Climate Variability and Poverty Nexus in Kenya (1986-2020)

Abstract

The study had sought to examine the impact of climate variability on poverty in Kenya. Specific objectives included to examine the effect of climate variability and other covariates on poverty in Kenya. To establish the mediating effect of economic growth on the relationship between climate variability and poverty. To examine the direction of causality between climate variability and poverty. The study adopted Keynesian theory, Fosu Growth-Poverty Model and Vulnerability Frameworks. The diagnostic research design was adopted examine the causal effect link between climate variability and poverty levels in Kenya. ARDL model and Error Correction model was adopted. The Error Correction term allowed for detection of short run and long run casual relationships and captures the long run adjustment of the cointegrated variables. The study further adopted pairwise granger causality test to examine the direction of causation between climate variability and poverty. The study results revealed that climate variability and other covariates explained poverty to a major extent as depicted by adjusted R2 of 0.9663 and 0.9419 for the consumption per capita and head count ratio models. Further, widespread climate shock occurrence and rainfall variability had a significant effect on consumption per capita and head count ratio measures of poverty. The study thus accepted the alternative hypothesis that climate variability has a significant effect on poverty in Kenya. Regarding the mediating effect of economic growth on the relationship between climate variability and poverty, it was established that economic growth mediated the relationship between climate variability (Rainfall variability and climate shock) and poverty in Kenya. The alternative hypothesis that economic growth mediates the relationship between climate variability and poverty in Kenya was thus accepted. Finally, regarding the direction of causality between climate variability and poverty in Kenya. The study revealed that poverty granger caused temperature variability. The study therefore concludes there is unidirectional causality between climate variability and poverty in Kenya running from poverty to climate variability. The study thus rejected the hypotheses that climate variability granger causes poverty in Kenya. The study recommended that government should focus on alleviating poverty in a bid to control climate change by raising minimum wages and investing in the Agricultural sector which is the main source of livelihood of poor communities. The government should continue implementing tax policies that hurt the poor masses less to help in redistribution of resources to the poor. Additionally, the government should invest in pro poor projects. Policies that encourage economic growth can help minimise the negative impacts of climate variability on the poor masses. The government should also come up with policies of import minimization to reduce imported inflation that hurt the poor. Further, cost push inflation resulting from wage demands by the lowly paid workers should attract policy from the government inform of having peaceful labour relations in the country.