Distributional Impact Analysis of Climate Variability in Rural Indonesia statistically significant. The estimated effect is mild- roughly five thousand rupiah per month, or six percent of mean reported profits. Farm profits, however, are likely to be poorly measured in the IFLS survey, as respondents may not know their revenues (including production for own consumption) and costs for the past 12 months, and there is no disaggregated information on revenues and costs.

**Delayed onset one year ago has substantial adverse effects on the expenditure of poor households.** We re-estimated equations (1) and (2) for the subsample of poor households. Poor households are defined as those whose average per capita consumption, over the three rounds of the survey, falls in the bottom quintile. The results are given in Table 6 (Annex 1). In contrast to all rural households, poor households suffer from delayed onset. The estimated reduction in consumption due to late onset in the previous year is approximately 13 percent and statistically significant. Poor household also benefit slightly less from early onset than all households, as early onset only raises consumption by 2.7 percent. The findings suggest that poor households are not well-insured against delayed onset, at least in the short run.

**Delayed onset two years ago is strongly and positively associated with per capita consumption for poor households.** Delayed onset two years ago is associated with a 23 percent rise in per capita consumption, which is larger than the 1 percent increase for all households. At this point, we cannot explain the large estimated positive effect of delayed onset two years ago on per capita consumption. A more detailed analysis on the effect of delayed onset on rural wages and rice prices is needed to shed further light on this result. For now, we conclude that poor households are able to recover within two years, and that delayed onset has no lasting negative effects on poor household’s consumption.

**Most of the negative effect of late onset one year ago on per capita consumption is due to an increase in household size.** The timing of the monsoon arrival can affect per capita consumption either through the numerator, total consumption, or the denominator of household size. The effect of climatic shocks on household size is ambiguous, in theory. Climatic shocks may increase household size by encouraging households to combine and discouraging the formation of new households. Shocks, however, may also decrease household size by encouraging out-migration from large households (Henry _et al_ . 2004). To better understand the effect of delayed onset on per capita consumption, we decomposed the effect of delayed onset into its effect on household size and its effect on total household consumption, by re-estimating equation (2) with log household size and log total consumption as dependent variables. Table 7 in Annex 1 shows the results for the poor households. The bottom portion of the second and third column indicates that delayed onset in the prior year decreases household consumption by roughly 4.3 percent while increasing household size by roughly 6.8 percent. Therefore, in this specification, over 60 percent of the total effect of delayed onset on per capita consumption comes through an increase in household size.

**For rich rural households, variation in monsoon onset is not an important determinant of per capita expenditure or farm profits.** Table 8 in Annex 1 gives the estimated effects of late onset for rich households – those whose average per capita consumption fall in the top quintile. Rich households neither benefit from early onset, nor suffer from delayed onset one or two years ago. While early onset two years ago reduces consumption by 12 percent for the richest households, the estimate is only marginally statistically significant. If rice prices falls with early onset, following a peak in rice production, net producers would be negatively affected. However, it is not possible to study further whether the households in the top quintile are mostly net producers or consumers of rice.

**In general, delayed onset reduces consumption only for poor rural households.** Across all rural households, consumption decreases by 1.5 percent the year following delayed onset, but these changes are not statistically different from zero. The most disadvantaged households – those in the bottom quintile of per capita expenditure - face substantially larger effects, both positive and negative. Delayed onset

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