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Social protection in the face of climate change : targeting principles and financing mechanisms

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  • Carter,Michael R.
  • Janzen,Sarah Ann

Abstract

Climate risk is an important driver of long-term poverty dynamics, especially in rural regions. This paper builds a dynamic, multi-generation household model of consumption, accumulation, and risk management to draw out the full consequences of exposure to climate risk. The model incorporates the long-term impacts of consumption shortfalls, induced by the optimal ?asset smoothing? coping behavior of the vulnerable, on the human capital and long-term wellbeing of families. The analysis shows that the long-term level and depth of poverty can be improved by incorporating elements of ?vulnerability-targeted social protection? into a conventional system of social protection. The paper also explores the degree to which vulnerability-targeted social protection can be implemented through a subsidized insurance mechanism. The analysis shows that insurance-based vulnerability-targeted social protection dominates (in economic growth and poverty reduction measures) both in-kind transfer mechanisms and vulnerability-targeted protection paid for using a public budget. The relative gains brought about by this scheme of insurance-augmented social protection increase?at least for a while?under climate change scenarios. However, if climate change becomes too severe, then even this novel form of social protection loses its ability to stabilize the extent and depth of poverty.

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  • Carter,Michael R. & Janzen,Sarah Ann, 2015. "Social protection in the face of climate change : targeting principles and financing mechanisms," Policy Research Working Paper Series 7476, The World Bank.
  • Handle: RePEc:wbk:wbrwps:7476
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    Cited by:

    1. Sarah A. Janzen & Michael R. Carter & Munenobu Ikegami, 2021. "Can insurance alter poverty dynamics and reduce the cost of social protection in developing countries?," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 88(2), pages 293-324, June.
    2. Michael R. Carter, 2022. "Can digitally‐enabled financial instruments secure an inclusive agricultural transformation?," Agricultural Economics, International Association of Agricultural Economists, vol. 53(6), pages 953-967, November.
    3. Fahim Nawroz Tonmoy & David Rissik & J. P. Palutikof, 2019. "A three-tier risk assessment process for climate change adaptation at a local scale," Climatic Change, Springer, vol. 153(4), pages 539-557, April.
    4. Sodokin, Koffi & Djafon, Joseph Kokouvi & Dandonougbo, Yevessé & Akakpo, Afi & Couchoro, Mawuli K. & Agbodji, Akoété Ega, 2023. "Technological change, completeness of financing microstructures, and impact on well-being and income inequality," Telecommunications Policy, Elsevier, vol. 47(6).
    5. Abdullah Al-Maruf & Sumyia Akter Mira & Tasnim Nazira Rida & Md Saifur Rahman & Pradip Kumar Sarker & J. Craig Jenkins, 2021. "Piloting a Weather-Index-Based Crop Insurance System in Bangladesh: Understanding the Challenges of Financial Instruments for Tackling Climate Risks," Sustainability, MDPI, vol. 13(15), pages 1-18, August.
    6. Carolina Milhorance & Marcel Bursztyn & Eric Sabourin, 2019. "The politics of the internationalisation of Brazil’s ‘Zero Hunger’ instruments," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 11(2), pages 447-460, April.
    7. Bo Yang & Xiangnan Wang & Tong Wu & Weihua Deng, 2023. "Reducing farmers' poverty vulnerability in China: The role of digital financial inclusion," Review of Development Economics, Wiley Blackwell, vol. 27(3), pages 1445-1480, August.
    8. Nathaniel Jensen & Munenobu Ikegami & Andrew Mude, 2017. "Integrating Social Protection Strategies for Improved Impact: A Comparative Evaluation of Cash Transfers and Index Insurance in Kenya," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 42(4), pages 675-707, October.
    9. Janna D. Tenzing, 2020. "Integrating social protection and climate change adaptation: A review," Wiley Interdisciplinary Reviews: Climate Change, John Wiley & Sons, vol. 11(2), March.
    10. Falco, Chiara & Rotondi, Valentina & Kong, Douch & Spelta, Valeria, 2021. "Investment, insurance and weather shocks: Evidence from Cambodia," Ecological Economics, Elsevier, vol. 188(C).

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    Keywords

    Debt Markets; Regional Economic Development; Rural Poverty Reduction; Climate Change Economics;
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