Estimating the potential impacts of climate change requires understanding the ability of agents to adapt to changes in their climate. This paper uses panel data from India spanning from 1956 to 1999 to investigate the ability of farmers to adapt. To identify adaptation, the author exploits persistent, multidecadal monsoon regimes during which droughts or floods are more common. These regimes generate medium-run variation in average rainfall, and there is spatial variation in the timing of the regimes. Using a fixed-effects strategy, she tests whether farmers have adapted to the medium-run rainfall variation induced by the monsoon regimes. The author finds evidence that farmers adjust their irrigation investments and their crop portfolios in response to the medium-run rainfall variation. However, adaptation only recovers a small fraction of the profits farmers have lost due to adverse climate variation.

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Projections suggest that the damages from climate change will be substantial for developing countries. Understanding the ability of households in these countries to adapt to climate change is critical in order to determine the magnitude of the potential damages. In this paper, I investigate the ability of farmers in India to adapt to higher temperatures. I use a methodology that exploits short-term weather fluctuations as well as spatial variation in long-run climate. Specifically, I estimate how damaging high temperatures are for districts that experience high temperatures more or less frequently. I find that the losses from high temperatures are lower in heat-prone districts, a result that is consistent with adaptation. However, while adaptation appears to be modestly effective for moderate levels of heat, my results suggest that adaptation to extreme heat is much more difficult. Extremely high temperatures do grave damage to crops, even in places that experience these temperature extremes regularly. The persistence of negative impacts of high temperatures, even in areas that experience high temperatures frequently, underscores the need for development policies that emphasize risk mitigation and explicitly account for climate-change-related risks.JEL Classification: O1, O3, Q1, Q5

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We present estimates of the effect of temperature on cognitive performance, and find that an additional 10 days in a year above 29C reduces math and reading test scores by 0.03 and 0.02 standard deviations respectively. However, in contrast to prior work, we find evidence for an income mechanism -hot days during the growing season reduce agricultural yields and test score performance with comparatively modest effects of hot days in the non-growing season. The roll-out of a conditional cash transfer program, by providing a safety net for the poor, weakens the link between temperature and test scores. Our results suggest that climate change will have disproportionate and large negative impacts on human capital accumulation of poor populations in agrarian economies, likely increasing the persistence of poverty.JEL Codes: H41, I0, Q5, Q54