Impact of climate change on household development resilience: Evidence from rural China

Abstract

The adverse impacts of climate change have emerged as one of the primary threats to human development; however, the climate change economic impact evaluation literature has mostly estimated effects under an assumption of full certainty. This article aims to estimate the long-run impact of climate change on household development resilience. To do so, we use the China Health and Nutrition Survey, which contains detailed longitudinal socioeconomic information from 1989 to 2015, and matches them to weather data. We find that climate change negatively impacts household development resilience. This negative impact stems from both a decline in upward mobility of households and an increase in downside risks. In other words, the rise in temperatures not only reduces the pace of household economic growth but also amplifies economic volatility, elevating consumption risk for households. The effects are driven by the decrease in agricultural production output and the risk of off-farm income. However, longer-run adaptation has offset 22.09% of the short-run effects of climate change on household development resilience. In contrast, climate adaptation mitigates household welfare loss to a greater extent through agricultural input adjustments and income diversification in the long run.