Climate change induced vulnerability: an evidence from Bangladesh

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This study examines food consumption vulnerability of the extreme poor households in the southern Bangladesh and explore how micro-finance contributes to reduce vulnerability. Households in this areas are vulnerable to climate change. This study analyzes the economic impact of last two big cyclones such as Sidr and Aila . In finding the determinants of vulnerability, econometric analysis is performed using ordered probit model. Heckman two-step model is applied to test the sample selection bias in the model. In this quasi-experimental study, propensity score matching (PSM) technique is used to find out the impact of two big cyclones and also the contribution of micro-finance participation on vulnerability. Apart from finding the determinants of food consumption vulnerability, micro-finance participation is found to be the significant determinant in reducing vulnerability. It can reduce both 2 and 1 vulnerability by 2.3% point. In Propensity Score Matching (PSM) analysis, the impact is 8% reduction of vulnerability. Conversely, the last two cyclones increase the vulnerability by 8% to 14% point. The study also provides some short and long term policy suggestions for this area.