Can conditional cash transfers reduce vulnerability to climate change?

In the last decades several Conditional Cash Transfers (CCTs) have been implemented to interrupt the intergenerational transmission of poverty. More recently, they have also been used as a policy response to provide support to households hit by the COVID crisis. CCTs are being deployed as a development tool to reduce local communities’ vulnerability, increasing their resilience and capacity to adapt. In this context, this paper investigates if CCTs can reduce vulnerability to climate change by increasing the adaptative capacity of local communities. Indeed, while some literature has found that CCTs can reduce specific dimensions of vulnerability to socio-economic shocks, we argue that more research is necessary to understand their impact on vulnerability to climate change. Empirically, we use a panel of household survey data collected in Colombia in 2002 and 2006. We employ a difference-in-differences approach to analyse the impact of the CCT programme Familia en Acción (FA) CCTs on rural households. We consider seven components of vulnerability linked to climate change aggregated in an index: wealth, health, access to information, access to basic facilities, financial vulnerability, resilience to natural disasters, and nutrition. Our results differ from previous research and indicate that CCTs provided by the FA program do not decrease vulnerability to climate change. This finding suggests that CCTs are not a universal solution to reducing vulnerability to climate change and may be ineffective in specific contexts. The literature often assumes that CCTs can have a mitigating effect on vulnerability to climate change. Our research shows that in the context of Colombia, this assumption is incorrect.The idea that providing monthly payments to households can reduce vulnerability to climate change should be considered with caution, given limited empirical evidence.Policy makers and scholars should consider the multidimensional nature of vulnerability and design targeted interventions and avoid considering CCTs as a panacea to all aspects of vulnerability to climate change.Our models show that the FA programme failed to have a significant impact in reducing vulnerability to climate change using several different specifications. We show that CCTs do not have an impact on numerous essential components such as wealth, health, access to infrastructure, information and knowledge, financial coping mechanisms, food consumption, and exposure to natural disasters. The literature often assumes that CCTs can have a mitigating effect on vulnerability to climate change. Our research shows that in the context of Colombia, this assumption is incorrect. The idea that providing monthly payments to households can reduce vulnerability to climate change should be considered with caution, given limited empirical evidence. Policy makers and scholars should consider the multidimensional nature of vulnerability and design targeted interventions and avoid considering CCTs as a panacea to all aspects of vulnerability to climate change. Our models show that the FA programme failed to have a significant impact in reducing vulnerability to climate change using several different specifications. We show that CCTs do not have an impact on numerous essential components such as wealth, health, access to infrastructure, information and knowledge, financial coping mechanisms, food consumption, and exposure to natural disasters.