Project

ADAPT- Assisting households to adapt to Climate Change

Start of Project 12/2018
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End of Project 09/2022

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. 

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Project results

Figure 1: Demand for index-based livestock insurance in Mongolia over time. Source: Own calculation based on data from the Mongolian Statistical Information Service.

(1) The perception of climate risks plays a crucial role in whether households in Mon­go­lia decide to purchase weather in­sur­ance. Both experiencing extreme weather events in the past and pessimistic expectations about future weather increase the likelihood that households will purchase weather insurance. Weather insurance providers could sensitize the rural population to climate risks in order to increase the demand for insurance.
(2) Extreme weather events reduce people's life satisfaction for up to five years. At the same time, these events increase inequality: while households working in agriculture ex­peri­ence a sharp drop in their life satisfaction, urban households are not affected. The losses of neighboring households have an additional negative effect on one's own life satisfaction. The full economic costs of ex­treme weather events are higher than the total damage suffered by individual households.
(3) Extreme weather events cause internal migration and population declines in the affected regions. These effects are driven by pastoralists, the most affected demographic. The aban­don­ment of livestock farming is a key channel through which climate affects migration within the country.

Main Findings

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  • Extreme weather events lead to increased internal migration.
     
  • Extreme weather events reduce people's life satisfaction.
     
  • Index-based weather insurance helps hous­­e­holds cope with climate damage.
     
  • Demand for index-based weather in­sur­ance is influenced by the experience of past extreme weather events.
     
  • Expansion of mobile phone infra­structure increases households' agri­cultural income.

Flagship-Paper

Fluhrer, S., Kraehnert, K. (2022):
Sitting in the same boat: Subjective well-being and social comparison after an extreme weather event. Ecological Economics 195: 107388.

Fluhrer, S., Kraehnert, K. (in review):
Mobile phone network expansion and agricultural income: A panel study.

Mogge, L., Kraehnert, K. (in review):
The effect of risk perception on the demand for index insurance in Mongolia.

Roeckert, J., Kraehnert, K. (2022):
Extreme Weather Events and Internal Migration: Evidence from Mongolia. Economics of Disasters and Climate Change 6: 95-128.