The Impacts of Weather Variability and Shocks on Farmers and Indigenous Peoples' Consumption: Evidence From Panama

ABSTRACT Weather variability and shocks pose significant challenges for tropical developing countries, making it crucial to understand their effects on consumption to address the existing deficiencies among the most vulnerable groups. This study examines the impact of weather variability and shocks on household consumption in Panama, utilizing repeated cross‐sectional data and weather records between 1997, 2003, and 2008. The findings indicate that increased temperatures, temperature anomalies, and floods decrease overall consumption, with non‐food consumption being more adversely affected than food consumption. Indigenous households experience greater negative impacts from weather shocks compared to farmers and impoverished households, highlighting their heightened susceptibility due to reliance on natural resources, insufficient governmental assistance, and various social challenges. Although farmers face difficulties in adapting to declining agricultural productivity, they are not as significantly affected by weather shocks as indigenous peoples. These results provide evidence of the need for enhanced public support and specific measures to reduce the adverse effects of extreme weather events on indigenous communities in Panama.