A simple framework for the estimation of climate exposure

This article introduces a new methodology to estimate climate exposure at the household�s level with the standardized precipitation evapotranspiration index (SPEI) as its building block. As the probability distribution of the SPEI is known, one can easily recover the marginal probability distribution of expected consumption. Furthermore, the approach is simple enough to accommodate quantile regressions and hence offer the opportunity to broaden the scope of the analysis to different categories of the population. I illustrate the methodology with a case study on Ethiopia. I find notably that while poor households in the most remote villages are almost as resilient to a 10-year return period drought as poor households living in the vicinity of a town (up to 20 km), the contrary is true for richer households: the ones living in remote parts of Ethiopia are much more at risk than their suburban counterparts.