# **1 Introduction**

It is widely recognized that climate change will disproportionately affect poorer countries (Mendelsohn, Dinar, & Williams, 2006; Tol, 2009; Bathiany, Dakos, Scheffer, & Lenton, 2018; Dell, Jones, & Olken, 2008), and poorer individuals within countries (Skoufias, Rabassa, & Olivieri, 2011; Hertel, 2016; Dennig, Budolfson, Fleurbaey, Siebert, & Socolow, 2015). Here, we provide a new assessment of the future impacts of climate change on extreme poverty by 2030, updating previous work (Rozenberg & Hallegatte, 2015; Hallegatte & Rozenberg, 2017) using the most recent available household surveys from the World Bank’s Global Monitoring Database. This assessment is done at the household level, using a bottom-up approach to explore the compounding effects of future socioeconomic development and changing climatic and environmental conditions.

Because of the uncertainty in future socioeconomic change and future climate change impacts (see Table 1), we use an exploratory modeling approach to create tens of thousands of scenarios for the next 10 years. The main idea behind this approach is to understand the consequences of various combinations of uncertainties to the system of interest (Bankes, Walker, & Kwakkel, 2013; Kwakkel & Haasnoot, 2019). The approach is mainly used for exploration, rather than prediction. Here, we do not provide a “best-guess” for the future impacts of climate change on poverty, but instead provide a range of possible impacts, and explore the influence of various relevant drivers and uncertainties. These factors include population growth, education, structural economic shifts, food prices, and health issues, among others.

Table 1: List of uncertain factors driving socioeconomic development and poverty and considered in this analysis.

|Category|Parameter|
|---|---|
||Population growth<br>Age structure|
|Socioeconomic -<br>SSP|Average productivity growth<br>Education attainment<br>Labor participation<br>Fraction of skilled labor|
||Sectoral share of employment|
|Socioeconomic -<br>Others|Sectoral productivity growth<br>Redistribution and pension<br>Income premium of skilled workers|
|Climate change|Severity of impacts|

We find that rapid and inclusive development is necessary to reduce climate change vulnerability, consistent with previous findings. In particular, we show that climate change may have significant impacts on global poverty incidence in this decade, possibly pulling more than 100 million people into poverty by 2030. We identify the most important factors and uncertainties in each region, highlighting differential vulnerability priorities for action. Finally, the paper concludes with a discussion of the impact of the COVID-19 crisis on our estimates, and the importance of COVID-19 recoveries that contribute to the long-term resilience of populations against shocks and stresses, including climate change.

# **2 Methodology**

The model used for this analysis is based on the model developed for the 2015 World Bank report, _Shock Waves: Managing the Impacts of Climate Change on Poverty_ (Hallegatte et al., 2015; Rozenberg & Hallegatte, 2015; Hallegatte & Rozenberg, 2017). The model represents the impacts of climate change on household incomes to estimate the implications for poverty and inequality. The bottom-up approach, considering impacts on individual households, complements top-down analyses based on integrated assessment models (Dellink, Lanzi, & Chateau, 2019) or econometric estimates (Burke, Hsiang, & Miguel, 1