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Finance and Climate Resilience: Evidence from the long 1950s US Drought

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  • Raghuram Rajan
  • Rodney Ramcharan

Abstract

We study how the availability of credit shaped adaptation to the long 1950s US drought. We find that investment in irrigation increased substantially more in drought-exposed areas with access to bank finance. The spillover effects of farmers’ ability to adapt to the drought through financing, thus preserving agricultural livelihoods, also lead to the greater survival of retail and manufacturing businesses. Overall, areas with greater access to financing suffered significantly less population decline, both in the short- and long term. Thus, enhancing access to finance can enable communities to adapt to large adverse climatic shocks, and limit migration.

Suggested Citation

  • Raghuram Rajan & Rodney Ramcharan, 2023. "Finance and Climate Resilience: Evidence from the long 1950s US Drought," NBER Working Papers 31356, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31356
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    Cited by:

    1. Jacopo Ponticelli & Qiping Xu & Stefan Zeume, 2023. "Temperature and Local Industry Concentration," Working Papers 23-51, Center for Economic Studies, U.S. Census Bureau.

    More about this item

    JEL classification:

    • G0 - Financial Economics - - General
    • J0 - Labor and Demographic Economics - - General
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General

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