Description: Social Protection in the Face of Climate Change : Targeting Principles and Financing Mechanisms

Social Protection in the Face of Climate Change : Targeting Principles and Financing Mechanisms

Climate risk is an important driver of long-term poverty dynamics, especially in rural regions. This paper builds a dynamic, multi-generation household model of consumption, accumulation, and risk management to draw out the full consequences of exp...

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Bibliographic Details
Main Authors:	Carter, Michael R., Janzen, Sarah A.
Language:	English en_US
Published:	World Bank, Washington, DC 2015
Subjects:	IMPACTS OF CLIMATE CHANGE JOBS RISKS HOLDING FOOD NEEDS POVERTY LINE SUBSISTENCE IMPACT ON POVERTY ECONOMIC GROWTH POLICY SCENARIO RISK REDUCTION INCOME POVERTY RATES EXCHANGE OPTION AGRICULTURAL DEVELOPMENT ASSET LOSSES LIQUIDITY DEVELOPING COUNTRIES LIVESTOCK INSURANCE HUMAN ASSETS AGRICULTURAL ECONOMICS BUDGET CONSTRAINTS MODELS WEATHER INSURANCE POORER HOUSEHOLDS PRICE CASH TRANSFER INTERNATIONAL BANK MEASURES POVERTY MEASURES INSURANCE SCHEME DEVELOPING COUNTRY HUMAN CAPITAL LEVELS REGION POVERTY REDUCTION BUDGET SAVINGS PENALTIES SCENARIOS RURAL HOUSEHOLDS DEVELOPMENT ECONOMICS MORAL HAZARD POOR FAMILIES POOR HOUSEHOLD POVERTY GAP INCOME SHOCK CONTRACTS VULNERABLE HOUSEHOLDS FIXED COSTS LIQUIDITY CONSTRAINTS TRANSFERS NATURAL DISASTERS MARKETS SMALLHOLDER AGRICULTURE DESTITUTE HOUSEHOLDS POVERTY MAPS PRODUCTION TECHNOLOGY CHRONIC POVERTY HUMAN CAPITAL ASSETS SOCIAL PROTECTION CONSUMPTION POVERTY INCOME RISK FARMERS PRICE SUBSIDIES POVERTY MAP INSURANCE COVERAGE FOOD AID FINANCE ADMINISTRATIVE COSTS CONSUMPTION BUDGET CONSTRAINT HUMAN CAPITAL ECONOMIC IMPACT VALUE OF ASSETS GOOD GOVERNMENT BUDGET CHRONIC MALNUTRITION CLIMATE CHANGE POLICIES DROUGHT CASH TRANSFER PROGRAM INSURANCE PRODUCTS SCHOOL ATTENDANCE FUTURE VALUE RESOURCE ECONOMICS CHRONICALLY POOR RETURNS INSURANCE CONTRACTS CLIMATE DEMAND PUBLIC BUDGET UTILITY FUNCTION FAMILY INCOME CONTRACT IMPACT OF SHOCKS SOCIAL NETWORKS INSURANCE CONTRACT MALNUTRITION RURAL PHYSICAL ASSETS INSURANCE PREMIUM NUTRITION MARKET TRANSFER PROGRAMS POLICY IDIOSYNCRATIC SHOCKS RURAL REGIONS CD HOLDINGS CONTRACT DESIGN INSURANCE TARGETING INVESTMENT STRATEGIES CONSUMPTION SMOOTHING PHYSICAL ASSET INSURANCE PAYMENTS FOOD INTAKE REGIONS STOCKS INVESTMENT CLIMATE CHANGE SCENARIOS SHARE RURAL AREAS POVERTY ALLOCATION POOR POPULATIONS INSURANCE MECHANISMS INFORMAL INSURANCE DYNAMIC MODEL INVESTMENTS RISK MANAGEMENT POVERTY DYNAMICS COST OF INSURANCE CASH TRANSFER PROGRAMS INCOME GAINS POOR PRIVATE FINANCING INEQUALITY POOR HOUSEHOLDS INVESTING
Online Access:	http://documents.worldbank.org/curated/en/2015/11/25250352/social-protection-face-climate-change-targeting-principles-financing-mechanisms http://hdl.handle.net/10986/23442

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Summary:	Climate risk is an important driver of long-term poverty dynamics, especially in rural regions. This paper builds a dynamic, multi-generation household model of consumption, accumulation, and risk management to draw out the full consequences of exposure to climate risk. The model incorporates the long-term impacts of consumption shortfalls, induced by the optimal “asset smoothing” coping behavior of the vulnerable, on the human capital and long-term wellbeing of families. The analysis shows that the long-term level and depth of poverty can be improved by incorporating elements of “vulnerability-targeted social protection” into a conventional system of social protection. The paper also explores the degree to which vulnerability-targeted social protection can be implemented through a subsidized insurance mechanism. The analysis shows that insurance-based vulnerability-targeted social protection dominates (in economic growth and poverty reduction measures) both in-kind transfer mechanisms and vulnerability-targeted protection paid for using a public budget. The relative gains brought about by this scheme of insurance-augmented social protection increase—at least for a while—under climate change scenarios. However, if climate change becomes too severe, then even this novel form of social protection loses its ability to stabilize the extent and depth of poverty.

Social Protection in the Face of Climate Change : Targeting Principles and Financing Mechanisms

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