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Impacts of climate shocks on household consumption and inequality in India

Published online by Cambridge University Press:  16 October 2020

Raavi Aggarwal Open the ORCID record for Raavi Aggarwal [Opens in a new window]
Raavi Aggarwal*
Affiliation:
Paris School of Economics (PSE), Paris, France Mercator Research Institute on Global Commons and Climate Change, Berlin, Germany
*
Corresponding author. aggarwal@mcc-berlin.net
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Abstract

This paper examines the impact of climate shocks, measured as temperature and precipitation variability, on real monthly per capita consumption expenditure of Indian households over the 1988–2012 period, utilising data from the National Sample Survey Organisation's Consumer Expenditure Surveys. The regression results show an increase in consumption by 1.2 per cent on average, in response to a one standard deviation rise in temperature, with heterogeneous impacts across economic sectors. While agricultural and industrial households experience consumption declines of 1.7 per cent and 8.3 per cent on average, service sector households exhibit consumption increases by 2.4–9.6 per cent on average across rural and urban regions, in response to a one standard deviation rise in temperature. The analysis suggests an increase in inequality of consumption across sectors due to climatic shocks, with implications for climate policy and sustainable development in India.

Keywords

agricultureclimate changeIndiaindustryinequality

JEL classification

Q54: Climate • Natural Disasters and Their Management • Global Warming O14: Industrialization • Manufacturing and Service Industries • Choice of Technology Q15: Land Ownership and Tenure • Land Reform • Land Use • Irrigation • Agriculture and Environment Q50: General
Type
Research Article
Information
Environment and Development Economics , Volume 26 , Special Issue 5-6: Weather and Climate Impacts in Developing Countries , October 2021 , pp. 488 - 511
Copyright
Copyright © The Author(s), 2020. Published by Cambridge University Press

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