Early warning, adaptation to extreme weather, and attenuation of economic losses: Empirical evidence from pastoral China

Abstract

Early warning systems (EWSs) are a critical tool for preparedness toward extreme weather; however, empirical study on the end-users of EWSs is scant. To fill this gap, we examine the effect of access to EWSs on the attenuation of economic losses, based on a unique panel household survey of 652 herder households in China's pastoral areas, which are vulnerable to natural disasters such as droughts and snowstorms. We utilize a triple-hurdle model that simultaneously estimates the determinants of three sequential dependent variables: whether an extreme weather event had occurred, whether economic losses were suffered, and the extent of economic losses. The results show that EWSs do not reduce the likelihood of suffering from economic losses; however, they are effective in attenuating the extent of losses among those who have suffered. In this study, EWSs significantly attenuated extreme weather-induced economic losses by approximately 42%. It is also shown that the determinants driving each of the three stages are heterogeneous. The mechanism analyses show that EWSs promote herdsmen's adoption of adaptation measures to extreme weather events. Our findings confirm the effectiveness of EWSs, and advocate further investments in underdeveloped EWSs in developing countries.