The impact of the 2015 El Nino-induced drought on household consumption: evidence from rural Ethiopia

This paper evaluates the impact of the 2015 El Nino-induced drought on household consumption in Ethiopia. A difference-in-difference method was used to compare consumption changes over time in a group unaffected by the drought to the changes in a group affected by the drought. By using the ESS household-level consumption aggregate data, we find that the 2015 drought reduces affected household's annual consumption by 8%, and the reduction was largely driven by changes in the lower tails of the consumption distribution. Overall, we find a significant consumption decline due to the 2015 drought, and much of the decline has been experienced among the consumption poor, indicating shock resilience inequality among rural households.