Nature s Impact on Economic Diversification and Welfare: Theory and Evidence from an Indian Fishery.
Ecology and Biodiversity of Animals and Ecosystems, Organismic Interactions
Statistics and Econometrics
Final Report Abstract
The research proposal addressed the link between environmental risk, economic diversification and the natural environment. Specifically, it asked how environmental risk and biodiversity affect economic diversification and rural welfare. During the funding period of the DFG Research Fellowship I have carried out several projects to better understand and quantify these relationships. Environmental fluctuations such as climate change make income diversification necessary in order to reduce the risk of disastrous income shortfalls. In a first research project I studied the impact of weather shocks on rural income diversification. Using data of 8,000 households from 20 developing countries I showed that households can partly offset the negative impact of weather shocks by allocating production factors from more climate sensitive income sources such as crop production to less weather sensitive income sources such as forestry. Natural biodiversity may reduce the impact of weather fluctuations on rural incomes. To estimate the effects of biodiversity on income stabilization I combined data of the same 8,000 rural households with gridded biodiversity data from Kreft and Jetz (2007). The results show that biodiversity stabilizes rural incomes, leading to less income diversification in response to weather shocks. Economic development and better access to market may alleviate the negative impact of environmental shocks on rural welfare. In a project that used mathematical modeling as well as data from the Chilika fishery I showed that better access to financial markets leads to more income diversification and consequently to richer and less resource dependent households. Surprisingly, it also leads to better resource stocks when property rights over the resources are strong. Income diversification also feeds back into the environment. In a project on agricultural diversity and pesticide use I showed that pesticide use is lower in areas of high crop diversity.
Publications
- (2018) Climate, crops, and forests: a pan-tropical analysis of household income generation. Envir. Dev. Econ. (Environment and Development Economics) 23 (3) 279–297
Wunder, Sven; Noack, Frederik; Angelsen, Arild
(See online at https://doi.org/10.1017/S1355770X18000116) - (2018) Development in a Dual Economy: The Importance of Resource-Use Regulation. Journal of the Association of Environmental and Resource Economists 5 (1) 233–263
Noack, Frederik; Riekhof, Marie-Catherine; Quaas, Martin
(See online at https://doi.org/10.1086/694222) - (2020) Resource Abundance and Education. Economic Development and Cultural Change 68 (2) 699–727
Noack, Frederik
(See online at https://doi.org/10.1086/700633) - (2015) Responses to Weather and Climate: A Cross-Section Analysis of Rural Incomes. World Bank Policy Research Working Paper 7478
Noack, F., Wunder, S., Angelsen, A. and Borner, J.
(See online at https://doi.org/10.1596/1813-9450-7478) - (2016) Informal Credit Markets, Commonpool Resources and Education. Center of Economic Research at ETH Zurich Working Paper 16/252
Riekhof, M.-C. and Noack, F.
- (2017). Identifying the landscape drivers of agricultural insecticide use leveraging evidence from 100,000 fields. Proceedings of the National Academy of Sciences, 114 (21): 5473-5478
Larsen, A. E., & Noack, F.
(See online at https://doi.org/10.1073/pnas.1620674114)
