Context
Adapting to global climate change is one of the greatest challenges of our time. As a result of climate change, extreme weather events are expected to occur more frequently and with greater intensity. Rural households in countries of the Global South are particularly affected. There is a great need for tools that support households in adapting to climate change and reduce household vulnerability to future extreme events. This also applies to Mongolia. The country is increasingly exposed to extreme winters, which result in extremely high livestock mortality and endanger the economic livelihood of the rural population.
Research Questions
The ADAPT project investigates which factors encourage or hinder Mongolian households to invest in climate adaptation. One focus is on index-based weather insurance – an instrument that is currently being discussed with great expectations among actors in development cooperation. Index-based insurance relies on a statistical index created at an aggregated geographic level based on weather or satellite data, such as rainfall or wind strength. Insured households receive a payout from the insurance company if the index exceeds or falls below a predefined threshold. Another adaptation measure that the ADAPT project is investigating is internal migration – an extreme form of adaptation. In addition, the project quantifies the impact of extreme weather events on the well-being of individuals and households.
In many countries of the Global South, high-quality microdata are not available, which often limits research. The ADAPT project addresses this gap by collecting socio-economic data in Mongolia and analyzing it using econometric methods. In cooperation with the National Statistical Office of Mongolia, researchers at PIK are implementing a representative household longitudinal survey: the Coping with Shocks in Mongolia Household Panel Survey. Waves 4 and 5 of the survey are collected as part of the ADAPT project.
Team
| Dr. Kati Krähnert (project lead) |
Svenja Fluhrer | Aleksandra Wojewska | Lukas Mogge | Julian Röckert |
|---|---|---|---|---|
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Results
Fluhrer, S. & Kraehnert, K. (2023 forthcoming) Mobile phone network expansion and agricultural income: A panel study. Agricultural Economics.
This study examines how the expansion of mobile phone networks affects rural development in Mongolia. The database is a detailed household panel survey with four waves implemented in western Mongolia, spanning the 2012-2021 period, which we combine with data on mobile phone towers. Our identification strategy exploits the uneven roll-out of mobile phone networks across rural areas over time. Using a two-way fixed effects approach, we show that network expansion strongly and significantly increases total household income of pastoralist households. The effect is driven by increased income from agriculture, particularly by higher producer prices for animal byproducts, improved access to transfer income, and increased household mobility. The expansion of mobile phone networks decreases income diversification among pastoralists. Instead, households specialize in agriculture. While findings suggest that investments in telecommunication infrastructure can help rural households to sustain a livelihood in the agricultural sector, the specialization in agriculture may increase households’ vulnerability to climate change.
Roeckert, J. & Kraehnert, K. (2022) Extreme Weather Events and Internal Migration: Evidence from Mongolia. Economics of Disasters and Climate Change 6(1): 95-128. https://doi.org/10.1007/s41885-021-00100-8
This article examines the effects of extreme weather events on internal migration in Mongolia. Our focus is on dzuds, extremely harsh winters characterized by very cold temperature, snowfall anomalies, and/or storms causing very high livestock mortality. We exploit exogenous variation in the intensity of extreme winter events across time and space to identify their causal impacts on permanent domestic migration. Our database is a time series of migration and population data at provincial and district level from official population registries, spanning the 1992-2018 period. Results obtained with a two-way fixed effects panel estimator show that extreme winter events cause significant and sizeable permanent out-migration from affected provinces for up to two years after an event. These effects are confirmed when considering net change rates in the overall population at the district level. The occurrence of extreme winter events is also a strong predictor for declines in the local population of pastoralist households, the socio-economic group most affected by those events. This suggests that the abandonment of pastoralist livelihoods is an important channel through which climate affects within-country migration.
