Harmful temperatures and consumption expenditure: evidence from Nigerian households

This paper examines the effect of changes in temperature on households’ food expenditure in Nigeria. Using micro-data on consumption expenditure from Nigerian households, we find that extreme heat increases per capita consumption expenditure during dry seasons but not in wet seasons. Prior works show that small-scale farmers attenuate the effects of extreme heat on agricultural productivity through the short-term use of non-traded productive inputs, such as land. This evidence supports the view that the scope of climate change mitigating practices could keep food prices steady despite increases in extreme weather events. However, when investment in tradable inputs like drought-resistant technologies is greater, attenuating weather shocks could lower the welfare of netfood buyers if it increases food prices. To further support our interpretation, we find that relative to households in urban cities, rural households pay more for food during the dry season. We interpret this as a reflection of the higher costs of production associated with extreme heat during the dry season. Our results support policies that offer compensated income to vulnerable households to mitigate the impact of weather shocks in agrarian communities in developing countries