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Impacts of climate shocks on household consumption and inequality in India

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  • Aggarwal, Raavi

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.

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  • Aggarwal, Raavi, 2021. "Impacts of climate shocks on household consumption and inequality in India," Environment and Development Economics, Cambridge University Press, vol. 26(5-6), pages 488-511, October.
    • Handle: RePEc:cup:endeec:v:26:y:2021:i:5-6:p:488-511_5
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    Cited by:

    1. Oscar Zapata, 2023. "Weather Disasters, Material Losses and Income Inequality: Evidence from a Tropical, Middle-Income Country," Economics of Disasters and Climate Change, Springer, vol. 7(2), pages 231-251, July.
    2. Calvin Mudzingiri & Gibson Mudiriza & Getrude Jana & Regret Sunge, 2024. "The effect of local climatic conditions on household consumption: a case study of South Africa," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-16, December.
    3. Li, Jiayi & Luo, Sumei & Zhou, Guangyou, 2023. "Electronic payment, natural environment and household consumption: Evidence from China household finance survey," International Review of Financial Analysis, Elsevier, vol. 85(C).

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