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Firm-Level Climate Change Adaptation: Micro Evidence from 134 Nations
Are firms adapting to climate change? We combine World Bank Enterprise Survey data covering 160,000 firms in 134 countries with spatially granular weather data to estimate temperature response functions. Firms in low- and lower-middle income countries (LMCs) are negatively affected by rising heat: revenues decline by 12 percent when temperatures are 0.5？C above historical averages for small and medium firms. Labor productivity and wages fall and energy costs rise, with effects concentrated in heat sensitive sectors. However, only one-third of firms in LMCs take adaptive measures. Information on policy constraints suggests that limited financing and burdensome regulation constrain firm-level adaption.
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