Choices between adaptation and coping strategies as responses to cyclonic shocks and their impact on household welfare in villages on the east coast of India

Abstract

Mitigation against climate extremes is not an option anymore but a necessity. Households maximize their utility with bounded rationality, yet there are gaps in the choices which make them poor and vulnerable. This is because of the loss aversion behavior toward adopting strategies. Tropical Cyclones Coping Strategies (TCCS) are ex-post short-term immediate strategies, which are preferred to Tropical Cyclones Adaptation Strategies (TCAS), which are ex-ante long-term strategies. These choices are intertemporal, and they impact the welfare of the households. We surveyed 504 households in 13 villages of Odisha state on the east coast of India, which are affected by recurrent cyclones. The multivariate probit model is applied to find the determinants affecting the choice of each TCAS and TCCS. After that, we quantify household welfare by using the endogenous switching probit model and its treatment effects. The results show that formal education, formal credit, and risk behavior are key determinants of TCAS and TCCS. Household welfare increases when households embark on various TCCS, but there does not seem to be any such benefit or loss from TCAS. However, there is welfare loss for those who haven't undertaken any strategy. We find that the behavior of the coastal households is loss aversive, where they discount the future more and value the present. Hence, they ignore adaptation strategies, assuming that coping strategies will adequately help them recover. We conclude that household behavior needs transformation, and policies and regulations should be inclined toward attracting long-term strategies more, with effective private and public interventions.