  In this paper, we analyze the long-term distributive impact of climate change
through rising food prices. We use a standard incomplete markets model and
account for non-linear Engel curves for food consumption. For the calibration
of our model, we rely on household data from 92 developing countries,
representing 4.5 billion people. The results indicate that the short-term and
long-term distributive impact of climate change differs. Including general
equilibrium effects change the welfare outcome especially for the poorest
quintile. In the presence of idiosyncratic risk, higher food prices increase
precautionary savings, which through general equilibrium affect labor income of
all agents. Furthermore, this paper studies the impact on inequality for
different allocations of productivity losses across sectors. When climate
impacts affects total factor productivity in both sectors of the economy,
climate impacts increase also wealth inequality.
