Does climate risk impact household consumption? Evidence from China

Jialong Li and Jiao Li

Economic Modelling, 2025, vol. 152, issue C

Abstract: Climate change is gradually reshaping consumption patterns, with extreme weather events exerting substantial negative effects. This paper examines the causal connection between household consumption and physical climate risk for a sample of households from the China Household Finance Survey (CHFS) between 2011 and 2019. The findings reveal that physical climate risks significantly decrease household consumption, which is driven by reductions in household income. We also find that commercial insurance can mitigate the negative impact of physical climate risk on household consumption, and the effects are stronger for households with low education levels, and those in adverse climatic regions and rural areas. These findings offer new insights into consumer behavior amid physical climate risks and provide implications for targeted policies supporting vulnerable groups.

Keywords: Household consumption; Climate risk; China (search for similar items in EconPapers)
JEL-codes: D12 G50 Q54 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0264999325002652
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:152:y:2025:i:c:s0264999325002652

DOI: 10.1016/j.econmod.2025.107270

Access Statistics for this article

Economic Modelling is currently edited by S. Hall and P. Pauly

More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Catherine Liu ().