Abstract

In this review, we summarise the literature on weather and climate adaptation in developing countries. 

First, we document the effects of climate change and extreme events on economic outcomes. Climate change and weather shocks impact households, firms, and countries negatively across a range of important outcomes such as income and mortality. 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. 

Next, we review the evidence on the effectiveness and efficiency of various adaptation approaches. We discuss adaptation through financial products, new technologies, mobility, and government policies. The literature indicates that 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. 

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.