Author: Carlos Bozzoli

This article analyzes the effects of household-level activity choices on farm household welfare in a developing country affected by mass violent armed conflict. The study uses household survey data from postwar Nampula and Cabo Delgado provinces in Northern Mozambique capturing many activity choices, including market participation, risk and activity diversification, cotton adoption, and social exchange, as well as income-and consumption-based measures of welfare. The study advances the literature on postwar coping and rural poverty at the micro level by estimating potentially endogenous activity choices and welfare outcomes using instrumental variables. The study finds that increasing the cultivated area and on-farm activities enhances postwar welfare of smallholders exploiting wartime survival techniques. Subsistence farming reduces income but does not affect consumption, while market participation has positive welfare effects. This suggests that postwar reconstruction policies should encourage the wartime crop mix but offer enhanced marketing opportunities for such crops. Cotton adoption, which was promoted by aid agencies in the postwar period, reduces household welfare per capita by between 16% and 31%, controlling for market access. This contradicts previous studies of postwar rural development that did not control for the war-related endogeneity. Hence, addressing the potential endogeneity of activity choices is important because the standard regression approach may lead to biased estimates of the impact of activity choice on welfare, which in turn may lead to biased policy advice. The article discusses and contextualizes these findings, concluding with a discussion of suitable pro-poor reconstruction policies for national governments and donors.