such as better access to markets and the use of technical assistance, at mitigating these shocks. The only factor that helped households to alleviate the adverse effect of shocks was the level of education of the household head. Households with a savings account or a loan from a financial institution are not more resilient to these shocks. Similarly, enhanced access to markets where agricultural inputs are bought and where agricultural products are sold, as well as technical assistance do not make a difference in the way households cope with climate shocks and variation in prices.

Figure 6 depicts the results for education and shows that higher levels of education of the household head reduce the negative effect of rainfall shocks (measured by the WRSI index) on both crop income and per capita consumption. Having a head with some e primary education reduces the negative effect of rainfall by 2.8 percent compared to those with no education while for those with complete secondary education, the reduction increases to 4.9 percent. Something similar occurs if we look at the effect on per capita consumption, albeit the magnitude is smaller and only the results for some secondary education among the bottom 40 percent remain significant.

More education facilitates diversification by enabling increased participation in the labor market, particularly in the non-agricultural sector. In addition, more educated individuals may assess and respond to risk more successfully. For both crop income and per capita consumption, the mitigation effects of higher education level are larger for households belonging to the bottom 40 percent of the distribution.

**Figure 6: Education mitigates the impact of climate shocks**

<!-- Start of picture text --> Reduction of effect of shock in crop income Reduction of effect of shock in<br>consumption<br>0.0 0.0<br>‐1.0 ‐0.2<br>‐0.4<br>‐2.0<br>‐3.0 ‐1.8 ‐1.4 ‐0.6 ‐0.4 ‐0.5<br>‐4.0 ‐2.8 ‐2.9 ‐3.2‐3.5 ‐3.6 ‐0.8‐1.0 ‐0.7 ‐0.6 ‐0.7<br>‐5.0 ‐1.2<br>‐6.0 ‐4.9 ‐4.7 ‐1.4 All B40<br>All B40<br>Reduction of effect (percentage points) ‐7.0 ‐6.0 Reduction of effect (percentage points) ‐1.6 ‐1.4<br><!-- End of picture text --> Source: Authors estimation using UNSP 2006 – 2012. Note*: Results statistically significant at the 10% level for crop income. For consumption only some secondary for the bottom 40 percent is statistically significant at the 5% level.

Finally, we examine whether consumption in the Northern and Eastern regions is just as reliant on the external environment as crop income in these regions proved to be. Given the limited sample size, households in the north and east are pooled together as are households in the center and west. We also just consider bean prices. The results confirm that the consumption of households in the north and east is more reliant on changes in the external environment than the wealthier households in the center and west (Table 12). The difference is largest when considering prices: a 10 percent increase in the bean price is associated with a 6.7 percent increase in consumption in the north and east, and a 2.5 percent increase in consumption in the center and west. As discussed, the reliance on the external environment has both been a source of welfare improvements and vulnerability for Northern and 25