rainfall stations throughout the country, whereas Figure 3 presents the average or normal amount of rainfall (in mm) in each province over the years 1951 to 2009.

Figures 2 and 3 here For our analysis, each household in a municipality is assigned the closest rainfall station to the municipality where it resides; conditional on the fact that the station is on the same island as the municipality.<sup>6</sup> In order to improve accuracy, we could use the average of the three closest stations rather than a single station. However, smaller islands only have one rainfall station. Thus, we choose to use the rainfall from the closest rainfall station in order to have a uniform methodology for all the municipalities. In some cases where a municipality comprises several islands, we cannot identify which households in the municipality are on the same island as the rainfall station. We have variables flagging this case as well as a variable flagging municipalities which do not have a rainfall station in the same island. We also conduct robustness checks by excluding municipalities where rainfall is measured with less precision.

We use per capita consumption as a measure of household welfare for both conceptual and pragmatic reasons. First, consumption due to smoothing tends to fluctuate less in the short term than income, which can be affected by the seasonality of employment. Consumption expenditures reflect not only what a household is able to command based on its current income including transfers, but also whether the household can access credit markets or household savings at times when current incomes are low or even negative. In this way, consumption is thought to provide a better picture of a household’s standard of living than a measure of current income. Second, income measures may not accurately capture inkind, seasonal, or informal income. In particular for poor rural household, total income may be derived from multiple activities with strong seasonal variation and with associated costs that are not always easily assigned. Third, income surveys are susceptible to underreporting as respondents may perceive incentives to do so. For these reasons, consumption is often considered by economists to provide a more accurate measure of household welfare in less developed countries.

The FIES is conducted in two visits to gather information on income and expenditure over the whole year. The first visit is conducted in July of the survey year covering the period from January 1<sup>st</sup> to June 30<sup>th</sup> of the same year. The second visit is conducted in January of the next year gathering information for the period from July 1<sup>st</sup> to December 31<sup>st</sup> of the previous calendar year. The FIES data publicly released by the Statistical Office aggregate the data collected over the two visits during the survey year.

There are four climatic zones in the Philippines, with only one zone that has two very pronounced seasons (Luzon, the rice granary of the Philippines is in this zone).<sup>7</sup> Only one other zone has a dry season but it lasts at most three months. In the two remaining climatic

> 6 We restrict to stations on the same island because rainfall can change substantially between islands. 7 A map of the different types of climate in the Philippines can is made available by PAGASA at <u>http://kidlat.pagasa.dost.gov.ph/cab/statfram.htm.</u>

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