Agricultural production amid conflict: Separating the effects of conflict into shocks and uncertainty
This paper (PDF) in the World Development journal examines the effect of conflict on agricultural production of small farmers and whether households respond differently to conflict shocks and uncertainty brought about the presence of non-state armed actors. Shocks may arise when either government or non-state armed actor is hegemonic in the region; in the later case, shocks tend to be worse. More violent shock leads the farmers to update beliefs and think there is a higher probability that non-state armed actors will dominate the region. More pessimistic beliefs lead the agent to exchange perennial crops for other agricultural activities, which are less risky but also less profitable. A violent shock will also reduce land used for perennial crops. However, the effect of a violet shock on other agricultural activities is ambiguous. On one hand, if the farmer is certain about the distribution of the shocks, a violent shock will decrease the land used for other agricultural activities since there is less available production. On the other hand, if the farmer is uncertain about the distribution of the shocks, a violent shock will induce more pessimistic beliefs and the farmer may increase the land dedicated to other agricultural activities for self-insurance purposes. Results show that the presence of armed groups does not necessarily coincide with violent assaults against the civilian population. Households may learn to live amid conflict, yet at a lower income trajectory. Traditional post-conflict policies concentrate on reconstruction efforts, which are necessary to increase production in a short period of time, as this paper shows. However, policies should also create favorable conditions to reduce uncertainty. In addition, policies that go beyond individual beneficiaries and target the community could improve trust among households, reducing the perception of uncertainty. Reducing uncertainty, paired with increased access to formal credit, induce households to expand investment and avoid sub-optimal decisions