Publication: The Poverty Impacts of Climate Change : A Review of the Evidence
Loading...
Published
2011-04-01
ISSN
Date
2012-03-19
Author(s)
Editor(s)
Abstract
Climate change is believed to represent a serious challenge to poverty reduction efforts around the globe. This paper conducts an up-to-date review of three main strands of the literature analyzing the poverty impacts of climate change : (i) economy-wide growth models incorporating climate change impacts to work out consistent scenarios for how climate change might affect the path of poverty over the next decades; (ii) studies focusing on the poverty impacts of climate change in the agricultural sector; and (iii) studies exploring how past climate variability impacts poverty. The analysis finds that the majority of the estimates of the poverty impacts tend to ignore the effect of aggregate economic growth on poverty and household welfare. The empirical evidence available to date suggests that climate change will slow the pace of global poverty reduction, but the expected poverty impact will be relatively modest and far from reversing the major decline in poverty that is expected to occur over the next 40 years as a result of continued economic growth. The studies focusing on the sector-specific channels of impacts of climate change suggest that the estimated impacts of climate change on agricultural yields are generally a poor predictor of the poverty impacts of climate change at the national level due to heterogeneity in the ability of households to adapt. It also appears that the impacts of climate change are generally regressive, that is, they fall more heavily on the poor than the rich.
Link to Data Set
Citation
“Rabassa, Mariano; Skoufias, Emmanuel; Olivieri, Sergio. 2011. The Poverty Impacts of Climate Change : A Review of the Evidence. Policy Research working paper ; no. WPS 5622. © World Bank. http://hdl.handle.net/10986/3389 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Publication The Economic Value of Weather Forecasts: A Quantitative Systematic Literature Review(Washington, DC: World Bank, 2025-09-10)This study systematically reviews the literature that quantifies the economic benefits of weather observations and forecasts in four weather-dependent economic sectors: agriculture, energy, transport, and disaster-risk management. The review covers 175 peer-reviewed journal articles and 15 policy reports. Findings show that the literature is concentrated in high-income countries and most studies use theoretical models, followed by observational and then experimental research designs. Forecast horizons studied, meteorological variables and services, and monetization techniques vary markedly by sector. Estimated benefits even within specific subsectors span several orders of magnitude and broad uncertainty ranges. An econometric meta-analysis suggests that theoretical studies and studies in richer countries tend to report significantly larger values. Barriers that hinder value realization are identified on both the provider and user sides, with inadequate relevance, weak dissemination, and limited ability to act recurring across sectors. Policy reports rely heavily on back-of-the-envelope or recursive benefit-transfer estimates, rather than on the methods and results of the peer-reviewed literature, revealing a science-to-policy gap. These findings suggest substantial socioeconomic potential of hydrometeorological services around the world, but also knowledge gaps that require more valuation studies focusing on low- and middle-income countries, addressing provider- and user-side barriers and employing rigorous empirical valuation methods to complement and validate theoretical models.Publication It’s Not (Just) the Tariffs: Rethinking Non-Tariff Measures in a Fragmented Global Economy(Washington, DC: World Bank, 2025-10-22)As tariffs have declined, non-tariff measures (NTMs) have become central to trade policy, especially in high-income countries and regulated sectors like food and green technologies. Although NTMs may serve legitimate goals, they could also sort countries and firms into or out of markets based on compliance capacity and differences in product mix. Documenting recent advances in the estimation of ad valorem equivalents (AVEs), this paper uncovers new patterns of use and exposure of NTMs. High-income countries rely more heavily on NTMs relative to tariffs, while low- and middle-income countries face steeper AVEs on their exports. Firm-level evidence shows that NTMs disproportionately affect smaller firms, leading to market exit and concentration. Poorly designed NTMs can harm productivity and welfare, while coordinated, capacity-aware use can deliver inclusive outcomes. Policy design, transparency, and diagnostics must evolve to reflect the growing role—and risks—of NTMs in a fragmented global trade landscape.Publication Monitoring Global Aid Flows: A Novel Approach Using Large Language Models(Washington, DC: World Bank, 2025-11-04)Effective monitoring of development aid is the foundation for assessing the alignment of flows with their intended development objectives. Existing reporting systems, such as the Organisation for Economic Co-operation and Development’s Creditor Reporting System, provide standardized classification