Rural households in developing countries will be increasingly affected by extreme weather events due to climate change. Yet, knowledge on the impacts of such events is often constrained by a lack of high quality micro data from developing countries. The ADAPT project addresses this gap by collecting and analyzing socio-economic data in Mongolia, a country that is severely affected by climate change. The ADAPT project implements a representative household panel survey with five waves – the Coping with Shocks in Mongolia Household Panel Survey – in collaboration with the National Statistical Office of Mongolia. Based on this novel database, the project quantifies the impact of extreme weather events on the well-being of individuals and households. Moreover, the project evaluates how effective various adaptation measures are in protecting households from damages caused by future events. A particular focus is on index-based weather insurance that provides indemnity payments to insured households in the aftermath of an extreme weather event.
Update on the project´s process
The data collection of wave 4 of the Coping with Shocks in Mongolia Household Panel Survey is completed, while the collection of wave 5 is ongoing. Two papers are in the review process with journals and further papers are in preparation.
- Index-based weather insurance is a relatively new instrument for households to adapt to climate change. Despite high hopes among policymakers, most index insurance programs struggle with low take-up rates. We provide new evidence that perceived risks play a crucial role in purchasing index insurance: Both exposure to past extreme weather events and more pessimistic expectations about future weather increase the likelihood that households purchase index insurance. Practical implications in the area of communication with potential customers could be drawn from this result. Index insurance providers could, for example, raise awareness of climate risks in the rural population.
- Our results show that extreme weather events reduce life satisfaction: Even four years after an event, the life satisfaction of severely affected households is significantly lower than the life satisfaction of comparable households that were less exposed to the extreme event. An important mechanism for these negative effects is loss of assets due to the event. Individuals’ own life satisfaction is lower if neighboring households suffer more damage.
Mogge, Lukas & Kraehnert, Kati: The effect of risk perception on the demand for index insurance in Mongolia. In Begutachtung.
Fluhrer, Svenja & Kraehnert, Kati: Sitting in the same boat: Subjective well-being and social comparison after an extreme weather event. In Begutachtung.