The adjusted poverty line for each scenario reflects the income levels required for an individual to be able to afford the same food basket despite the disproportionate rise in food prices. The simulated household consumption for the projected year are then compared to the new poverty line to compute poverty measures that take into account the impact of the higher relative price of food.

# **IDP and IS‐affected populations**

As mentioned previously, the twin crises are likely to have impacted households across Iraq through different transmission channels. For instance, households directly affected by the war against the Islamic State– which include the displaced, and those still living in the IS‐affected governorates – will be affected differently, as will households belonging to communities hosting IDPs. In order to include the effect of these shocks in the simulation, additional assumptions are needed in the crisis scenario for 2014.

We first identify two types of populations of interest: a) Internally Displaced Persons (IDP) and b) those left‐behind. The first group is based on information from the IOM Displacement Tracking Matrix (IOM DTM) of families crossing governorate boundaries by origin and source governorate. This is summarized in (Table 6). In the micro‐simulation exercise, we focus on internal displacement from three governorates, which accounts for 90 percent of the total cross‐governorate displacement. Based on the population flows measured in the IOM DTM, a subset of families is randomly selected from three governorates of origin (IS‐affected governorates) ‐ Anbar, Nineveh, and Kirkuk ‐ and allocated in different host governorates in proportion to the movements measured in the IOM DTM. The second group consists of those who continue to live in the three governorates directly affected by IS – Anbar, Nineveh, and Kirkuk.

First, we describe the assumptions made about the income and consumption flows of the IDPs. The consumption of IDPs could have been reduced by a decrease in the quality or flow of services received from housing as well as the loss of immobile durable goods and assets. After discussions and agreement with counterparts from the Government of Iraq, we assume a 50% decrease in services received from the new shelter/dwelling and we eliminate all consumption from non‐mobile assets like fridge, cooler, electric generator, etc. Both adjustments are household specific.

From the income viewpoint, additional assumptions are made. First, those previously employed in the private sector are assumed unemployed and consequently without any labor income. In contrast, IDPs who held public sector jobs have in general continued to receive their salaries and benefits. Secondly, private transfers are eliminated based on disruption of connection and communications between IDP and relatives as well as larger social networks. On the other hand, public transfers are untouched based on the assumption that IDP families can pick up their rations in new locations as well as still receive their pensions. Given that most IDP are now living in rented dwellings or camps, the flow of services from owned dwellings service is eliminated from the total household income for those who were owners in their governorate of origin.

For families left behind and still living in the IS‐ affected governorates of Anbar, Nineveh, and Salahadin, additional assumptions were made. In the income space, it is assumed that employment rates remain 14