Adaptive Social Protection in Colombia: What is the Distributional Impact of Shocks and How Can the Social Protection System Better Respond?

Colombia is increasingly vulnerable to the impacts of climate change and the greater recurrence of disaster events. In this context, the government has been gradually adapting its installed capacities to deal with covariant shocks. The Social Protection System (SPS) considers these adaptation processes and seeks to mitigate the impact that shocks may have on the poorest and most vulnerable households’ consumption and income. Through progressively adapting their preparation, coping, and adaptation mechanisms, the SPS plays a critical role in containing the potential and more frequent impacts of climate change on the poor and vulnerable population. The main objective of this report is to explore the distributional impacts of covariate economic and climate-related shocks in Colombia and the capacity of the social protection system to respond effectively and to provide policy recommendations for improvements. The report is part of a World Bank regional Latin America and the Caribbean Region (LCR) effort for strengthening adaptiveness of SP systems and is one of the deep dives of the Country Climate Development Report (CCDR) prepared by the World Bank in Colombia. The document is divided into five parts. The first is this introduction. The second motivates why is it important to build more adaptive systems: it describes how shocks derail the path toward reducing poverty and inequality in Colombia and zooms in on the importance of the ASPS. The third part deals with the theoretical framework of the microsimulation exercise of climate change and COVID-19 shocks and proposes the conceptual structure of scalability and adaptability of social protection. The fourth section proposes the main findings of the applied tool, while the last chapter presents potential policy options.