Coping with climate risk: the role of institutions, governance and finance in private adaptation decisions of the poor

This paper looks at adaptation from the point of view of households. It asks how political and economic institutions may affect – help or hinder – these adaptation decisions. Climate change represents a change in the (future) distribution of weather. Since the development literature has firmly established the role of weather risk as a source of income volatility for the poor, review the range of risk-coping mechanisms available to poorer households, with a focus on possible barriers to adaptation. Ask both how government interventions (policies, institutions etc.) affect the set of options available for adaptation and risk coping, and also what these adaptive responses imply for development prospects, and in particular the prospects of the poor and other marginalised groups. Argue that some risk taking is necessary for development and adaptation therefore should be primarily about risk-coping rather than arbitrary attempts to minimise risks. An important consideration for policy-makers, which appears to have been relatively neglected to date in the adaptation literature, is how adaptation and development will interact dynamically over time.

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