Humboldt-Universität zu Berlin - Quarterly Journal of International Agriculture

Quarterly Journal of International Agriculture No. 1/12

Weather Risk and Household Participation in Off-farm Activities in Rural Ethiopia

Abera Birhanu Demeke and Manfred Zeller
University of Hohenheim, Stuttgart, Germany


This study examines the effects of weather shock on households’ decision to engage in different types of off-farm work in rural Ethiopia. A multinomial logit model is applied to household data collected in 1999 and 2004. The regression results show that the level and variability of rainfall has a significant effect on the decision by households to engage in any type of off-farm work. The probability of a household deciding to participate in low-return, off-farm activities increases with lower levels and higher variability of rainfall, suggesting that households engage in those activities as a strategy for coping with adverse weather shock. Contrary to this, we find that participation in high-return activities increases with the level of rainfall and tends to decrease with rainfall variability, suggesting a strong correlation between off-farm activities and agricultural production.

Keywords: off-farm participation, rainfall risk, coping, Ethiopia, multinomial logit

JEL: J22, Q12

Vol. 51 (2012), No. 1: 1-20