Work in Progress

Wealth, Durable Assets, and Consumption Smoothing under Climate Shocks

While a large literature studies livestock as a buffer asset in agrarian economies, this paper asks whether tradable durable goods — bicycles, mobile phones, motorbikes, generators, and solar panels — serve a similar self-insurance function. Using three waves of the Uganda National Panel Survey (2009–2012) and a two-way fixed effects design exploiting spatial and temporal variation in rainfall, I show that a one-standard-deviation drought shock reduces food consumption by 7% on average. This masks substantial heterogeneity by wealth: each standard deviation of baseline durable asset wealth attenuates the consumption decline by 2 percentage points, driven by active asset liquidation — non-poor households reduce durable holdings by roughly 10% following a shock, while poor households show no significant adjustment and instead absorb the consumption decline in full.