A joint publication by the Grantham Research Institute on Climate Change and the Environment, and the Centre for Climate Change Economics and Policy, this paper analyses the link between income and adaptation to climate events both empirically and theoretically Through analysis of extensive and high-quality data-sets, this paper argues that the ‘adaptation deficit’, the widely accepted idea that poor countries are more heavily affected by climate change than rich countries, is down to two main factors: a demand effect, whereby the demand for good climate security increases with income; and an efficiency effect, which works as a spill-over externality on the supply-side.
Following an introduction, the paper presents a simple theoretical model that introduces the two channels through which income affects climate security: demand and efficiency. Section three sets up the authors empirical model used to analyse each of the countries studied, the results of which are presented in section four. Potential shortcomings and methodological refinements are the topic of section five, before the final section concludes the report.
The key findings presented in the conclusions include:

There is empirical evidence of a strong demand effect; a 10 per cent increase in income reduces climate disaster related economic damages by between 3 and 5 per cent, and up to 19 per cent for cyclones. The relationship between income and fatalities is weaker, but nevertheless significant.
There is significant variation in the efficiency effect however, even after controlling for income, which point to instances of adaptation inefficiency.
The strength of efficiency spill-overs into adaptation capacity varies with government spending, institutional quality, and income distribution.
That adaptation inefficiencies do not correlate well with income means that there is a need for a combination of special measures that go beyond a focus on policies that boost income only.
The countries identified where efficiency spill-overs were weakest included many of the poorest countries in the world, though Bangladesh, often considered good at disaster risk management, also features.
There is a need for further analysis on the link between economic growth and climate resilience, and more detailed and nuanced models capturing more demographic dynamics that can influence climate vulnerability.