Prevent or repair? Experimental evidence from providing incentives for climate resilient housing in Vietnam

Abstract

ABSTRACT We present results from a randomized field experiment in Da Nang in Central Vietnam. We assess the take-up and impacts of a microcredit program that aims to increase the adoption of climate resilient housing among low-income urban households. Households were randomly assigned offers of either a loan and technical assistance package or a cash transfer with a smaller loan and technical assistance. We find large and significant impacts on the resilience of the new or retrofitted houses due to being offered the more generous incentive package. Households that were offered the cash transfer and a smaller loan, are three times as likely to accept. The difference in uptake, and therefore impact, of the two packages shows that there is a need for a subsidy in addition to the technical assistance in order to reach near-poor households. Previous public spending on typhoon relief indicates that such a subsidy could be covered by re-allocating funds from typhoon repairs to damage prevention through resilient housing.