Gendered Effects of Climate Shock on Welfare: The Roles of Remittance and Mobile Money in Somalia

ABSTRACT This study investigates the impact of climate shock on Somali households' welfare status and examines the mediating roles of remittances and mobile money in enhancing households' coping capacity. Using a combination of fixed‐effects regression models and an inverse probability weighting method along with a structural equation model, our analysis demonstrates that climate shock has adverse effects on various welfare indicators for both female‐ and male‐headed households. However, we find that female‐headed households are more likely to fall below the poverty line, have a larger poverty depth, and shift their diet due to climate shock than male‐headed households. Interestingly, we find that remittances decrease following climate shock, both on average and for female‐headed households, but such reduction does not have a significant adverse effect on the households' coping ability. This could be an indication that Somali households rely on other coping mechanisms for shocks rather than remittances. Similarly, even though we find that mobile money increases the likelihood of receiving remittances, we find no evidence that this translates into a higher coping ability to climate shock. Thus, targeted policy measures are essential to enhance the resilience of female‐headed households to climate shocks, and further research is needed to identify and strengthen coping strategies, especially for households led by women.