Climate change is projected to dramatically disrupt rainfall patterns and agricultural yields in Sub-Saharan Africa, potentially stalling and even reversing gains that have been made in the region’s fight against poverty. While frequent exposure to failed harvests and other negative income shocks is a reality of life for the world’s rural poor and many have developed strategies for coping with such shocks, some of these coping strategies can lead to poverty traps. For example, coping with shocks by reducing food consumption, pulling children out of school, and selling off productive assets can negatively affect human capital formation and prospects for escaping poverty in the long run. The likelihood of employing negative coping strategies that can lead to poverty traps may be greater in the face of weather shocks, as their covariance across a community weakens informal safety nets (e.g., borrowing).

This study investigates whether cash transfers enable households facing weather and other negative income shocks to avoid coping strategies that can lead to poverty traps. To test this hypothesis, we harness data from the randomized roll-out of Zambia’s Child Grant Program, which extends unconditional cash transfers to households with children under the age of five. The panel dataset follows 2,515 households in rural Zambia between 2010 and 2012, with the baseline collected just prior to program implementation. In addition to containing extensive information on both treatment and control households’ consumption, income, assets, and schooling decisions, the dataset also records the specific types of shocks experienced by respondents as well as their stated coping strategies.

Nearly 90% of households experienced droughts, floods, and storms between 2010 and 2012. We examine the impacts of cash on both stated and revealed (i.e., behavioral) coping strategies and use difference-in-difference models to identify impacts. Particular attention is paid to how the covariance of shocks across a community affects coping strategies.

We find that cash reduces the likelihood of households employing negative coping strategies, such as skipping meals, and increases the likelihood of employing productive strategies, such as growing additional crops and working more. This analysis of stated coping strategies is supported by the behavioral data, which shows that receiving cash enables households to smooth food consumption in the face of both covariate shocks affecting agricultural production and prices as well as other idiosyncratic shocks affecting households’ labor, assets, and income.

These results have significant implications for the design of climate change adaptation programs. While cash transfers are not routinely considered in the policy discourse concerning adaptation programming, because cash transfers enable households to cope with covariate weather shocks and the many other idiosyncratic shocks the rural poor routinely face, cash transfers offer a "no-regrets" approach for climate adaptation programs.