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Exploring The Impacts Of Cash Transfers On Household Vulnerability In Amazon Estuary Region Of Brazil--an Agent-based Simulation

Congress: 2015
Author(s): Yue Dou, Peter Deadman, Oriana Almeida, Sergio Rivero, Nathan Vogt
Yue Dou, Peter Deadman, Derek Robinson
Department of Geography and Environmental Management, University of Waterloo
 
Oriana Almeida, Sérgio Rivero
Universidade Federal do Pará, Brazil
 
Nathan Vogt
National Institution for Space Research


Keyword(s): Sub-theme 11: Key vulnerabilities and security risks,
Article: Oral:
Abstract

Introduction:

In the Brazilian Amazon estuary region, small farm households must adapt to a dynamic environment that includes years with extreme floods or droughts events. The degree and frequency of such extreme events has been shown, by both scientific evidence and farmers' perceptions, to be increasing over the past few decades (Pinho et al., 2014). These climatic changes direct the attentions to explore the vulnerability of coupled human-environment systems. To sufficiently understand this vulnerability, it is essential to investigate one of its significant components--human system--using conceptual model proposed by Turner & Kasperson (2003). Not solely influenced by exposure to such hazards, vulnerability is also determined by the resilience of the human system, which offers options and flexibility to cope with or adapt to changes and risks. Being exposed to same disturbances and risks, ascribing to different human conditions, will cause various impacts and trigger adaptations that result in varied vulnerability.

Government cash transfer programs, such as old age pensions or child education subsidies, play an important role in influencing household livelihood strategies and activities, resulting in changes to the resilience and vulnerability of human systems in this region. The influence of these programs on economic growth and labour allocation has been studied (Barrientos, 2012; Bertrand, 2003; Boone et al., 2013; Sadoulet et al., 2001), but its role in the influence on household vulnerability needs further studies. Understanding the impact of these cash transfer programs and their consequences on the resilience of individual households are important for exploring the vulnerability of these communities in the face of a changing environment.

Aims: It can be answered through such questions as: (1) among small farm households, who are more vulnerable to under way environmental changes? (2) How are cash transfers and the consequences attenuated or amplified to vulnerability differently? (3) What can be done to reduce vulnerability to change?

Importance of the study: Conducting this study to answer the above questions we are able to 1) investigate impacts from government cash transfer programs on household resilience, and to 2) identify who are vulnerable, furthermore, what make them vulnerable to floods and droughts; 3) by comparing impacts from different cash transfer programs, a more cost-effective cash transfer program thus can be designed to reduce vulnerability for targeted groups.

Method:

This study utilizes household surveys and agent-based simulation to explore the dynamic of this coupled human and natural system. First of all, we use a "sustainable rural livelihood" model to define the concept of livelihood and construct analysis into household livelihood system. A household survey of 635 Caboclo households was accomplished in 50 communities of Abaetetuba municipality, Pará, Brazil in 2012. Households are clustered into groups based on the size of cash transfer one household receives jointing with their dependency on this income, which we define specifically as livelihood strategy in this study. We also use ANOVA and T-test to compare group means in income, human capital, and assets. Afterwards, multi-nomial analysis (MNL) is applied to identify the characteristics that households' choice of different strategy.

Agent-based model (ABM) then is constructed to represent the households from real world to a computerized environment, focusing on their responses to different cash transfers and variability across household characteristics. We use Chayanov's theory as a foundation(Chayanov, 1966; Ellis, 1996) to form and explain small farming household's behaviors and patterns that has emerged from the survey. Households face two opposing objectives: an income objective which requires labour input, and a work-avoidance objective which conflicts with income generation. Parameters for production function and utility preferences are obtained from the database, which vary for households in different groups. Confounding by cash transfer, household agents adjust their behaviors accordingly to their decision making and preferences.

Results and Discussion:

Preliminary analysis of household survey in this region demonstrates that there are varying degrees of household dependency on cash transfers. Factors such as education level and household assets were found to be significant in influencing household dependency on cash transfers and thus resilience in the short term.

Model simulation is complementary to static questionnaire. By running simulation we are able to generate household dynamics to cash transfer, hence to track household resilience in the long term. Early results indicate that households with higher education, and less dependence on cash transfers, show enhanced resilience in comparison to households who have high cash transfer dependency and become more vulnerable in face of climate change and other shocks.

Conclusions:

Results from clustering analysis reveal the heterogeneity of household livelihoods in estuary region: households receive distinctive amounts of cash transfers, and they apply different strategies accordingly. This heterogeneity, furthermore, results in different degrees of vulnerability for households when they are under same exposures from climate changes. Young households and well educated households mostly have off-farming activities, which largely decreases their dependency on environmental conditions. The cash transfer program, however, is facing a fundamental dilemma: it decreases household dependence on environment however may increase household dependency on this cash income from government; it secures household income in general especially when the labour is inadequate, but also becomes an adverse effect for farmers to participate in more activities and generate more income. Future model simulation can help to identify which type of households is growing more dependency on cash transfer in the long run. Therefore, a more cost-effective government program can be designed to enhance resilience and further reduce vulnerability. 1. Barrientos, A., 2012. Social Transfers and Growth: What Do We Know? What Do We Need to Find Out? World Dev. 40, 11Â20. doi:10.1016/j.worlddev.2011.05.012

2. Bertrand, M., 2003. Public Policy and Extended Families: Evidence from Pensions in South Africa. World Bank Econ. Rev. 17, 27Â50. doi:10.1093/wber/lhg014

3. Boone, R., Covarrubias, K., Davis, B., Winters, P., 2013. Cash transfer programs and agricultural production: the case of Malawi. Agric. Econ. 44, 365Â378. doi:10.1111/agec.12017

4. Chayanov, A. V, 1966. The theory of Peasant Economy, 1st ed. Richard D Irwin, INC, Homewood, IL.

5. Ellis, F., 1996. Peasant Economics: farm households and agrarian development, 2nd ed. Cambridge University Press, Cambridge, UK.

6. Pinho, P., Marengo, J., Smith, M., 2014. Complex socio-ecological dynamics driven by extreme events in the Amazon. Reg. Environ. Chang. 14.

7. Sadoulet, E., Janvry, A. De, Davis, B., 2001. Cash Transfer Programs with Income Multipliers: PROCAMPO in Mexico. World Dev. 29, 1043Â1056. doi:10.1016/S0305-750X(01)00018-3

8. Turner, B., Kasperson, R., 2003. A framework for vulnerability analysis in sustainability science. Proc. Â 100.

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