Climate Adaptation: Issue 2

In this section, we discuss possible directions for research that can contribute to our understanding of adaptation to climate change. The first is a deeper understanding of long-term impacts of climate change, as well as the mechanisms facilitating adaptation. Moreover, certain short-term adaptations, like irrigation, may have negative longer-term consequences from depleting groundwater. Understanding what actions and policies empower agents to build sustained resilience is important, especially since evidence discussed in this review suggests that no isolated strategy leads to complete preparedness or recovery from a shock. Composite interventions like graduation programmes that include bundles of information, assets, and resources could play a vital role in overcoming climate vulnerability, as they have been effective in pushing people out of poverty traps and improved resilience to weather shocks in some contexts. Testing similar programmes catered towards climate resilience could potentially improve our understanding of what works in the long run. 

In individual adaptation strategies, covering downside-risk through insurance or technology has emerged as a promising mitigation approach in the agricultural sector. They crowd-in investments and enhance productivity with and without weather shocks. The growing research on adoption has made progress in understanding the take-up of technologies, their underlying heterogeneity and modes of dissemination, but in many settings, take-up of weather insurance remains low. The optimal design and outreach approach for climate insurance in different contexts remain elusive. Work in psychology and environmental management has discussed behavioural adaptation to climate change (see van Valkengoed and Steg 2019 for a meta analysis, and van Valkengoed et al. 2022 and Walawalkar et al. 2023 for reviews), which may be relevant for policies seeking to facilitate adaptation.

Recent evidence highlights forecasting and early warning systems as a promising low-cost adaptation strategy. Improved hurricane forecasts reduce mortality and property damages, flood early warning systems with community-based dissemination improve health outcomes, and monsoon onset forecasts enable farmers to tailor investments at costs comparable to index insurance. Public investment in forecasting infrastructure and effective dissemination systems may offer high returns, particularly where traditional insurance markets remain underdeveloped.

Furthermore, a deeper understanding of firms’s adaptation to climate change could include areas such as the use of weather insurance, management practices and organisational structures, location of work (ranging from agglomeration of industries to work from home versus in-person work), and research and innovation in building firm’s capacity in weathering climate shocks. Additionally, about 60% of the global workforce is employed in the informal sector, which contributes about 35% of the GDP in low and middle income countries (ILO 2018). Informality adds to the vulnerability to climate shocks in developing countries and more work is needed to understand how these populations can be covered despite climate change.

Current and future evidence on adaptation will translate into climate resilience largely through government policy. Policy is an especially powerful tool, since the same linkages that can amplify the negative effects of climate shocks through migration and supply chains, can also multiply the efficiency of government policy in facilitating adaptation and mitigation. In democracies, we assume that the government's incentives are aligned with the long-term well-being of citizens and will accommodate climate adaptation. However, research suggests that political economy concerns may skew government interests away from long-term adaptation. There is currently a growing literature highlighting these political constraints (Grossman et al. 2025), but more research on what conditions can align political motives with climate resilience would be highly policy-relevant.

We conclude by emphasising four aspects of the literature on climate change adaptation in developing countries. First, climate change and weather shocks impact households, firms, and countries negatively across a range of first-order outcomes such as income and mortality. Second, these effects are usually quite large and can transmit across space via supply relationships or migration, and persist across time, including in some instances for decades. Third, while households, farmers, and firms undertake a variety of adaptation measures, these are seldom able to mitigate the impacts of climate completely, indicating that policies to facilitate adaptation will likely have large welfare gains. Fourth, while socio-economic policies can provide safety nets and minimise frictions that catalyse adaptation, political economy concerns may also shift the focus away from climate resilience. As developing countries begin to ramp up efforts to facilitate adaptation and receive international climate financing for adaptation, understanding how these can be best allocated to high-impact regions and policies should form a crucial set of questions for future work.

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