Unequal Rains: The Impact of Climatic Variability on Thailand’s Welfare and Poverty Levels

The World Bank study finds that greater rainfall and healthier vegetation improve welfare and reduce poverty and inequality in Thailand, while rainfall shortages worsen them. It urges stronger irrigation, adaptive social protection, and flexible credit programs to cushion households against climate-driven welfare shocks.

A new study by researchers from the World Bank’s Poverty and Equity Global Department, Sailesh Tiwari, Emmanuel Skoufias, and Varun Kshirsagar, with support from the Climate Support Facility’s Whole of Economy Program, delves into how climatic variability shapes welfare and inequality in Thailand. The study examines the link between rainfall, vegetation health, and household living standards from 2007 to 2021. Drawing on data from Thailand’s Socio-Economic Survey (SES) and satellite-based climate indices such as ERA5 rainfall and MODIS vegetation data, the study provides a rare national-level analysis of how climate shocks redistribute welfare across urban and rural households.

The Growing Threat of Climatic Volatility

The research underscores how climate change has made Thailand’s weather more erratic, marked by irregular monsoons, droughts, and floods that strain agricultural livelihoods. With nearly a third of the country’s workforce dependent on farming and rice as its dominant crop, unpredictable rainfall poses a major threat to both rural incomes and national welfare. Delayed or insufficient rains reduce crop yields and household consumption, while rising food prices spread the impact into urban economies. Although households employ coping strategies, borrowing, diversifying crops, or selling assets, these often come at the cost of future income. Because climatic shocks affect entire communities simultaneously, informal risk-sharing networks fail, making social safety nets crucial for climate resilience.

Measuring the Climate–Welfare Connection

To analyze welfare dynamics, the authors combine household consumption data with rainfall, temperature, and the Normalized Difference Vegetation Index (NDVI), a satellite measure of plant health. Welfare is captured through real household consumption per capita, adjusted for inflation using 2017 prices. The study focuses on weather during the planting season, March to May, since rainfall at this stage determines crop success and incomes in the following year. Using an advanced statistical approach known as the Recentered Influence Function (RIF) regression, the authors estimate how fluctuations in rainfall and NDVI affect not only average welfare but also inequality and poverty across provinces.

Their findings reveal a clear pattern: years with higher rainfall and greener vegetation correspond to greater welfare, lower poverty, and reduced inequality. A one-standard-deviation increase in NDVI reduces national poverty by four percentage points, with stronger impacts in rural regions where agriculture dominates. In contrast, rainfall shortages worsen inequality and push more households below the poverty line. While NDVI fluctuations have little effect in cities, they significantly affect rural consumption, confirming that agriculture remains the key conduit through which weather shapes living standards.

Unequal Burden: The Rural and Agricultural Divide

By combining provincial data with crop production maps from the International Food Policy Research Institute’s SPAM database, the study finds that the welfare impacts of climate variability are not evenly distributed. Rice-producing provinces, particularly those with less than 85 percent irrigation coverage, are the most vulnerable. In these regions, rainfall and NDVI anomalies sharply influence household welfare, while provinces with diversified or non-rice economies remain largely insulated. Surprisingly, better vegetation health sometimes coincides with lower agricultural profits, likely due to price drops after bumper harvests, but it also raises rural wages, suggesting that improved crop conditions create more farm employment even if profits per farmer fall.

Social Protection: A Partial Shield Against Climate Shocks

Thailand’s well-known social protection and microfinance programs, including the Million Baht Village Fund, government farmer funds, and the Welfare Card scheme, were assessed for their capacity to mitigate climate-related welfare losses. The results are mixed. Social assistance programs, when well-targeted, helped cushion the rise in inequality and poverty caused by rainfall deficits, but they did not fully prevent overall declines in welfare. Expanding social assistance coverage by just ten percentage points could, however, raise mean welfare by about 0.03 percent and reduce inequality by nearly four percent.

Credit programs such as the Village Fund proved less effective, largely because they are not flexible enough to support newly vulnerable households affected by climate shocks. Social protection benefits, while modest, play distinct roles across areas: in rural Thailand, they help stabilize consumption and reduce inequality, while in urban settings, they directly cut poverty rates. Yet, the current system lacks adaptive mechanisms that respond swiftly to changing climatic realities, leaving many at risk of sliding back into poverty.

A Call for Resilient and Inclusive Policy

The study concludes that climatic variability, especially rainfall shortages, poses a significant threat to Thailand’s welfare and equality achievements. As weather extremes intensify, the authors call for targeted investments in irrigation and water management infrastructure, the integration of insurance features into social assistance, and improved targeting of climate-vulnerable households. Strengthening the flexibility and responsiveness of credit programs like the Village Fund and linking welfare delivery to climate-risk monitoring are also essential. The report’s message is clear: Thailand’s progress in poverty reduction and shared prosperity will depend not just on economic growth, but on its capacity to weave climate resilience into the fabric of its social protection and development policies.