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Understanding the adaptation deficit: why are poor countries more vulnerable to climate events than rich countries?

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  • Fankhauser, Samuel
  • McDermott, Thomas K. J.

Abstract

Poor countries are more heavily affected by extreme weather events and future climate change than rich countries. One of the reasons for this is the so-called adaptation deficit, that is, limits in the ability of poorer countries to adapt. This paper analyses the link between income and adaptation to climate events theoretically and empirically. We postulate that the adaptation deficit may be due to two factors: A demand effect, whereby the demand for the good “climate security” increases with income, and an efficiency effect, which works as a spill-over externality on the supply-side: Adaptation productivity in high-income countries is enhanced because of factors like better public services and stronger institutions. Using panel data from the Munich Re natural catastrophe database we find strong evidence for a demand effect for adaptation to two climate-related extreme events, tropical cyclones and floods. Evidence on the efficiency effect is more equivocal. There are some indications that adaptation in rich countries might be more efficient, but the evidence is far from conclusive. The implication for research is that better data, in particular on adaptation effort, need to be collected to understand adaptation efficiency. In terms of policy, we conclude that inclusive growth policies (which boost adaptation demand) should be an important component of international efforts to close the adaptation deficit.

Suggested Citation

  • Fankhauser, Samuel & McDermott, Thomas K. J., 2014. "Understanding the adaptation deficit: why are poor countries more vulnerable to climate events than rich countries?," LSE Research Online Documents on Economics 57620, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:57620
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    Cited by:

    1. Lopez-Uribe, Maria del Pilar & Castells-Quintana, David & McDermott, Thomas K. J., 2017. "Geography, institutions and development: a review ofthe long-run impacts of climate change," LSE Research Online Documents on Economics 65147, London School of Economics and Political Science, LSE Library.
    2. Adriana Kocornik-Mina & Thomas K. J. McDermott & Guy Michaels & Ferdinand Rauch, 2020. "Flooded Cities," American Economic Journal: Applied Economics, American Economic Association, vol. 12(2), pages 35-66, April.
    3. Weiler, Florian & Klöck, Carola & Dornan, Matthew, 2018. "Vulnerability, good governance, or donor interests? The allocation of aid for climate change adaptation," World Development, Elsevier, vol. 104(C), pages 65-77.
    4. Kevin Grecksch & Carola Klöck, 2020. "Access and allocation in climate change adaptation," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 20(2), pages 271-286, June.
    5. Xiao-Chen Yuan & Xun Sun & Upmanu Lall & Zhi-Fu Mi & Jun He & Yi-Ming Wei, 2016. "China’s socioeconomic risk from extreme events in a changing climate: a hierarchical Bayesian model," Climatic Change, Springer, vol. 139(2), pages 169-181, November.
    6. Antoine Dechezlepretre & Sam Fankhauser & Matthieu Glachant & Jan Stoever & Simon Touboul, 2020. "Invention and Global Diffusion of Technologies for Climate Change Adaptation," World Bank Other Operational Studies 33883, The World Bank.
    7. Adenle, Ademola A. & Ford, James D. & Morton, John & Twomlow, Stephen & Alverson, Keith & Cattaneo, Andrea & Cervigni, Rafaello & Kurukulasuriya, Pradeep & Huq, Saleemul & Helfgott, Ariella & Ebinger,, 2017. "Managing Climate Change Risks in Africa - A Global Perspective," Ecological Economics, Elsevier, vol. 141(C), pages 190-201.
    8. Hiroki Onuma & Kong Joo Shin & Shunsuke Managi, 2017. "Reduction of future disaster damages by learning from disaster experiences," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 87(3), pages 1435-1452, July.
    9. Stephanie Toole & Natascha Klocker & Lesley Head, 2016. "Re-thinking climate change adaptation and capacities at the household scale," Climatic Change, Springer, vol. 135(2), pages 203-209, March.
    10. McDermott,Thomas K.J., 2016. "Investing in disaster risk management in an uncertain climate," Policy Research Working Paper Series 7631, The World Bank.
    11. Xiao-Chen Yuan & Xun Sun, 2019. "Climate change impacts on socioeconomic damages from weather-related events in China," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 99(3), pages 1197-1213, December.
    12. Kevin Grecksch & Carola Klöck, 0. "Access and allocation in climate change adaptation," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 0, pages 1-16.
    13. Laura A. Bakkensen & Xiangying Shi & Brianna D. Zurita, 2018. "The Impact of Disaster Data on Estimating Damage Determinants and Climate Costs," Economics of Disasters and Climate Change, Springer, vol. 2(1), pages 49-71, April.
    14. Crick, Florence & Eskander, Shaikh M.S.U. & Fankhauser, Sam & Diop, Mamadou, 2018. "How do African SMEs respond to climate risks? Evidence from Kenya and Senegal," World Development, Elsevier, vol. 108(C), pages 157-168.
    15. Delavane B. Diaz, 2016. "Estimating global damages from sea level rise with the Coastal Impact and Adaptation Model (CIAM)," Climatic Change, Springer, vol. 137(1), pages 143-156, July.
    16. Tanya O'Garra & Susana Mourato, 2016. "Are we willing to give what it takes? Willingness to pay for climate change adaptation in developing countries," Journal of Environmental Economics and Policy, Taylor & Francis Journals, vol. 5(3), pages 249-264, September.
    17. Richard S.J. Tol, 2020. "The economic impact of climate in the long run," Working Paper Series 1120, Department of Economics, University of Sussex Business School.
    18. Qing Miao, 2019. "Are We Adapting to Floods? Evidence from Global Flooding Fatalities," Risk Analysis, John Wiley & Sons, vol. 39(6), pages 1298-1313, June.
    19. Samuel Fankhauser & Nicholas Stern, 2016. "Climate change, development, poverty and economics," GRI Working Papers 253, Grantham Research Institute on Climate Change and the Environment.
    20. Sam Fankhauser, 2016. "Adaptation to climate change," GRI Working Papers 255, Grantham Research Institute on Climate Change and the Environment.
    21. Stephanie Toole & Natascha Klocker & Lesley Head, 2016. "Re-thinking climate change adaptation and capacities at the household scale," Climatic Change, Springer, vol. 135(2), pages 203-209, March.
    22. Baarsch, Florent & Granadillos, Jessie R. & Hare, William & Knaus, Maria & Krapp, Mario & Schaeffer, Michiel & Lotze-Campen, Hermann, 2020. "The impact of climate change on incomes and convergence in Africa," World Development, Elsevier, vol. 126(C).
    23. Castells-Quintana, David & Lopez-Uribe, Maria del Pilar & McDermott, Thomas K.J., 2018. "Adaptation to climate change: A review through a development economics lens," World Development, Elsevier, vol. 104(C), pages 183-196.
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    More about this item

    Keywords

    climate change; adaptation; development; extreme events; disaster risk;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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