Firm-Level Adaptation to Climate Change in Low- and Middle-Income Countries

The effects of climate change are disproportionately concentrated in low- and middle-income countries (LMICs). Firms have incentives to adapt to climate change, but market frictions common in developing country contexts may hinder firm adaptation efforts. This paper reviews microeconomic, empirical evidence on the impacts of climate change on firms in LMICs and firm-level adaptation strategies. Current evidence highlights challenges and opportunities from climate change and suggests that firms are attempting to adapt but face barriers to full adaptation. Limited geographic coverage and a focus on short-term responses to weather rather than responses to long-term changes in climate highlight the need for further work on firm-level climate adaptation in LMICs.