Report No: AUS0001213 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Risk and Vulnerability in Nepal Findings from the Household Risk and Vulnerability Survey Thomas Walker, Yasuhiro Kawasoe and Jui Shrestha November 2019 Public Disclosure Authorized i Table of Contents Table of Contents..................................................................................................................................... i Acknowledgments .................................................................................................................................. ii Disclaimer .............................................................................................................................................. iii Executive Summary ................................................................................................................................ 1 Chapter 1. Introduction ........................................................................................................................... 7 Chapter 2. Survey Methodology ........................................................................................................... 10 Chapter 3. Household Characteristics ................................................................................................... 15 Chapter 4. Shocks ................................................................................................................................. 24 Chapter 5. Coping Strategies ................................................................................................................ 45 Chapter 6. Welfare Impacts of Shocks................................................................................................... 53 Chapter 7. Conclusions and Policy Recommendations .......................................................................... 64 Appendix .............................................................................................................................................. 68 References ............................................................................................................................................ 86 i Acknowledgments This report summarizes the findings of the Nepal Household Risk and Vulnerability Survey, a three-year panel survey financed by a grant from the United Kingdom Department for International Development (DfID) and conducted on behalf of the Government of Nepal. The team thanks Andy Murray, Craig Irwin, Nina Schuler, Gareth Weir and Benjamin Zeitlyn from DfID for their support in establishing and managing the grant. The study was conducted by a team from the World Bank, led by Thomas Walker, with Hanan Jacoby, Yasuhiro Kawasoe, Upasana Khadka, Jui Shrestha and Savant Shrestha, and under the guidance of Pablo Gottret and Stefano Paternostro. Inputs and comments on the study design were also received from Yasuhiko Matsuda, Jyoti Pandey, Jasmine Rajbhandary, Emmanuel Skoufias, Sailesh Tiwari, Hiroki Uematsu and Gabriel Aguirre. Suravi Bhandary, Soyesh Lakhey, Ami Shrestha and Anupama Shrestha provided excellent assistance in finalizing the report. Toni Koleva, Amira Nikolas, Sushila Rai, Tara Shrestha, Elfreda Vincent and Lansong Zhang provided invaluable administrative support. The authors are also grateful for the support and advice of the Nepal country team, in particular Takuya Kamata, Faris Hadad-Zervos, Bigyan Pradhan and Roshan Bajracharya. We are immensely grateful to the households who participated in the survey—in all three survey rounds in most cases. Their willingness to be interviewed and the assistance they provided to the field teams made the survey a success. We also thank the Government of Nepal for its support, especially the National Planning Commission, which provided letters of introduction for the field team, the Central Bureau of Statistics, which provided the sampling frame and advice on sampling, and the Nepal National Reconstruction Authority, which shared data on earthquake grant recipients. The survey fieldwork was conducted by Full Bright Consultants (Pvt.) Ltd, led by Manjul Manandhar, Harka Raj Rai and Binod Kachhapati, with Bijaya Pandey and Megh Bahadur Khatri. Michael Lokshin, James Arthur Shaw and other members of the World Bank’s Survey Solutions team provided technical support in preparing and operating the survey data entry platform. The supervisors for the survey team were Siraj Pokharel, Krishna Karki, Mohan Sapkota, Tej Thapaliya, Krishna Khanal, Bhim Neupane, Hari Shankar