Adaptation to climate risk: Evidence from cyclones and flooding in Bangladesh

Razi Iqbal

No j43sk_v1, SocArXiv from Center for Open Science

Abstract: This paper evaluates the importance of adaptation in dealing with an increase in climate risk. The paper studies adaptation along two margins: changes in crop choices, and reallocation of workers across sectors. Using long-term data on cyclones and flooding in Bangladesh, I find that the increase in propensity of both cyclones and floods affect crop choice, but only cyclones affect sectoral employment, shifting employment out of agriculture. The paper develops a structural model to study the welfare implications of adaptation and calculate the Value of adaptation i.e. how much worse welfare would be if both adaptation channels were shut off. I find that the Value of adaptation is informed by the nature of the shocks: both the intensity of future shocks and their correlatedness across crops and regions influence the Value of adaptation. The Value of adaptation is 20% in the case in which intensity of both flooding and cyclones doubles relative to the 2000s average, and such increases are correlated within regions.

Date: 2025-02-10
New Economics Papers: this item is included in nep-agr, nep-dev and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:osf:socarx:j43sk_v1

DOI: 10.31219/osf.io/j43sk_v1

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