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Modeling the Impact of Extreme Climate Events on Household Welfare: An Empirical Framework

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  • Nekeisha Spencer

    (University of the West Indies)

  • Eric Strobl

    (University of Bern, Switzerland & University of Birmingham)

Abstract

This paper provides a review of the main empirical challenges involved in quantitatively estimating the impact of extreme climate events on household welfare at the micro-level. To this end, it first outlines a conceptual framework of extreme climate event damage modeling that can aid in terms of considering the ideal input and damage function requirements to create appropriate proxies. It then considers the use of imperfect versions of these proxies in a general econometric framework designed for typical data contexts, and the implications with regard to the interpretation of the results for the impact on household welfare. Using four extreme climate event type case studies, namely tropical cyclones, flooding, extreme heat, and droughts, the study outlines and discusses their respective challenges within the proposed framework.

Suggested Citation

  • Nekeisha Spencer & Eric Strobl, 2025. "Modeling the Impact of Extreme Climate Events on Household Welfare: An Empirical Framework," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 88(4), pages 921-964, April.
    • Handle: RePEc:kap:enreec:v:88:y:2025:i:4:d:10.1007_s10640-025-00955-5
    DOI: 10.1007/s10640-025-00955-5
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