by 6.3%; while poverty practically remained unchanged between 2008 and 2010.<sup>8</sup> The size of the vulnerable population increased to an extent that practically corresponds to the decline of the middle class in those years.

Besides economic and financial crisis, Mexico is also exposed to other types of risk. In terms of crime and violence, according to recent analysis by Enamorado, López-Calva and RodríguezCastelán (2014), municipalities with higher levels of drug-related crimes have grown at a slower pace between 2005 and 2010 than municipalities less affected by this shock. For firms, surveys estimate that losses due to theft and vandalism account for roughly 4% of their product, and that 43% of Mexico’s firms paid for private security, spending about 2.2 percent of their annual sales on these services (IFC and WB, 2012). Climate change and the proneness to natural disasters also pose challenges for Mexico,<sup>9</sup> especially to poor rural households who are at higher risk of suffering from disasters.<sup>10</sup> There is also good evidence for Mexico that natural disasters drive people into poverty.<sup>11</sup> To quote some study findings, severe rainfall and droughts triggered poverty persistence among poor households.<sup>12</sup> Children exposed to extreme precipitation shocks during their early stages of development (first years of life and in-utero stage) with respect to children not affected exhibit negative effects in the cognitive indicators, which mean that the effects persist in the mediumterm.<sup>13</sup> And children living in rural households affected by warmer-than-average agricultural years in rural areas of Northern Mexico were shorter,<sup>14</sup> and from another study children in Central Mexico affected by natural disasters were also more likely to get sick than children living in unaffected areas.<sup>15</sup> Mexico (as other LAC countries) has also experienced increased volatility of food prices in recent years.<sup>16</sup> Between 2005 and 2008, world food prices rose considerably. According to the World Bank’s Commodity Price Data,<sup>17</sup> the international price of maize increased by almost 250% and the price of rice by roughly 700%. In Mexico, the average price of the basket of imported agricultural products increased by 62% between the same years (Chávez et al., 2008). The same authors estimate that a 15% increase in food prices would imply, ceteris paribus, that approximately 2% of the population would fall into extreme poverty.

> 8 The incidence of poverty slightly increased using the official poverty lines.

> 9 The country lies within one of the world’s most active seismic regions; is prone to constant droughts in its northern cone and is in the path of hurricanes and tropical storms originating in the Caribbean Sea, Atlantic and Pacific Oceans. 10 Cruz, de la Fuente and Soriano (2013); Arnold et al (2012).

> 11 Rodriguez-Oreggia et al (2012)

> 12 De la Fuente and Borja-Vega (2014)

> 13 Aguilar and Vicarelli (2012)

> 14 Skoufias and Vinha (2011)

> 15 De la Fuente and Fuentes (2010)

> 16 Ivanic and Martin (2008)

> 17 http://databank.worldbank.org/data/databases/commodity-price-data

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