Climate and equity: a framework to understand welfare impacts and guide policy action

To guide policy action, this document sets out a framework for thinking about the relationship between climate and poverty, and how climate change and climate policies affect household welfare. Reducing the impact of climate change on poor and vulnerable households is essential for hastening poverty reduction. Climate change disproportionately affects poor and vulnerable people whose livelihoods often depend on natural resources and whose lack of access to savings, credit, and insurance makes hazards more costly.

This document also provides a review of the analytics methods and tools that can be used to quantify the risks climate change poses to welfare and the impacts of climate action on welfare. The framework uses an asset-based approach to examine how climate outcomes affect household income and consumption, and how households use assets and markets to cope with climate shocks.