Prasad Choudhary, Braj Kishor Sah, Pravakar Jaisawal, Premdeep Adhikari, Rejendra Shrestha, Raju Neupane, Dupchen Lama, Ramesh Poudel, Bikram Wagle, Sudeep Acharya, Yubaraj Dahal, Kul Br. Khatri, Mahesh Dev, Shankar Karki, Narayan Paudel, Manoj K. Bhattarai, Tirtha Gautam, Pradeep Dahal, Pemba Sherpa, Bikim Shrestha, and Keshav Neupane. Data from the field was verified by data checkers Abishek KC, Amrita Sah, Bhuwan Rayamajhi, Deep Raj Pant, Gagan Paudel, Megh Raj Chaudhary, Mohan Sapkota, Nawaraj Chaulagai, Om Adhikari, Rabina Rajak, Sabita Adhikari, Sarak Dahal, Shankar Karki, Srijana Paudel, and Utkarsh Poudel. Enumerators for the survey were Abina Sigdel, Ahsami Chaudhari, Amir Thapa, Amrita Sah, Anand Patel, Anita Kafle, Anita Bharati, Archana Chaudhari, Archana Rasaili , Ashmi Chaudhary, Ashmita Nepal, Ashwini Thakur, Basbin Wagle, Bhuban Rayamajhi, Bikash Thapa, Bimala Pradhan, Bimala Shrestha, Bramhadev Chaudhary, Buddhi Pd Gautam, Chiranjibi Khatiwada, Deep Raj Pant, Deepak Bagale, Devendra Shah, Dibakar Jha, Dipila Pant, Dirga Thapa, Diwakar Jha, Diwakar Paudel, Gagan Poudel, Gajendra Jha, Gobind Lamichhane, Harikala Puri, Indra B. Bamjan, Jamuna Rai, Kabita Kuwar, Kamal R.Chhetry, Kamal Shahi¸ Kamala Sharma, Kanchan Rokaha, Kul Bahadur Khattri, Kunti Shah, Laxmi P. Upadhaya, Laxmi Khadka, Loknath Dhamala, Luna Laxmi Uprety, Madhav Gyawali, Mahesh Balla, Manoj Adhikari, Manoj Kumar Shah, Manu Rana, Megh B. Gurung, Megh R. Chaudhary, Min Bahadur Koirala, Mohan Sapkota, Mukti Nath Sapkota, Mukti Pd. Gautam, Muktinath Adhikari, Nar Shrestha, ii Naresh Kunwar, Nawal Sing Rana, Nawaraj Chaulagai, Nirmal Banjara, Pabita Lama, Pradip Basnet, Pramod K. Yadav, Pramod Mandal, Pratima Khatri, Priyesh Goit, Punama Bahandari, Purna Man Shrestha, Nawraj Chaulagai, Purnman Shrestha, Purushottam Dahal, Purusottam Shrestha, Rabindra Khatiwada, Rajan Adhikari, Rajan Neupane, Rajesh Yadav, Raju Giri, Rama Sitaula, Ramesh Shrestha, Rameshwar Yadav, Rita Timilsina, Roshan Adhikari, Ruman Aacharya, Rupa Verma, Sajana Bista, Salina Aryal, Sambidha Wagle, Samiksha Subedi, Samir Aryal, Samjhana Sharma, Sangeeta Shubba, Sangita Sharma, Sanjaya Dangi, Santosh Jha, Santosh Yadav, Sarita Bharati, Sarita Regmi, Satyawan S. Kasti, Saurav Acharya, Shalina Aryal, Shankar Yadav, Shivaji Budathoki , Shova Subedi, Shrijana Sharma, Shyam Sundar Ram, Sita Rayamajhi, Suman Adhikari, Suman Ghimire, Sushila Rayamajhi, Tej Kadhayat, Tej Thapaliya, Usha Karki, and Yoshoda Poudel. Administrative support was provided by Alok Acharya and Yam Sinjali. Preliminary findings were presented and discussed at annual stakeholder workshops held in Kathmandu in January 2017, February 2018 and June 2019. These consultations included representatives from government, development partners and academia. Final dissemination was conducted at the International Conference on Resilient Social Protection for Inclusive Development, which took place in Kathmandu on 18-19 September 2019. The team thanks all participants for their feedback, which has strengthened the report. Cover Photo credit: Thomas Walker Disclaimer This volume is a product of the staff of the International Bank for Reconstruction and Development/ The World Bank. The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. iii Executive Summary This report summarizes the findings of a unique panel survey of rural households in Nepal, conducted between 2016 and 2018 by the World Bank with financing from the UK Department for International Development (DfID). The survey covered 6,000 households in rural and peri-urban areas nationwide. The objective of the survey was to better understand the exposure of households to major natural and socio- economic shocks, their means of coping with these shocks, and the impact of shocks on household welfare. While most households appear to be able to withstand a range of smaller shocks to assets and income, larger and more covariate shocks continue to pose a major risk to household assets, food security and overall welfare. These effects persist for up to two years following the shock. Our findings point to the importance of having established formal social assistance to help the chronically poor build their resilience, and assist all households to cope in the event of major shocks. Frequency and Size of Shocks Almost 90 percent of households reported at least Figure 1. Frequency of Shocks by Type one shock during the study period. Each year, on Earthquake average one in three households was affected by a Flood and landslide shock.