of aid activities but have limitations when it comes to capturing new areas like climate change, digitalization, and other cross-cutting themes. This paper proposes a bottom-up, unsupervised machine learning framework that leverages textual descriptions of aid projects to generate highly granular activity clusters. Using the 2021 Creditor Reporting System data set of nearly 400,000 records, the model produces 841 clusters, which are then grouped into 80 subsectors. These clusters reveal 36 emerging aid areas not tracked in the current Creditor Reporting System taxonomy, allow unpacking of “multi-sectoral” and “sector not specified” classifications, and enable estimation of flows to new themes, including World Bank Global Challenge Programs, International Development Association–20 Special Themes, and Cross-Cutting Issues. Validation against both Creditor Reporting System benchmarks and International Development Association commitment data demonstrates robustness. This approach illustrates how machine learning and the new advances in large language models can enhance the monitoring of global aid flows and inform future improvements in aid classification and reporting. It offers a useful tool that can support more responsive and evidence-based decision-making, helping to better align resources with evolving development priorities.Publication The Macroeconomic Implications of Climate Change Impacts and Adaptation Options(Washington, DC: World Bank, 2025-05-29)Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.Publication The State of Global Services Trade Policies: Evidence from Recent Data(Washington, DC: World Bank, 2025-10-28)The economic environment for services trade has changed dramatically over the past 15 years, driven by rapid technological progress that has expanded the possibilities for exchanging services. How has trade policy responded to these changes? How do policy stances in a wide range of service sectors compare across economies? With its unprecedented global coverage, the Services Trade Policy Database and the associated Services Trade Restrictions Index, developed jointly by the World Bank and the World Trade Organization, help address these questions. This paper makes three principal contributions. First, it offers an in-depth discussion of the current state of services trade policies and their differences across 134 economies and 34 services subsectors. Second, the paper reveals how recent (2016–22) changes in policy stances have seen progressive liberalization by lower-income economies but stabilization or even slight policy reversals in high-income economies. This dynamic differs fundamentally from the trend that unfolded after the Great Recession over 2008–16. Third, the paper shows the implications of policy changes over the past six years on services trade costs, and it showcases how the Services Trade Policy Database’s regulatory information can inform trade negotiations, regulatory analysis, and policy making. Alongside these contributions, the paper documents updates to the Services Trade Policy Database’s economy and sector coverage and explains the latest methodological improvements made to the World Bank–World Trade Organization Services Trade Restrictions Index.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication The Poverty Impacts of Climate Change(World Bank, Washington, DC, 2011-03)Over the last century, the world has seen a sustained decline in the proportion of people living in poverty. However, there is an increasing concern that climate change could slow or possibly even reverse poverty reduction progress. Given the complexities involved in analyzing climate change impacts on poverty, different approaches can be helpful; this note surveys the results of recent research on climate change impacts on poverty.Publication Distributional Implications of Climate Change in India(2011-04-01)Global warming is expected to heavily impact agriculture, the dominant source of livelihood for the world's poor. Yet, little is known about the distributional implications of climate change at the sub-national level. Using a simple comparative statics framework, this paper analyzes how changes in the prices of land, labor, and food induced by modest temperature increases over the next three decades will affect household-level welfare in India. The authors predict a substantial fall in agricultural productivity, even allowing for farmer adaptation. Yet, this decline will not translate into a sharp drop in consumption for the majority of rural households, who derive their income largely from wage employment. Overall, the welfare costs of climate change fall disproportionately on the poor. This is true in urban as well as in rural areas, but, in the latter sector only after accounting for the effects of rising world cereal prices. Adaptation appears to primarily benefit the non-poor, since they own the lion's share of agricultural land. The results suggest that poverty in India will be roughly 3-4 percentage points higher after thirty years of rising temperatures than it would have been had this warming not occurred.Publication The Poverty and Welfare Impacts of Climate Change Quantifying the Effects, Identifying the Adaptation Strategies(Washington, DC: World Bank, 