Multiple shocks and households' choice of coping strategies in rural Cambodia

Abstract

A detailed understanding of households' shock-coping capacity is needed to design appropriate social safety net programs and interventions. We use a 2-year panel dataset from rural Cambodia to seek answers to the following research questions: (i) are rural households forced to reduce their consumption due to shocks? and (ii) what are the factors affecting households' choice of shock-coping strategies in response to shocks? The results of econometric models reveal that most covariate shocks have significant and negative effects on household consumption. In particular, total consumption expenditure and food consumption expenditure are negatively affected by floods, whereas household education expenditure is negatively affected by livestock diseases. These shocks also force households to use coping strategies of selling durable assets and extracting natural resources. Although droughts appear not to significantly affect household consumption, these shocks push households into using child labor, selling durable assets or extracting natural resources. Household consumption is shown to be not significantly affected by health shocks. Borrowing and receiving assistance from friends and relatives are identified as major coping strategies in response to health shocks. Our findings call for assistance programs to support households in preventing and mitigating the effects of floods, droughts and livestock diseases.