East Asian Economic Review

Korea Institute for International Economic Policy (대외경제정책연구원)
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The Impacts of Climate Variability on Household Consumption: Evidence Based on Village Weather Data in Indonesia

  • Received : 2023.10.23
  • Accepted : 2023.12.08
  • Published : 2023.12.30
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Abstract

This study investigates the impacts of long-term climate variability on household consumption in Indonesia, a country highly vulnerable to climate change. The analysis combines household survey data from nearly 5,998 families with satellite-derived weather data from NASA POWER spanning 30 years. We use the long-term variability in temperature and precipitation as a proxy for climate change. This study examines the impact of climate change which proceeds over the long term, unlike previous studies concerning one-off or short-term climate events. In addition, using satellite data enhances the accuracy of households' exposure to climate variability. The analysis finds that households in a village with higher temperature and precipitation variability significantly consume less food. This implies that households more exposed to climate change are at higher risk of malnutrition in developing countries. This study has a limitation that it cannot rule out the potential endogeneity of choosing a climate-vulnerable residential location due to economic poorness.

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Acknowledgement

This work was supported by the Korea Institute of Energy Technology Evaluation and Planning (KETEP) and the Ministry of Trade, Industry & Energy (MOTIE) of the Republic of Korea (20224000000260). Additionally, we express our sincere gratitude to the referees for their very insightful comments on earlier drafts.

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