2012-07-20)The continued decline in global poverty over the past 100 years particularly in the past three decades is a remarkable achievement. In 1981, 52 percent of the world population lived on less than $1.25 a day. By 2005, that rate had been cut in half, to 25.0 percent, and by 2008 to 22.2 percent (World Bank 2012). Preliminary estimates for 2010 indicate that the extreme poverty rate has fallen further still; if follow-up studies confirm this, the Millennium Development Goal (MDG) of halving world poverty will have been reached five years early (World Bank 2010). In recent years, poverty reduction has continued in most countries, even after the financial, food, and fuel shocks of 2008-09. Although poverty remains widespread in South Asia and Sub-Saharan Africa, progress has been substantial: extreme poverty fell in South Asia from 54 percent in 1990 to 36 percent in 2008 (World Bank 2012). In Sub-Saharan Africa, where population growth exceeded the rate of poverty reduction, the number of extremely poor people increased from 290 million in 1990 to 356 million in 2008, yet over 2005-08, the region's poverty rate nonetheless 'fell 4.8 percentage points to less than 50 percent the largest drop in Sub-Saharan Africa since international poverty rates have been computed,' according to the latest edition of the World Development Indicators (WDI) (World Bank 2012). Although progress has been slower at the $2-a-day poverty line, the WDI noted that an increase in the absolute number of people living on $1.25-$2.00 a day reflects both the upward movement from extreme poverty and 'the vulnerabilities still faced by a great many people in the world.' climate change is likely to reduce agricultural productivity, especially in the tropical regions, and to directly affect poor people's livelihood assets including health, access to water and other natural resources, homes, and infrastructure (World Bank 2010). Moreover, increasing climatic variability manifesting as more frequent and erratic weather extremes, or 'weather shocks' will likely make poor households even more vulnerable, which could in turn exacerbate the incidence, severity, and persistence of poverty in developing countries. This volume not only surveys the research terrain concerning the effects of climate change on poverty but also looks closely at vulnerable rural populations (in a developing country, Indonesia, and in the newly industrialized Mexico) where weather shocks have measurable short term if not immediate effects on the farming livelihoods many depend on for both income and subsistence. The low-income farmers of rice in Indonesia and of corn and other staple crops in Mexico are at the human forefront of climate change.Publication Disquiet on the Weather Front : The Welfare Impacts of Climatic Variability in the Rural Philippines(World Bank, Washington, DC, 2013-08)Three recent rounds (2003, 2006, and 2009) of the Family Income and Expenditure Survey are matched to rainfall data from 43 rainfall stations in the Philippines to quantify the extent to which unusual weather has any negative effects on the consumption of Filipino households. It is found that negative rainfall shocks decrease consumption, in particular food consumption. Rainfall below one standard deviation of its long-run average causes food consumption to decrease by about 4 percent, when compared with rainfall within one standard deviation. Positive deviations above one standard deviation have a limited impact. Moreover, for households close to a highway or to a fixed-line phone, consumption appears to be fully protected from the impact of negative rainfall shocks.Publication Understanding Changes in Poverty(World Bank Group, Washington, DC, 2014-08-12)Understanding Changes in Poverty brings together different methods to decompose the contributions to poverty reduction. A simple approach quantifies the contribution of changes in demographics, employment, earnings, public transfers, and remittances to poverty reduction. A more complex approach quantifies the contributions to poverty reduction from changes in individual and household characteristics, including changes in the sectoral, occupational, and educational structure of the workforce, as well as changes in the returns to individual and household characteristics. Understanding Changes in Poverty implements these approaches and finds that labor income growth that is, growth in income per worker rather than an increase in the number of employed workers was the largest contributor to moderate poverty reduction in 21 countries experiencing substantial reductions in poverty over the past decade. Changes in demographics, public transfers, and remittances helped, but made relatively smaller contributions to poverty reduction. Further decompositions in three countries find that labor income grew mainly because of higher returns to human capital endowments, signaling increases in productivity, higher relative price of labor, or both. Understanding Changes in Poverty will be of particular relevance to development practitioners interested in better understanding distributional changes over time. The methods and tools presented in this book can also be applied to better understand changes in inequality or any other distributional change.
