Poverty Impact of Commodity Price Boom Using Household Survey. The Case of Maize in Zambia

This paper uses Household Survey data to analyze the possible eects that a food price surge could have on poverty and overall welfare. In particular, we use the Zambian Living Conditions Monitoring Survey I (LCMS I) to estimate a demand system that enables us to simulate various price scenarios for the Zambian main staple and its possible eects for dierent population categories. Dierently from previous studies, in our demand system we address two flaws usually encountered in this type of applications: one is the possible selection bias due to non-consumption of a particular staple among households, the other is the dierence between the quantity used for estimation (typically logarithm) and the quantity of interest (level). Jointly, this increases the reliability of our technique. Our results show that a 50 percent increase in maize prices, which is in line with the actual surge in Zambia, could lead to an average consumption decrease of 17 percent among Zambian households and overall poverty could rise from 40 percent to 43 percent fairly quickly at national level.