Summary :

Overview

This working paper is part of the FEMISE Working Paper Series stemming from the 2024 FEMISE Annual Conference, highlighting research that addresses pressing socio-economic challenges across the Euro-Mediterranean region.

The paper explores the relationship between climate change vulnerability and income inequality in South Mediterranean countries. Using panel data from sixteen countries between 1995 and 2021, the study investigates how climate-related vulnerabilities contribute to widening within-country income disparities.

Drawing on the ND-GAIN Vulnerability Index and employing a Feasible Generalized Least Squares (FGLS) model, the research provides new empirical evidence on the socioeconomic consequences of climate vulnerability across the region. The analysis also examines the role of agricultural employment and institutional quality as key transmission channels shaping inequality outcomes.

The findings offer important insights for policymakers and development actors seeking to design climate policies that are not only environmentally effective, but also socially equitable and inclusive.

Abstract

Climate change is one of the defining challenges of our time, marked by its complexity and evolving nature. While the effects of climate change on economic output and poverty have been widely studied, the relationship between climate vulnerability and within-country income inequality has received comparatively less attention.

This paper examines the link between climate vulnerability and income inequality across sixteen South Mediterranean countries over the period 1995–2021. Using the ND-GAIN Vulnerability Index and panel data analysis, the study finds that increased climate vulnerability is positively associated with rising income inequality.

The findings reveal that food vulnerability is a major driver of inequality, reflecting the region’s dependence on agriculture, food imports, and exposure to climate-related shocks. The analysis further shows that employment in the agricultural sector amplifies the inequality effects of climate vulnerability, while institutional quality does not sufficiently mitigate these impacts.

The paper concludes that climate change disproportionately affects vulnerable populations and risks deepening existing socio-economic inequalities across the South Mediterranean region. Addressing these challenges requires integrated policy approaches that combine climate adaptation, agricultural resilience, institutional reform, and social equity considerations to support a more sustainable and inclusive transition.