Daniele Rinaldo

job market seminar
online

Daniele Rinaldo

University of Cambridge
Dams, snails and poverty traps
Date(s)
Monday, February 8 2021| 11:30am to 12:45pm
Abstract

Irrigation schemes are one of the most important policy responses designed to reduce poverty, particularly in sub-Saharan Africa. Concomitantly, they facilitate the propagation of schistosomiasis, a water-based debilitating disease that is endemic in many developing countries. I study the economic impact of schistosomiasis in Burkina Faso via the estimation of its burden on agricultural production with new data and new methods, and identify it as a productivity shock. I show that the disease is both a driver and a consequence of poverty, and that returns to water resources development are significantly reduced once its health effects are taken into account. I reconcile these results with a theoretical framework, which shows how the joint dynamics of schistosomiasis and the production decisions of farmers create Pareto-inferior endemic Nash equilibria, and how the wealth-dependent disease reproduction rate (the R0) can generate poverty traps. A stochastic extension of the model shows how this rate controls the probability flow between the system attractors. Social optima require deviations from separable allocations proportional to the disease burden on the maximized utility paths. Complete information on the feedback between wealth and disease can potentially allow farmers to escape the poverty trap.