Firm Adaptation in Production Networks: Evidence from Extreme Weather Events in Pakistan

A session organized as part of the South Asia Program

Speaker: Johannes Boehm, Associate Professor at the Department of Economics at Sciences Po.
Chair: Christophe Jaffrelot, Sciences Po-CERI
Discussant: Clément Imbert, Professor of economics at the Department of Economics at Sciences Po. 

Johannes Boehm’s presentation will draw from a paper whose draft is already available on his website (https://jmboehm.github.io/Pakistan_Floods.pdf)

"Firm Adaptation in Production Networks: Evidence from Extreme Weather Events in Pakistan"
Clare Balboni, Johannes Boehm, Mazhar Waseem

This paper considers how far private adaptation may reduce future vulnerability to climate risks. Using data on monthly firm-to-firm transactions from Pakistan, we find 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.

Scientific coordinator : Christophe Jaffrelot, Sciences Po - CERI / CNRS