Social protection in the face of climate change: Targeting principles and financing mechanisms

Michael R. Carter, Sarah A. Janzen

Research output: Contribution to journalArticlepeer-review

Abstract

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 insurancebased 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.

Original languageEnglish (US)
Pages (from-to)369-389
Number of pages21
JournalEnvironment and Development Economics
Volume23
Issue number3
DOIs
StatePublished - Jun 1 2018
Externally publishedYes

Keywords

  • Climate change
  • Insurance
  • Poverty dynamics
  • Risk and uncertainty
  • Social protection

ASJC Scopus subject areas

  • Development
  • Environmental Science(all)
  • Economics and Econometrics

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