IGC Grant

17. Juni 2024

New research project of Angelika Budja funded by The International Growth Centre (IGC)

The study assesses how improved drainage infrastructure contributes to urban adaptation to climate change in developing countries. We use a drainage infrastructure project in Barishal, Bangladesh, led by the KfW  Development Bank and the Barishal City Corporation (BCC), which aims to reduce vulnerability to seasonal flooding. Floods are among the most costly and frequent natural disasters, with economic damages estimated at 476 billion GBP between 2010 and 2021 (EM-DAT, CRED, 2022). Bangladesh is particularly vulnerable, with nearly 60% of the population currently at high risk of flooding, and future risk predicted to increase due to climate change (Letsch et al. 2023).

The primary research question is whether the drainage improvement project (i) reduces the direct flood risk faced by urban dwellers during the rainy season and (ii) has indirect effects on the socio-economic condition of households in terms of consumption, assets, educational attainment, market-connectivity, life satisfaction, and short-term health. To estimate these effects, we propose an innovative identification strategy based on a spatial regression discontinuity design. Specifically, we exploit the discontinuity arising from variations in access to the gravity-fed canals of the drainage network based on the slope of the terrain, which can be considered as locally exogenous.

Overall, the project contributes to a better understanding of the socio-economic impacts of climate change adaptation policies. To date, the literature on the economics of climate change has mostly focused on the socio-economic impacts of temperature changes or natural disasters (e.g. Maccini & Yang 2009, Burke et al. 2018, Kocornik-Mina et al. 2020, Shah & Steinberg 2017), but quantitative evidence on the effectiveness of adaptation policies, especially in urban settings, is scarce. The study tries to fill this research gap in a collaborative framework with KfW and BCC, hence actively contributing to the policy discourse on climate change adaptation in Bangladesh.

Funded by the IGC

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