Social Protection in the Face of Climate Change

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.

Bibliographic Details

Main Authors:	Carter, Michael R., Janzen, Sarah A.
Format:	Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2015-11
Subjects:	IMPACTS OF CLIMATE CHANGE, JOBS, RISKS, HOLDING, FOOD NEEDS, POVERTY LINE, SUBSISTENCE, IMPACT ON POVERTY, ECONOMIC GROWTH, POLICY SCENARIO, RISK REDUCTION, INCOME, POVERTY RATES, EXCHANGE, OPTION, AGRICULTURAL DEVELOPMENT, ASSET LOSSES, LIQUIDITY, DEVELOPING COUNTRIES, LIVESTOCK INSURANCE, HUMAN ASSETS, AGRICULTURAL ECONOMICS, BUDGET CONSTRAINTS, MODELS, WEATHER INSURANCE, POORER HOUSEHOLDS, PRICE, CASH TRANSFER, INTERNATIONAL BANK, MEASURES, POVERTY MEASURES, INSURANCE SCHEME, DEVELOPING COUNTRY, HUMAN CAPITAL LEVELS, REGION, POVERTY REDUCTION, BUDGET, SAVINGS, PENALTIES, SCENARIOS, RURAL HOUSEHOLDS, DEVELOPMENT ECONOMICS, MORAL HAZARD, POOR FAMILIES, POOR HOUSEHOLD, POVERTY GAP, INCOME SHOCK, CONTRACTS, VULNERABLE HOUSEHOLDS, FIXED COSTS, LIQUIDITY CONSTRAINTS, TRANSFERS, NATURAL DISASTERS, MARKETS, SMALLHOLDER AGRICULTURE, DESTITUTE HOUSEHOLDS, POVERTY MAPS, PRODUCTION TECHNOLOGY, CHRONIC POVERTY, HUMAN CAPITAL ASSETS, SOCIAL PROTECTION, CONSUMPTION POVERTY, INCOME RISK, FARMERS, PRICE SUBSIDIES, POVERTY MAP, INSURANCE COVERAGE, FOOD AID, FINANCE, ADMINISTRATIVE COSTS, CONSUMPTION, BUDGET CONSTRAINT, HUMAN CAPITAL, ECONOMIC IMPACT, VALUE OF ASSETS, GOOD, GOVERNMENT BUDGET, CHRONIC MALNUTRITION, CLIMATE CHANGE, POLICIES, DROUGHT, CASH TRANSFER PROGRAM, INSURANCE PRODUCTS, SCHOOL ATTENDANCE, FUTURE, VALUE, RESOURCE ECONOMICS, CHRONICALLY POOR, RETURNS, INSURANCE CONTRACTS, CLIMATE, DEMAND, PUBLIC BUDGET, UTILITY FUNCTION, FAMILY INCOME, CONTRACT, IMPACT OF SHOCKS, SOCIAL NETWORKS, INSURANCE CONTRACT, MALNUTRITION, RURAL, PHYSICAL ASSETS, INSURANCE PREMIUM, NUTRITION, MARKET, TRANSFER PROGRAMS, POLICY, IDIOSYNCRATIC SHOCKS, RURAL REGIONS, CD, HOLDINGS, CONTRACT DESIGN, INSURANCE, TARGETING, INVESTMENT STRATEGIES, CONSUMPTION SMOOTHING, PHYSICAL ASSET, INSURANCE PAYMENTS, FOOD INTAKE, REGIONS, STOCKS, INVESTMENT, CLIMATE CHANGE SCENARIOS, SHARE, RURAL AREAS, POVERTY, ALLOCATION, POOR POPULATIONS, INSURANCE MECHANISMS, INFORMAL INSURANCE, DYNAMIC MODEL, INVESTMENTS, RISK MANAGEMENT, POVERTY DYNAMICS, COST OF INSURANCE, CASH TRANSFER PROGRAMS, INCOME GAINS, POOR, PRIVATE FINANCING, INEQUALITY, POOR HOUSEHOLDS, INVESTING,
Online Access:	http://documents.worldbank.org/curated/en/2015/11/25250352/social-protection-face-climate-change-targeting-principles-financing-mechanisms https://hdl.handle.net/10986/23442
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