Adapting to climate change accounting for individual beliefs

Guglielmo Zappalà

Journal of Development Economics, 2024, vol. 169, issue C

Abstract: As the climate changes, efficient climate policy requires a better understanding of how individuals adapt. Despite extensive research on various climate adaptation frictions, including financial and technological constraints, models of adaptive decision-making assume that agents have perfect information and accurate beliefs about climate. Combining rural household data in Bangladesh with a meteorological measure of dryness, this paper studies the role of individual drought beliefs and their accuracy in irrigation decisions as a key adaptive margin. In a theoretical model, I introduce a behavioral friction to document how heterogeneous beliefs differentially influence responsiveness to the same meteorological signal in dryness. The empirical analysis reveals an asymmetric response to dry shocks in irrigation conditional on the accuracy of prior beliefs. A counterfactual analysis shows lower technology adoption levels and higher monetary losses when beliefs are inaccurate.

Keywords: Adaptation; Agriculture; Bangladesh; Beliefs; Climate change; Drought; Irrigation (search for similar items in EconPapers)
JEL-codes: D83 O13 Q12 Q15 Q51 Q54 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304387824000385
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:deveco:v:169:y:2024:i:c:s0304387824000385

DOI: 10.1016/j.jdeveco.2024.103289

Access Statistics for this article

Journal of Development Economics is currently edited by M. R. Rosenzweig

More articles in Journal of Development Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().