Users also downloaded
Showing related downloaded files
Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication World Development Report 2012(World Bank, 2012)The main message of this year's World development report: gender equality and development is that these patterns of progress and persistence in gender equality matter, both for development outcomes and policy making. They matter because gender equality is a core development objective in its own right. But greater gender equality is also smart economics, enhancing productivity and improving other development outcomes, including prospects for the next generation and for the quality of societal policies and institutions. Economic development is not enough to shrink all gender disparities-corrective policies that focus on persisting gender gaps are essential. This report points to four priority areas for policy going forward. First, reducing gender gaps in human capital-specifically those that address female mortality and education. Second, closing gender gaps in access to economic opportunities, earnings, and productivity. Third, shrinking gender differences in voice and agency within society. Fourth, limiting the reproduction of gender inequality across generations. These are all areas where higher incomes by themselves do little to reduce gender gaps, but focused policies can have a real impact. Gender equality is at the heart of development. It's the right development objective, and it's smart economic policy. The World development report 2012 can help both countries and international partners think through and integrate a focus on gender equality into development policy making and programming.Publication The Relationship between Climate Action and Poverty Reduction(Published by Oxford University Press on behalf of the World Bank, 2023-12-30)There is growing awareness that actions by policymakers and international organizations to reduce poverty, and those to mitigate and adapt to climate change, are inextricably linked and interwoven. This paper examines relevant academic and policy literature and evidence on this relationship and explores the potential for a new form of development that simultaneously mitigates climate change, manages its impacts, and improves the wellbeing of people in poverty. First, as a key foundation, it outlines the backdrop in basic moral philosophy, noting that climate action and poverty reduction can be motivated both by a core principle based on the right to development and by the conventional consequentialism that is standard in economics. Second, it reviews assessments of the current and potential future impacts of weakly managed climate change on the wellbeing of those in poverty, paying attention to unequal effects, including by gender. Third, it examines arguments and literature on the economic impacts of climate action and policies and how those affect the wellbeing of people in poverty, highlighting the importance of market failures, technological change, systemic dynamics of transition, and distributional effects of mitigation and adaptation. Finally, the paper surveys the current state of knowledge and understanding of how climate action and poverty reduction can be integrated in policy design, indicating where further research can contribute to a transition that succeeds in both objectives.Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.Publication World Development Report 2006(Washington, DC, 2005)This year’s Word Development Report (WDR), the twenty-eighth, looks at the role of equity in the development process. It defines equity in terms of two basic principles. The first is equal opportunities: that a person’s chances in life should be determined by his or her talents and efforts, rather than by pre-determined circumstances such as race, gender, social or family background. The second principle is the avoidance of extreme deprivation in outcomes, particularly in health, education and consumption levels. This principle thus includes the objective of poverty reduction. The report’s main message is that, in the long run, the pursuit of equity and the pursuit of economic prosperity are complementary. In addition to detailed chapters exploring these and related issues, the Report contains selected data from the World Development Indicators 2005‹an appendix of economic and social data for over 200 countries. This Report offers practical insights for policymakers, executives, scholars, and all those with an interest in economic development.