Understanding the Economics of Drought

A water-harvesting catchment near Borama, Somalia
A water-harvesting catchment near Borama, Somalia, helps quench the thirst of pastoralists’ livestock. Such catchments, which collect and store runoff from a larger drainage area, provide one way to conserve water for times of drought.
Frank Nyakairu, FAOPhoto

“A hunger crisis is not solely an act of God,” said Secretary of State Hillary Clinton in an address on the drought and famine in the horn of Africa at the International Food Policy research Institute on August 11, 2011. “It is a complex problem of infrastructure, governance, markets, education.”

The complexities involved in what is being called the worst drought in 60 years have placed more than 13 million East Africans in urgent need of humanitarian aid. While relief efforts tend to the pressing crisis, new and ongoing projects by USAID and its partners aim not only to provide immediate support for refugees and others affected by the current drought, but also to supply the economic, technological, and instructional tools that communities and individuals need to weather the next drought—and the one after that.

Displaced Families, Displaced Livelihoods

Rain equals wealth in much of the Horn. For pastoral people, whose livelihood is tied to their livestock, green pastures are crucial for healthy, valuable animals. For agropastoral communities, rainfall provides the main means of watering essential crops. When the rains fail, as they have this year, so do the “banks” of many individuals. Drought-induced losses not only render families unable to supply their own food, but also leave them lacking in revenues from livestock and crop sales to obtain food in the marketplace.

“The assumption that the poor produce most of their own food is not correct,” says John Scicchitano, USAID program manager for the famine Early Warning System Network (FEWS NET), a USAID-funded organization that provides predictions and analysis of food security status in regions around the world. “We understand now that the poorest rely on markets for a lot of their food, and may buy 50 percent or more of their food.” With livestock in poor condition and prices for staples soaring as much as 240 percent over five-year averages, many people in the Horn have found themselves unable to afford enough to eat.

The resulting crisis has forced families to separate. “Most of the refugees are children and women,” says Emebet Kebede, head of the FEWS NET Ethiopia field office, because men have often stayed behind to tend to remaining herds. “The level of social impact caused by separation of families, detachment from the communities, and the loss of family members due to malnutrition and disease outbreaks is very significant,” she adds. In southern Somalia, that distress has been further aggravated by the controlling presence of militant groups motivated by personal interest who restrict humanitarian access and impede the development of a secure and stable state.

Seeking a Brighter Horizon

Yet USAID Administrator Rajiv Shah and others have noted that although the current drought is likely the worst the region has seen in decades, the famine could easily have been worse than it is—a result Kebede attributes to aid mechanisms that have successfully mitigated the worst impacts in Ethiopia and Kenya. Through these existing and new endeavors, USAID is equipping communities with the social, economic, and market-based tools needed to avoid a vicious cycle of drought and food insecurity. Among the agency’s strategies:


In addition to hydrological monitoring (see feature article), FEWS NET also keeps decision makers in USAID and elsewhere informed of market conditions and food prices in vulnerable areas in 224 markets around the world through its Price Watch tool. The data allows FEWS NET to predict where and when food insecurity may arise, thus serving as an early warning system that can trigger targeted aid from host governments, USAID, and others. FEWS NET also monitors livestock prices relative to food prices. “For pastoralists that’s a very important indicator,” says Scicchitano. “If livestock goes down and food goes up, their ability to buy food will be impacted dramatically.”

Pre-crisis Support

Ethiopia’s Productive Safety Net Program is one mechanism that connects individuals with financial support before food insecurity is imminent. A government-donor program organized by the World Bank’s International Development Association and funded in part by USAID, the program’s first phase employed local people in infrastructure development, including improvements to irrigation, surface water runoff collection, and conservation measures that raised groundwater levels. The second stage of the program has involved providing small cash grants that allow Ethiopians to access credit and invest in agricultural tools, boosting farm productivity. During the droughts of 2008, the safety net program was credited with helping to ward off severe food shortages in Ethiopia. Today, FEWS NET’s Kebede reports that the program, which offers distributions each year from January to June, is functioning in many of the areas currently affected by drought. “This has a direct impact on the market as it stabilizes prices,” she says, “allowing thousands access to affordable food.” Through this safety net system approximately 7.5 million individuals in the region have been spared from the worst effects of this year’s drought.

Linking Suppliers with Markets

USAID’s East Africa Market Linkages Initiative—a two-year program, which just ended in September—worked in Kenya and seven other countries to link small farmers with regional and national markets and storage facilities. Through the initiative, 33 grantees received more than $4.5 million to improve crop handling, buying, storage, and marketing. Such efforts helped recipients leverage many more millions of dollars of private sector investment which funded training of village networks in agricultural techniques to boost crop yields.

Instilling Resiliency

Feed the Future, an interagency initiative of the U.S. government that is being spearheaded by USAID, is applying the specialized knowledge of more than 400 experts to shore up the resilience of communities by providing veterinary care and supplemental food for livestock, sharing fertilizers and drought-tolerant seeds that improve agricultural yields, and focusing empowerment efforts on women—who are responsible for 70 percent of farming labor in much of Africa—to pass on training to their communities. Feed the Future also seeks to reduce barriers to trade and diversify livelihoods, which may help pastoralists and agropastoralists avoid food insecurity when the next drought cycle arrives.

With forward-thinking and capacity-building programs such as these, USAID and its partners are seeking to move from reaction to preparation and, as Secretary Clinton notes, “to doing development differently,” allowing Africa to feed itself.

K. Unger Baillie

More Information:


International Development Association (IDA) in Africa

Last updated: September 25, 2013

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