The Effect of Drought on Health Outcomes and Health Expenditures in Rural Vietnam

This paper quantifies the short-term impact of drought on health conditions and health expenditures. Using panel data from rural Vietnam and rainfall data in an instrumental variable approach, the results suggest that populations face an increased risk of illness in the year they are exposed to drought. Households with reduced agricultural incomes and limited access to coping mechanisms seem particularly affected. Drought-related health shocks also cause financial burden for many households, with health expenditures increasing by 9-17% of total consumption. This paper contributes to a literature which so far has mostly focused on the long-term consequences of climate shocks.