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The Impacts of Climate Variability on Household Consumption: Evidence Based on Village Weather Data in Indonesia

Author

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  • Ira Eka, Pratiwi

    (Kyung Hee University)

  • Park, Bokyeong

    (Kyung Hee University)

Abstract

This study investigates the impacts of long-term climate variability on household consumption in Indonesia, a country highly vulnerable to climate change. The analysis combines household survey data from nearly 5,998 families with satellite-derived weather data from NASA POWER spanning 30 years. We use the long-term variability in temperature and precipitation as a proxy for climate change. This study examines the impact of climate change which proceeds over the long term, unlike previous studies concerning one-off or short-term climate events. In addition, using satellite data enhances the accuracy of households’ exposure to climate variability. The analysis finds that households in a village with higher temperature and precipitation variability significantly consume less food. This implies that households more exposed to climate change are at higher risk of malnutrition in developing countries. This study has a limitation that it cannot rule out the potential endogeneity of choosing a climate vulnerable residential location due to economic poorness.

Suggested Citation

  • Ira Eka, Pratiwi & Park, Bokyeong, 2023. "The Impacts of Climate Variability on Household Consumption: Evidence Based on Village Weather Data in Indonesia," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 27(4), pages 273-301, December.
    • Handle: RePEc:ris:eaerev:0425
    DOI: 10.11644/KIEP.EAER.2023.27.4.425
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    Keywords

    Climate Change; Climate Variability; Consumption; Satellite Data; Indonesia;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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