Adaptation to climate risk: Evidence from cyclones and flooding in Bangladesh
Climate change is intensifying extreme weather events, increasing economic risks for developing economies. This project examines long-term data on floods and cyclones in Bangladesh to assess how adaptation reduces these impacts. It focuses on two key responses: shifts in crop choices and labour reallocation across sectors. The findings show that higher exposure to flooding and cyclones leads farmers to move away from vulnerable crops. Cyclone risk also pushes workers out of agriculture, while flood risk does not significantly affect employment. Model simulations suggest that adaptation could reduce future economic losses from climate shocks by 17–47%, depending on their scale and distribution.
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- Climate change is increasing the frequency and intensity of extreme weather events, exposing developing economies to greater economic risk.
- This project uses long-term data on floods and cyclones in Bangladesh to study the importance of adaptation in reducing the impact of rising climate risk on the economy. The project focuses on adaptation along two margins: changes in crop choice and labour reallocation across sectors.
- Findings show that a rise in both flooding and cyclone propensity shifts farmers away from more exposed crops. In addition, while rising cyclone propensity shifts workers out of agriculture, rising flood propensity has no discernible impact on agricultural employment.
- Incorporating long-term adaptation responses in a general equilibrium model shows that, going forward, adaptation can reduce the negative impact of rising climate risk by 17-47%, depending on the size of future shocks and their correlation across regions.