History of Shocks

In Bangladesh, damage caused by natural disasters is one of the main sources of crisis for poor households. Every year, natural calamities such as floods, cyclones, erosion, and droughts cause extensive damage to crops, homes, household and community assets, which can lead to illness or death, decrease in livelihood opportunities of the poor. Disasters hamper physical access to food and food stocks, destroy crops, and disrupt markets. Natural disasters directly affect household food security because loss of employment opportunities, an increase in health expenditure and an increase in necessary food expenditure.

Covariate Shocks

Covariate shocks, shocks that affect many households are once, and are likely to overwhelm social coping strategies based upon support within families and communities, include the severe floods of 2004 and 2007 and Cyclone Sidr in 2007. At the community or national level, natural disasters pose a threat to all households, especially poor households with few assets or savings.

Covariate Shocks in Bangladesh include:

• River Floods: Floods are an annual phenomenon, with the most severe occurring July-August. The floods of 1988, 1998 and 2004 were particularly catastrophic, resulting in large-scale destruction and loss of life. Women, children and the extreme poor are especially vulnerable.

• Flash Floods: Flash floods are pre-monsoon, sudden-onset floods caused by heavy and sustained rainfall. Early flash-floods cause a particular risk to the boro crop in the Sylhet haor area.

• Droughts: Prolonged droughts are not common in Bangladesh. However, dry spells or “crop droughts” can cause enormous suffering for the poor, especially for those depending on rainfed, subsisttance farming.  Much of the western part of the country can be affected by droughts, with the northwest being the most commonly affected.

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• Erosion: Riverbank erosion is a severe threat to the livelihoods of poor people living along the Jamuna, Brahmaputra, Padma, and Meghna rivers. People living on the chars are particularly vulnerable and are forced to move frequently due to river erosion.

• Cyclones and Tornadoes: Cyclones affect the coastal districts of Bangladesh and cause tremendous damage to/loss of: housing, agricultural crops, draught animals, food stocks and sources of drinking water. Fisherman and those with poor housing conditions are most likely to suffer injury or death. In recent years, improved cyclone preparedness has led to a considerable reduction in loss of life. Bangladesh also suffers from tornadoes and strong storms, which mostly occur in the central and northwestern area of the country during the pre- and post-monsoon period.

• Diarrhoea: The incidence of diarrhea is high throughout the year but the crisis period is from July-September and is exacerbated by receding flood waters.

• Monga: Monga refers to a near famine situation faced by many poor households, particularly in the northern region of Bangladesh, such as in the vast char lands of the Kurigram and Gaibandha districts. The main reason for the occurrence of monga is the pre-harvest acute employment crisis among poor agrarian communities during the months of October and November in areas dependent on the traditional agriculture. Monga is characterized by high prices of essential commodities, lack of work for agricultural day laborers, hunger and malnutrition, sale of livestock and household belongings, advanced sale of labor, migration of adult males, and increased money lending against very high interest rates. The occurrence of natural disasters in the preceding months exacerbates the intensity of monga. The most monga affected districts are Kurigram, Gaibandha, Lalmonirhat, Nilphamari, Rangpur, Dinajpur, Panchagarh and Thakurgaon.
  
• Cold Spells: During the winter season, cold weather causes suffering among the elderly, homeless, young children and vulnerable poor. The northern part of the country is particularly affected.
• Earthquakes: Bangladesh is divided into three earthquake seismic zones with the highest seismic activity in zone I, covering the northern districts from Kurigram to Moulvibazar. Experts have been forewarning a 6-7 magnitude earthquake to occur at any time which would cause unimaginable destruction and death in a country that is ill-prepared for such a disaster.

• Arsenic Contamination: The latest data indicates that 59 out of 64 districts have wells with arsenic levels above the safe limit, exposing about 75 million people to this toxic substance on a daily basis. The deteriorating health of arsenicosis patients puts a heavy burden on their families, contributing to economic hardship, social exclusion and food insecurity.

Idiosyncratic Shocks

Idiosyncratic shocks, individual-specific shocks that typically affect particular households, include illness, which is a major factor leading to land loss. Without a high quality, accessible and affordable public health system, illness, particularly an emergency illness or injury, can prove extremely expensive both in terms of cost and foregone labor of the patient.

The following factors affect every household to varying degrees depending largely on the household’s socioeconomic status:

• Death/ Illness – At the household level, one of the biggest threats to livelihood is the illness or death of a family member. Poor living conditions and limited access to health services increase the risk of illness pushing families into poverty. Lack of adequate hygiene and sanitation pose serious threats in many areas of the country.
• Loss of employment - Invisible poor and vulnerable households also cite loss of employment – 37 and 39 percent respectively – as a key reason for declining incomes. 
  
• Asset losses may be related to exposure to shocks, which also figure prominently for middle-income households.
• Market Failure - The few non-vulnerable households to experience a decline in their incomes cited market failure as the predominant reason – more than three-quarters of the non-vulnerable households mentioned market failure. In contrast to the poorest households, non-vulnerable household livelihoods are much more dependent on market forces than on employment disruptions.
• Non-vulnerable household livelihood improvements are strongly related to agricultural improvements. Forty-four percent of non-vulnerable households have seen their incomes increase largely as a result of the use of better crop varieties; another one-third (32 percent) increased their area cultivated. Not a single invisible poor household could point to these two variables to explain improved income status. The most vulnerable households, particularly the invisible poor, are heavily dependent on labor opportunities for their income earning opportunities.

Households that experience a type of shock in the last year (percent) IFPRI 2007