Fluhrer, S. & Kraehnert, K. (2022) Sitting in the same boat: Subjective well-being and social comparison after an extreme weather event. Ecological Economics 195(107388). https://doi.org/10.1016/j.ecolecon.2022.107388
How does subjective well-being depend on the fate of others when a covariate shock strikes? We address this question by providing novel evidence on the impact of shock-induced damages experienced by individuals and their reference group on life satisfaction. We do so by examining the case of pastoralists in Mongolia, who faced a once-in-50-years winter disaster. Our identification strategy exploits the quasi-experimental nature of the extreme event. The empirical analysis builds on a detailed household panel survey, complemented with aggregated climate data and historic livestock census data. Results show that exposure to the extreme event significantly and strongly reduces subjective well-being even 4–5 years after the event occurred. The negative shock impact is amplified by observing peers doing economically worse. Similarly, exposure to the extreme event increases the perceived inequality among households with assets at risk. We argue that the event increased sectoral disparities between pastoralists and those households not engaged in agriculture.
Svenja Fluhrer received the "Economics of Climate Change - Early Career Best Paper Award" from the Federal Ministry of Education and Research for this research paper.
Mogge, L. (2023) A District-Level Analysis of the Effect of Risk Exposure on the Demand for Index Insurance in Mongolia. Ruhr Economic Papers 1018. http://dx.doi.org/10.4419/96973184
This paper provides novel evidence on how risk exposure shapes the demand for index-based weather insurance. The focus is on Mongolia, where index insurance is offered as a commercially marketed product to pastoralists threatened by extreme weather events that cause high livestock mortality. Using a two-way fixed effect model and country-wide district-level data spanning a period of five years, this paper shows that the demand for index insurance increases in areas exposed to adverse weather conditions occurring in the months preceding the end of the insurance sales period. The effect is neither driven by the receipt of insurance payouts nor by observing peers receiving payouts. I argue that these results can be best explained by insurance purchasers adapting their risk perception in response to recent weather risks. The findings of this paper point to a problem for policymakers as a period of mild weather conditions could cause households to lose interest in purchasing insurance, thus leading to underinvestment in insurance coverage.
Coping with Shocks in Mongolia Household Panel Survey
The data basis of the ADAPT project is a longitudinal household survey, the Coping with Shocks in Mongolia Household Panel Survey. PIK carried out the data collection in cooperation with the National Statistical Office of Mongolia (NSO) in three provinces in western Mongolia (Fig. 1).
Fig. 1: Map of Mongolia, survey area is dark shaded
The ADAPT project continued the existing longitudinal survey with three waves and surveyed all sample households two more times in 2020 (wave 4) and 2021 (wave 5) (Fig. 2).
Fig. 2: Timeline of data collection
The sample (1,768 households in wave 1) is representative of the urban and rural populations in each of the three survey provinces as of 2010. Data collection took place continuously: around 150 households were surveyed each month, with each household being surveyed in the same month as in wave 1. The local team, consisting of nine interviewers, three team leaders and three drivers, was in monthly contact with the authorities in the survey region and was therefore well informed about the whereabouts of the predominantly nomadic sample households. Between waves 1 and 5, the number of sample households fell from 1,768 to 1,629. This attrition rate of 7.86% is very low by international standards (Fig. 3).
Fig. 3: Sample attrition over time
The standardized questionnaire comprises around 400 questions in each wave. Among other things, socio-economic characteristics of all household members (age, gender, education), well-being (income, wealth, life satisfaction), nutrition (consumer spending, diversity of consumption, weight and height of children), health (expenditure, mental health), adaptation were recorded to climate change (weather insurance, investments, migration), impacts of extreme weather events (losses, strategies, receipt of humanitarian and informal assistance) and impacts of the Covid pandemic (loss of income, food availability).
Questionnaires
Wave 4
Wave 5
Citation of the data
Kraehnert, K., Lehmann-Uschner, K., Groppo, V., Bertram-Huemmer, V., Fluhrer, S., Mogge, L., Roeckert, J., & Wojewska, A., 2022. Coping with Shocks in Mongolia household panel survey, waves 1-5. Version 2.0. Potsdam, Berlin, and Ulaanbaatar: PIK, DIW Berlin, and NSO.
Funding
The project was funded by the Federal Ministry of Education and Research under the grant number 01LA1906A.
