Welfare and Climate Risks in Coastal Bangladesh: The Impacts of Climatic Extremes on Multidimensional Poverty and the Wider Benefits of Climate Adaptation

Abstract

It is widely recognized that climate hazards impact the poor disproportionately. However, quantifying these disproportionate hazard impacts on a large scale is difficult given limited information on households’ location and socioeconomic characteristics, and incomplete quantitative frameworks to assess welfare impacts on households. This paper constructs a household-level multidimensional poverty index using a synthetic household dataset of 43 million people residing in the coastal zone of Bangladesh. Households are spatially linked to the critical infrastructure networks they depend on, including housing; water, sanitation, and hygiene; electricity; education; and health services. Combined with detailed cyclone hazard data, the paper first quantifies risks to households, agriculture, and infrastructure. It then presents a novel framework for translating critical infrastructure impacts into the temporary incidence of service deprivations, which can contribute to temporary deprivations and hence multidimensional poverty. The paper uses this framework to evaluate the benefits of various adaptation options. The findings show that asset risk due to flooding is US$483 million per year at present, increasing to US$750 million per year in 2050 under climate change. Households face an average infrastructure service disruption of two days per year, which is expected to increase to 4.6 days per year in 2050. This, in turn, would incur a temporary increase in multidimensional poverty (7.2 percent of people are multidimensionally poor at the baseline) of up to 94 percent (2.9 million people) 30 days after an extreme cyclone event (a 1-in-100 years event) at present and 153.9 percent (4.8 million people) in the future. The paper quantifies the large welfare benefits of upgrading embankments, showing how apart from significant risk reduction, these interventions reduce service disruptions by up to 70 percent in some areas and can help up to 1.6 million (0.23 million under current and proposed programs) people from experiencing some form of temporary poverty. Overall, the paper identifies poor households exposed to climate impacts, as well as those prone to falling into poverty temporarily, both of could help to mainstream equity considerations in new adaptation programs.