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Working Papers

The Economics of Adaptation to Extreme Weather Events in Developing Countries - Working Paper 199

Susmita Dasgupta, Benoit Laplante, and David Wheeler
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Without international assistance, developing countries will adapt to climate change as best they can. Part of the cost will be absorbed by households and part by the public sector. Adaptation costs will themselves be affected by socioeconomic development, which will also be affected by climate change. Without a better understanding of these interactions, it will be difficult for climate negotiators and donor institutions to determine the appropriate levels and modes of adaptation assistance. This paper contributes by assessing the economics of adaptation to extreme weather events. We address several questions that are relevant for the international discussion: How will climate change alter the incidence of these events, and how will their impact be distributed geographically? How will future socioeconomic development, notably an increased focus on education and empowerment for women and girls, affect the vulnerability of affected communities? And, of primary interest to negotiators and donors, how much would it cost to neutralize the threat of additional losses in this context?

At both regional and global levels, we find an impressive scale for the increases in female education expenditure to improve climate resilience. By mid-century, neutralizing the impact of extreme weather events requires educating an additional 18 to 23 million young women at a cost of $11 to $14 billion annually. For the period 2000–2050 as a whole, the two climate scenarios the authors considered entail about $280 billion in additional expenditure. The present value of these expenditures is substantially reduced by time-discounting, even at modest rates, but the basic result stands: In the developing world, neutralizing the impact of worsening weather over the coming decades will require educating a large new cohort of young women at a cost that will steadily escalate to several billions of dollars annually.

However, it will be enormously worthwhile on other margins to invest in education for millions of young women who might otherwise be denied its many benefits.