In this paper, I have explored the link between grazing and water resource scarcity and per capita food consumption expenditure as a proxy for welfare and food security using distance and shadow price as a resource scarcity indicator in Northern Ethiopia based on a unique data set for 518 sample farmers. To address my objectives, I employed an IV 2SLS model for estimating welfare and probit for analyzing food security, drawing on a separable farm household model. My results confirmed the theoretical prediction that grazing and water affect households’ welfare and food security adversely, as predicted by the downward spiral hypothesis.
