Cost and Benefits of Climate Change Adaptation Policies: Evidence from an RCT and Extreme Flooding in Pakistan

This study estimates the damage costs of climate change by incorporating the specific costs and benefits of adaptation measures across various environmental scenarios. The researchers utilized a three-year tracking period of households in rural Sindh, Pakistan, which included exposure to extreme monsoon flooding in 2016. This field-based approach allowed for a precise analysis of how targeted preparedness programs can foster resilience against adverse weather shocks. The methodology specifically compared communities participating in a humanitarian aid program to a randomly selected control group. By doing so, the authors were able to quantify improvements in health and food security directly attributable to the intervention.

The findings demonstrate that proactive adaptation investments are highly effective and can pay for themselves within a very short timeframe. In fact, the analysis suggests that these measures have the potential to significantly reduce the social costs of carbon when viewed over a long-term horizon. The research highlights that identifying strategies to mitigate the social cost of carbon is essential for achieving sustainable outcomes. Despite the success of the program, the authors acknowledge that many standard climate models have historically failed to differentiate between various adaptation scenarios. This study fills that gap by providing empirical evidence of how local policies impact economic stability.

The authors estimate $101.47 in damages per household for those left unprotected during a flood event. The paper notes that in 2020, the U.S. government reportedly underestimated the societal costs of carbon dioxide by approximately 3.6 times. While some models suggest a social cost of carbon (SCC) range between $35 and $115, newer predictions using extreme event data place it as high as $1,056 per ton of CO2. Additionally, the study observed that insurance density in the studied region was extremely low, estimated at a mere $4 per person. These figures underscore the high return on investment for humanitarian and climate preparedness programs in vulnerable regions.

Avdeenko, Alexandra, and Markus Frölich. "Cost and Benefits of Climate Change Adaptation Policies: Evidence from an RCT and Extreme Flooding in Pakistan." *Journal of the European Economic Association* 23, no. 5 (October 2025): 1950–2002. https://doi.org/10.1093/jeea/jvaf012