Distributional Impact Analysis of Climate Variability in Rural Indonesia

**El Nino events can delay rice planting by up to two months, reducing the area cultivated and delaying the plantings of next year’s dry-season crop** .<sup>**6**</sup> Monsoon timing affects the total amount of land planted for many crops (Table 1), but is especially important for rice. From 1983-2004 a 30-day delay in monsoon onset caused rice output to fall, on average, by 580.000 metric tons in East Java/Bali and 540.000 metric tons in West/Central Java during the main rice harvest season between January and April<sup>7</sup> (Naylor, _et a_ l, 2007). Also studies on rice farming in India have found that variability in area cultivated is higher than yield variability (Walker and Ryan, 1990).

|**Table 1. ENS**|**O-Sensitivity**<sup>1</sup>**by Crop in Indonesia 1963-**|**1998.**|
|---|---|---|
|**Crop**|**Production (t)**<br>**Area Harvested (ha)**|**Yield**|
|**Maize**|0.61*<br>0.61**|**0.2**|
|**Sweet Potato**|0.48*<br>0.46**|**0.05**|
|**Soybean**|0.41*<br>0.43**|**-0.02**|
|**Groundnut**|0.34*<br>0.52**|**-0.25**|
|**Rice**|0.23<br>0.50**|**-0.17**|
|**Cassava**|0.16<br>0.05|**0.16**|

Correlation between percentage deviations from 5 year moving average and SOI monthly average (June-September). Significance:<sup>**</sup> P<0.01,<sup>*</sup> P<0.05 Source: Irawan (2002).

**Most of the climate-induced variation in rice production is a consequence of changes in the area harvested rather than in the per hectare yield.** Falcon _et al_ (2004) estimated each degree Celsius increase in the SSTAs (using the August Niño 3.4 sea surface temperature anomaly) results in a national area affected of -261 thousand hectares, a production effect of -1,318mt<sup>8</sup> and a $21/metric ton change in the world price for lower quality rice (Table 2). El Niño events cause delays in the main rice harvest and often also drive up prices in domestic and international markets. Decreases in rice stocks and increases in prices have a disproportionate impact on poor net consumers of rice (Naylor _et al:_ 2007; Falcon _et al:_ 2004). During the 1997-1998 El Niño, for example, Indonesia had to import over five million tons of rice to ensure food availability (Kishore _et al._ 2000).

# **III. Data and Methodology**

**Our prior hypothesis is that late onset reduces both farm profits and household expenditure in rural areas.** This is based on previous research which indicates that delayed monsoon onset decreases the amount of rice area harvested in the following rice calendar year (Falcon _et al_ , 2004). Early onset, on the other hand, is expected to have a neutral or positive effect on consumption. There is, however, no direct empirical evidence on the magnitude of the negative effects and the types of rural households are most vulnerable.

> 6 During El Nino events, the warmer ocean water shifts eastward away from Indonesia causing rain to fall over the central Pacific Ocean.

> 7 The average production in this season was 9 million metric tons – mmt - in West/Central Java and 5 mmt in East Java/Bali. 8 For the September-December trimester changes are 142 thousand hectares in area harvested and production by 556tmt. For the January-April trimester the production change is of 938 mmt. For the May-August trimester the slope coefficients are positive rather than negative.

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