Modernization, weather variability, and vulnerability to famine

This paper shows that under weather variability the transformation from a rural to an incomplete market economy can increase the vulnerability of peasants to famine. This can occur even if improvements in technology have raised agricultural productivity and made production less responsive to weather variability. Indeed, negative environmental shocks can produce a drop in wages that outweighs the increase in wages due to an equivalent positive environmental shock. Consequently, the amount of grain stored increases more slowly in good seasons than it decreases in bad ones. This paper gives new insights on the catastrophic effects produced by widespread droughts in India during the second half of the 19th century. Notwithstanding the introduction of new modes of production and the modernization of infrastructures, the interaction between environmental variability and new institutional arrangements might have contributed to increase the vulnerability of peasants to famine.