Social protection in the face of climate change: targeting principles and financingmechanisms

This paper builds a multi-generation household model of consumption, accumulation, and risk management to assess the dynamic consequences of climate risk exposure. The model incorporates long-term impacts of consumption shortfalls, induced by optimal 'asset smoothing' coping behavior of th...

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Bibliographic Details
Published in:Environment and development economics 2018-06, Vol.23 (3), p.369-389
Main Authors: Carter, Michael R., Janzen, Sarah A.
Format: Article
Language:English
Subjects:
RESEARCH ARTICLE
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Summary:This paper builds a multi-generation household model of consumption, accumulation, and risk management to assess the dynamic consequences of climate risk exposure. The model incorporates long-term impacts of consumption shortfalls, induced by optimal 'asset smoothing' coping behavior of the vulnerable, on poverty. The analysis shows the long-term level and depth of poverty can be improved by incorporating 'vulnerability-targeted social protection' into a conventional social protection system. The paper further shows insurance-based vulnerability-targeted social protection dominates (in economic growth and poverty reduction measures) both in-kind transfers and asset-based vulnerability-targeted protection. We then stress test social protection mechanisms and find the relative performance of insurance-based vulnerability-targeted social protection improves when subjected to current pessimistic projections about increasing drought risk. However, if drought risk increases beyond current climate change projections, then even the vulnerability-targeted policy loses its ability to stabilize the extent and depth of poverty.
ISSN:1355-770X
1469-4395
DOI:10.1017/S1355770X17000407