POVERTYAGRICULTURAL DEVELOPMENTVULNERABILITY ASSESSMENTNATURAL CATASTROPHESDEATHFOOD POLICYPOOR PEOPLECHILD LABOURDISASTERSOLAR RADIATIONMEASURESPOVERTY ASSESSMENTHURRICANESREGIONINSURANCE COMPANYPOVERTY ANALYSISPOVERTY INDICATORCROP YIELDSAVINGSCROP PRODUCTIONTSUNAMIRURAL HOUSEHOLDSHOUSEHOLD HEADINSURANCE MARKETSPOVERTY GAPFLOODSGEOGRAPHICAL REGIONSVULNERABILITY‐ ASSESSMENTFOOD PRICESHEEPREGIONAL RESULTSPUBLIC SAFETYNATURAL HAZARDNATURAL DISASTERSHOUSEHOLD COMPOSITIONHOUSEHOLD FACTORSFORECASTINGHOUSEHOLD INCOMETYPHOONDISASTERSCONSUMPTION EXPENDITUREINSURERSFARMERSDISASTER EVENTFAMINECOVARIATE SHOCKSHOUSEHOLD HEADSCLAIMS ASSESSMENTINSURANCE CONTRACTSUNEMPLOYMENTREINSURANCECROP YIELDSINFANT MORTALITYDROUGHTSCONSUMPTIONHUMAN CAPITALTROPICAL CYCLONEEARTHQUAKERISK ASSESSMENTFLOOD DAMAGEFOOD SECURITYDISASTER REDUCTIONDISASTER RISKCLIMATE CHANGEDROUGHTECOLOGICAL ZONESNATURAL HAZARDBANKEXTREME EVENTSINSURANCE CONTRACTSFOOD CONSUMPTIONFLOOD DAMAGESAFETY NETCLAIMS ASSESSMENTDAMAGEIMPACT OF SHOCKSIMPACT OF DISASTERSSMALLHOLDER FARMERSRURALFLOODCROP LOSSESPRODUCTION FUNCTIONDIVERSIFICATIONIDIOSYNCRATIC SHOCKSINSURANCERURAL POLICYSAFETY‐NETREGIONSPRODUCTION SYSTEMSHURRICANEIRRIGATIONRISKFOOD CROPSPOVERTYDROUGHT RISKVULNERABILITY TO POVERTYABSOLUTE TERMSCLIMATE CONDITIONSPHYSICAL DAMAGEHOUSEHOLD CONSUMPTIONAGRICULTURAL PRODUCTIVITYRISK MANAGEMENTIMPACT EVENTSHOUSEHOLD WELFAREHOUSEHOLDS WITH LIVESTOCKPOORWELFARE MONITORINGPOVERTY ASSESSMENTDISASTER RISKWELFARE MEASUREASSET SALESFOOD PRICESCHILD LABOURCLIMATIC REGIONSAFETYECONOMIC GROWTHRISK ASSESSMENTPOVERTY ANALYSISENVIRONMENTAL DISASTERWorking PaperWorld Bank10.1596/1813-9450-7717