We recently had the opportunity to sit down with Ana Maria Ibanez, Economics Professor at the University of the Andes, and ask a few questions about her important research.
The AMA Innovation Lab has a broad portfolio of research designed to increase our understanding poverty dynamics and poverty traps – the things that make and keep households in developing countries poor, and to evaluate possible solutions. Typically, the shocks AMA Innovation Lab researchers investigate are weather-related disasters, such as flood or drought. But a devastating source of negative income shocks that AMA Innovation Lab researchers have not deeply investigated is conflict.
Professor Ibanez visited UC Davis to give a seminar on her most recent research, which concentrates on analysis of conflict – in particular, the impact of armed conflict on households and victims of conflict. She has most recently been focusing on Colombia, examining how legacies of conflict affect households behavior after an income shock, and whether conflict’s negative impacts hinder the risk-coping strategies of households.
Can you please give us a brief background on the research you’re here at UC Davis to present? The work I’m presenting today studies the legacies of armed conflict in Columbia. And it studies the legacies of armed conflict, trying to understand, or exploring, how people react to a weather shock – to extreme weather shock – by migrating, and how this migration differs, and how these risk coping mechanisms differ, for the people that lived in regions without conflict, and in regions with conflict and a strong governance structure from non-state armed actors. So, basically what we are doing with that, is trying to understand or exploring how the legacies of conflict affect social networks, affect access to markets, and affects the abilities of households to mitigate negative income shocks.
What drew you to this research? I have done, for several years, research on the impacts of armed conflict and specifically, I studied the impacts of conflict on the internally displaced population, the people who were forced to migrate because of conflict. And the results of this research showed that internally displaced people suffered large economic losses because they had large asset losses, their human capital depleted significantly, and their ability to mitigate shocks also was hindered due to the displacement process. In addition, they had a lot of problems trying to catch up in urban areas, so their income really did not recover from the displacement shock. But I always wanted to understand what happened with the people that decided to stay in the conflict region. Because you had a lot of people that displaced, they were victims of conflict. But a lot of people that were victims of conflict and lived under really violent and difficult conditions stayed in those regions. So what drew me to this research is precisely to understand what happened with the “stayers”. And what the research is starting to show is that these people, in some cases, might be much more vulnerable than the displaced populations, because they did not migrate in the first place because they did not have the resources to do so, in many cases. So the paper that I will present today will show that, will show that these people are very vulnerable to shocks and have a lot of vulnerabilities that we had not thought about.
The summary for your presentation notes that the study investigates “whether the impact of conflict on social networks and market mechanisms hinders the risk-coping mechanisms of households”. What are the risk-coping mechanisms households in this part of the world typically employ when faced with a negative income shock? They cope very similarly to any household. They use social networks, they use transfers that they receive from family and friends, they sell assets. But what we have found is that these households are more constrained than the households that were not under conflict, that were not subject to conflict conditions, to say it in another way. So basically what the research is finding is that these people have weaker social networks and their networks are restricted to the close networks – to family and friends. They really don’t have access to wider networks in which the income is less correlated so they can receive higher transfers, for example. We are also finding that these households are more isolated from markets. So what happens is when they face the weather shock – the extreme weather shock – they are very constrained to react. They do receive transfers from family and friends, but these transfers seem not to be enough to cover the conflict shock, the weather shock. They sell assets. They sell land, which is an extreme coping mechanism and very importantly so. They migrate. They don’t send one migrant, but the whole family migrates, so it’s also an extreme coping mechanism. What the research is pointing to is that these households really are extremely vulnerable as a result of conflict. I am most distressed that these households are not living today under conflict. This is the legacy of conflict. In many regions, on average, actors left ten years ago. So ten years after, you can still see the effects.
It’s interesting to observe the vital role social networks play in developing economies – this is something the AMA Innovation Lab has observed in our own work in different contexts. Can you speak a little to the role social networks play, and what you’ve learned happens when these networks are disrupted or destroyed, and households become more isolated? What the research – not only the one I’m presenting today, but other studies that we have done – is that conflict and armed groups have a huge impact on social networks, and not a positive impact. Armed actors really, control the population in the territory. For example, they use the community organizations to be able to control the population. They capture and they use the social networks, they impose their own leaders. They co-opt them strongly. And we have found that, particularly, they co-opt the political organizations. So formal organizations and community organizations are really weakened by armed groups. But in the research I am going to present today what you see is that the families are very isolated. Their networks are really close family and friends. And what we have seen is that trust in the community and the density of the networks and the centrality of the networks is weaker in regions of conflict. And this is not surprising. Armed groups, besides co-opting the formal organizations, they use the population, for example, for alienating, for getting information from the other groups, so there’s a lot of mistrust. That’s not surprising.
