Understanding the adaptation deficit: why are poor countries more vulnerable to climate events than rich countries?
Poor countries are more heavily affected by extreme weather events and future climate change than rich countries. This discrepancy is sometimes known as an adaptation deficit. This paper analyses the link between income and adaptation to climate events theoretically and empirically. We postulate that the adaptation deficit is due to two factors: A demand effect, whereby the demand for the good ï¿½climate securityï¿½ 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 infrastructure and stronger institutions. Using panel data from the Munich Re natural catastrophe database we find evidence for both effects in two climate-related extreme events: tropical cyclones and floods. The demand effect is uniformly strong, but there is considerable variation in adaptation efficiency. We identify the countries where inefficiencies are largest. Lower adaptation efficiency is associated in particular with less government spending, an uneven income distribution and bad governance. The conclusion for policy is that international efforts to close the adaptation deficit have to include both inclusive growth policies (which boost adaptation demand) and dedicated adaptation support (which enhances spill-overs), the latter targeted at the countries with the highest adaptation inefficiencies.
|Date of creation:||Sep 2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +44 (020) 7405 7686
Web page: http://www.lse.ac.uk/grantham.
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Thomas K.J. McDermott & Frank Barry & Richard S.J. Tol, 2013.
"Disasters and Development: Natural Disasters, Credit Constraints and Economic Growth,"
CEDI Discussion Paper Series
13-03, Centre for Economic Development and Institutions(CEDI), Brunel University.
- Thomas K.J. McDermott, . "Disasters and Development: Natural Disasters, Credit Constraints and Economic Growth," The Institute for International Integration Studies Discussion Paper Series iiisdp363, IIIS.
- McDermott, Thomas K. J. & Barry, Frank & Tol, Richard S. J., 2011. "Disasters and Development: Natural Disasters, Credit Constraints and Economic Growth," Papers WP411, Economic and Social Research Institute (ESRI).
- William Greene, 2004.
"Distinguishing between heterogeneity and inefficiency: stochastic frontier analysis of the World Health Organization's panel data on national health care systems,"
John Wiley & Sons, Ltd., vol. 13(10), pages 959-980.
- William Greene, 2003. "Distinguishing Between Heterogeneity and Inefficiency: Stochastic Frontier Analysis of the World Health Organization’s Panel Data on National Health Care Systems," Working Papers 03-10, New York University, Leonard N. Stern School of Business, Department of Economics.
- Richard Tol, 2002. "Estimates of the Damage Costs of Climate Change. Part 1: Benchmark Estimates," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 21(1), pages 47-73, January.
- Matthew E. Kahn, 2005. "The Death Toll from Natural Disasters: The Role of Income, Geography, and Institutions," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 271-284, May.
- Ilan Noy, 2007.
"The Macroeconomic Consequences of Disasters,"
200707, University of Hawaii at Manoa, Department of Economics.
- Hallegatte, Stephane, 2011. "How economic growth and rational decisions can make disaster losses grow faster than wealth," Policy Research Working Paper Series 5617, The World Bank.
- Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-44, June.
- Anbarci, Nejat & Escaleras, Monica & Register, Charles A., 2005. "Earthquake fatalities: the interaction of nature and political economy," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1907-1933, September.
- Stéphane Hallegatte & Fanny Henriet & Anand Patwardhan & K. Narayanan & Subimal Ghosh & Subhankar Karmakar & Unmesh Patnaik & Abhijat Abhayankar & Sanjib Pohit & Jan Corfee-Morlot & Celine Herweijer &, 2010. "Flood Risks, Climate Change Impacts and Adaptation Benefits in Mumbai: An Initial Assessment of Socio-Economic Consequences of Present and Climate Change Induced Flood Risks and of Possible Adaptation," OECD Environment Working Papers 27, OECD Publishing.
- Kellenberg, Derek K. & Mobarak, Ahmed Mushfiq, 2008. "Does rising income increase or decrease damage risk from natural disasters?," Journal of Urban Economics, Elsevier, vol. 63(3), pages 788-802, May.
- Richard Tol, 2002. "Estimates of the Damage Costs of Climate Change, Part II. Dynamic Estimates," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 21(2), pages 135-160, February.
- Xavier Gabaix, 2008. "Variable Rare Disasters: A Tractable Theory of Ten Puzzles in Macro-finance," American Economic Review, American Economic Association, vol. 98(2), pages 64-67, May.
- Albala-Bertrand, J. M., 1993. "Political Economy of Large Natural Disasters: With Special Reference to Developing Countries," OUP Catalogue, Oxford University Press, number 9780198287650.
- Solomon M. Hsiang & Daiju Narita, 2012. "Adaptation To Cyclone Risk: Evidence From The Global Cross-Section," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 3(02), pages 1250011-1-1.
- Mark Skidmore & Hideki Toya, 2005.
"Economic Development and the Impacts of Natural Disasters,"
05-04, UW-Whitewater, Department of Economics.
- Toya, Hideki & Skidmore, Mark, 2007. "Economic development and the impacts of natural disasters," Economics Letters, Elsevier, vol. 94(1), pages 20-25, January.
- Alex Bowen & Sarah Cochrane & Samuel Fankhauser, 2012. "Climate change, adaptation and economic growth," Climatic Change, Springer, vol. 113(2), pages 95-106, July.
- Barro, Robert, 2006. "Rare Disasters and Asset Markets in the Twentieth Century," Scholarly Articles 3208215, Harvard University Department of Economics.
- Schumacher, Ingmar & Strobl, Eric, 2011. "Economic development and losses due to natural disasters: The role of hazard exposure," Ecological Economics, Elsevier, vol. 72(C), pages 97-105.
When requesting a correction, please mention this item's handle: RePEc:lsg:lsgwps:wp134. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (The GRI Administration)
If references are entirely missing, you can add them using this form.