Do cash transfers foster resilience? Evidence from rural Niger

In this paper, the authors test whether cash transfers help households mitigate the welfare effects of climatic shocks. They also analyze mechanisms that contribute to enhance resilience, including the role of savings, asset accumulation and income smoothing in agriculture and off-farm household enterprises. The authors study a government-led cash transfer program that delivers small monthly unconditional transfers of 10,000 CFA (about 20 USD) 3 for two years. The program is part of a government-led national safety net and targets poor households in rural shock-prone areas of Niger.

Policy makers are increasingly interested in strategies to promote resilience by enhancing households’ ability to prepare and protect themselves against shocks. The issue has become salient given widespread concerns about climate change and the growing frequency of shocks globally. The focus on improving resilience is also at the center of efforts to better coordinate the nexus between emergency humanitarian interventions and more permanent development programs (Clarke and Dercon, 2016; Bowen et al., 2020). However, there is little evidence on effective policy options to improve poor households’ resilience

This study provides evidence that: 

• cash transfers can help households mitigate the adverse effects of climatic shocks.
• Transfers raise average per capita consumption by about 10 percent on average. This effect is mostly driven by households affected by droughts, for whom welfare impacts are larger than the transfer amount and fully offset losses induced by shocks.
• Turning to the mechanisms, beneficiaries have higher participation and savings in tontines.
• Importantly, it shows that cash transfers improve household capacity to smooth income when shocks occur.
• It observes an intensification of agricultural activities, with increased revenues from sales of agricultural products. The likelihood that households operate an off-farm enterprise and related profits are also higher when shocks occur. The authors find more limited impacts on assets and livestock

Overall, these results suggest that households benefit from investing the transfers in incomegenerating activities. This explains how the magnitude of the impacts on consumption is larger than the value of the transfers among households hit by a shock. The findings are consistent with safety nets enhancing resilience.