Climate Change, Making Poor People Poorer? An assessment of climatic shocks on household income in Bangladesh.

Abstract

As global average temperatures are increasing due to climate change, economic impacts are increasingly palpable. A major concern is that these impacts are likely disproportionally concentrated in developing countries, and in turn poor communities within these countries. This thesis aims to quantify the distributional impact of climate shocks in Bangladesh. We analyze the effects of weather shocks such as floods, droughts and extreme temperature on household income. For this purpose, we combine climate data with data from the Bangladesh Household Income and Expenditure Survey (HIES) and use a fixed-effect regression analysis. To further assess the vulnerability on households of different income levels an unconditional quantile regression approach is additionally applied. Our results indicate that higher income households are most vulnerable to climate shocks. We find that extremely cold temperature days negatively affect income. Our estimates show that floods effect households in multiple ways, negatively for small and high magnitude floods, yet positively for floods of medium magnitude. These effects are solely regarding higher income households. We find that different sectors are most likely affected differently from climate events. A modern and agricultural sector might be affected to different extents and directions when exposed to climate events.