Firm adaptation in production networks: evidence from extreme weather events in Pakistan

Contents

1. Abstract
2. Citation
3. Links

Abstract

This paper considers how far private adaptation may reduce future vulnerability to climate risks. Using data on monthly firm-to-firm transactions from Pakistan, it finds that flood-affected firms are more likely to relocate to safer ground, and shift purchases towards suppliers in less flood-prone regions and reached via less flood-prone roads. The results indicate that firms are imperfectly informed about flood risk, and update their beliefs following floods. We quantify aggregate impacts using a spatial model of endogenous production network formation. The findings suggest that climate change impacts will be mediated as firms learn from the experience of increasingly frequent disasters.

This paper is part of the Private Enterprise Development in Low Income Countries (PEDL) programme.

Citation

Balboni C, Boehm J and Waseem M. 'Firm adaptation in production networks: evidence from extreme weather events in Pakistan' PEDL Working Paper 2024

Links

Firm adaptation in production networks: evidence from extreme weather events in Pakistan

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