Has anything grown up in its place? The holes that are left from the situation you describe above, has there been any push back to that? What we see in the research that I am going to present today, is that , it’s ten years after. Nothing has changed much. We don’t have information for the ten years before, of how things were before, but these armed groups are very inserted in the community and really co-opted the political organization, so they were really really strong. And what it seems is that it really weakened the trust in the community, and we don’t see evidence of these people trying to find other ways to organize themselves. We don’t.
When a negative income shock drives increased migration, what have you observed (or do you think) the impacts of that increased migration are on households, particular households in or near the poverty level? You are touching the next question that we would like to look into. This is very preliminary work. Basically, what we want to understand now is how this migration is related to poverty. Whether the migration strategy is effective to prevent from falling into poverty or falling into poverty traps. So that is the next step that we would like to see. I would anticipate that many households may fall into poverty and many households may fall into poverty traps because they sell their assets. They sell livestock. They sell land. But we still have to see that. That’s the next step that we want to study.
But you mentioned before that those that migrate are somewhat better off than those who decided to stay or had to stay? Yes, but that was during forced displacement. In this case, I also think that migration is effective for improving consumption. So the first regressions that we have done – but these are very preliminary – you see that migration is indeed effective to increase consumption a bit. So what we need to understand is whether this increase in consumption is enough to mitigate the weather shock. And we still need to figure that out. We haven’t done that yet.
When negative shocks occur, and when these social networks are disrupted, you’ve observed that households are pushed to sell land and livestock, and migrate in order to cope with the negative income shocks. Have you come across ideas that might help mitigate these negative impacts? We are not looking into that, but I think it’s important to look into that, especially for conflict areas. There is already some research showing some policy implications of people facing extreme shocks and how policy can help people mitigate these shocks, by having access, for example, to loans or having access to risk-coping mechanisms. But what I think the research is showing is that in conflict areas, it’s even more important, because you have households that are completely isolated, not only from markets but also from social networks in a country that is not a low-income country, because Columbia is already a medium-income country. Even though, you see households that are very isolated from markets and from social networks. So definitely, there is a really big opportunity there for doing important policy work to increase the access to risk-coping mechanisms. But – very importantly – to help the community to reconstruct the social networks and create their new organizations and to strengthen their community organizations that were so affected by conflict. So, not only the traditional policy mechanisms that are used to improve the risk-coping ability of households, but additional ones to really reduce the impacts of conflict which are long-lasting. From what it seems here, they are long-lasting.
There’s no financial mechanisms in these areas to help them so that they wouldn’t have to move in the first place? We do ask about insurance, and whether they have weather insurance, and the percentage of households that have weather insurance is 0.1%. It’s like, three households or something like that. They don’t have access to that. They have access to credit, and we do see that the people who faced the shock have a higher probability of getting credit, formal credit through the banks. We don’t know whether that helped, but that’s an option. They get transfers from the government as well, which is interesting. What we find is that the people in the regions where the shock is more intense, where the rains lasted longer, what we find is that they receive more transfers from the government, from a conditional cash transfer. This is the traditional cash transfer program, where the conditions are related to education and health and things like that. They don’t receive extra support from the government for the flooding. It’s just the standard. I don’t know if the government decides to give more conditional cash transfers, or to give them quicker, or something like that, but they do receive more as a result of the shock.
Do you think if there was some kind of bundle of financial options available to mitigate those risks, these interventions would help? I’m sure that you would see that migration would decrease. Migration is really large. From 2010 to 2013, you had 20 percent of the households migrating, which is really high. Usually, in many countries, you see about 10 percent, but here its 20 percent. So they are moving all the time. And some of that migration is really investment migration, so you are better off, and some of it is as a coping mechanism. You are not sure what else to do but move, survive somehow. So I really think that if you have access to the mechanisms, you would not see as much of the latter migration. I mean, you would see the good migration, but not the migration you see as a last resort to mitigate the shock.
To conclude – what are your next steps? Which research questions do think are important to tackle next? With the data that we collected, we are doing additional research that is important. One is the one you have been asking about social networks. We really want to understand what is the impact of the conflict, especially on the structures imposed by armed groups on the efficacy of social networks, on households trusting each other, on working together, on helping each other. So one part of the research we are doing is concentrated on that. Another part of the research is really trying to understand the political preferences and the political behavior of the households that live in these communities. As I mentioned before, armed groups really co-opted the political organizations, the community political organizations, and this might have had huge impacts on the political preferences in these communities and on the political behavior of these households. So, we are exploring that, and we are trying to understand how conflict also leaves legacies on politics. And the third thing that we would like to understand is how they live. Now, what we are looking at is migration, and how people react to a weather shock. But I’m sure it’s not only affecting how people mitigate shocks, but is affecting the way people produce, participate in markets, have access to financial mechanisms. I would also like to understand all that, and understand why some people decide to stay in the communities and why some of the people decide to leave.
A huge thank you to Professor Ana Maria Ibanez for taking the time to sit down with us to discuss this important and timely work. For more information on Prof. Ibanez's research, please click here.