Environmental Shocks and Household Welfare in Rwanda

Abstract

The objective of the dissertation was to evaluate the impact of environmental shocks on household incomes. Rwanda, like many countries, is affected by changes in climate, these effects permeate through to incomes of households in the country considering the extent to which households in Rwanda depend on the environment. The study attempts to assess the effect of environmental shocks on household welfare represented by household consumption in Rwanda. Using regression analysis with data from EICV4, this study reveals a negative and significant impact of environmental shocks on household welfare in the country whereby the environmental shocks reduces the overall household welfare by 4 percent. The findings also show that there are other factors which significantly affect household welfare such as savings, education levels and health status of household members. The results suggest what common sense does: “Since the environmental shocks that often result in disasters such as extinction of species, depletion of resource stocks, or destruction of ecosystems, the government of Rwanda in collaboration with other countries should devise policies that are environmentally-friendly and more specifically that aims at protecting the environmental and mitigate the risks in case of environmental shocks. Although some of these policies exist already, they could be enhanced by national awareness as well as promoting selective investments that are not disastrous to the environment.”