Animesh Jayant

In this paper, I identify a previously unexplored channel through which firm adaptation to climate events generates persistent market power. Using 50 years of novel plant-level data on the water-intensive Indian sugar industry — including a georeferenced panel on 4 million cane farmers — and an event study design, I document that sugar mill exits rise after extreme droughts, primarily among the least productive plants, and that their cane supply is reallocated towards more productive survivors. These survivors also quality upgrade to new drought-tolerant cane varieties and streamlined harvesting programs, allowing them to observe long-term gains in productivity and market shares. The core mechanism for these outcomes is that strong survivors strategically finance costly upgrading using oligopsony rents that arise from higher market concentration after droughts, and deter future entry. Strikingly, cane prices see no changes despite productivity improvements within plants. A dynamic oligopsony model with endogenous quality upgrading rationalises these findings and reveals a fundamental policy trade-off: while climate-induced restructuring may improve productivity, it generates redistribution from farmers (who face amplified markdowns) to mills and workers (who benefit from efficiency gains). These findings establish climate change as a novel driver of long-run market power with important distributional consequences.

Recent research highlights how climate damages can be mitigated through sectoral reallocation (Nath, 2025), crop reallocation (Costinot et al., 2016), and reducing trade and migration barriers (Conte et al., 2021). In this project, I evaluate the potential for reallocation between agricultural and non-agricultural production on the basis of farm size to serve as a margin of climate adaptation, and examine how input market and sectoral mobility frictions can hamper this process. I study this question in the context of India, a highly climate-vulnerable economy comprising 25% of the world's farms, proceeding in three steps. First, I present empirical estimates showing that productivity losses from rising temperatures are only half as large on larger farms relative to smaller ones — implying substantial gains if climate-exposed countries could promote farm consolidation and facilitate labour reallocation from vulnerable small farms into non-agriculture. Second, I document that long-run responses to rising temperatures see a shrinking of average farm sizes, driven by a decline in the number of large farms rather than the consolidation that efficient adaptation would predict. This points to an important role for input market frictions. Third, to rationalise these findings, I develop a theoretical framework embedding input market and sectoral mobility frictions in a Melitz model, and use it to quantify how these frictions dampen the gains from climate adaptation.

In principle, firms in developing countries benefit from the fact that advanced technologies have already been developed in industrialised countries and can simply be adopted. But for many firms this advantage remains elusive. In this project, we investigate the role of market competition in spurring quality upgrading within the Indian sugar industry – the world’s second largest, yet highly unproductive. To overcome measurement challenges that have hindered empirical progress on the subject, we use novel long-term administrative records on the universe of sugar manufacturers in India that comprise direct measures of plant-level technology, management and production. For identification, we rely on a natural experiment that introduces market competition in sugarcane markets with varied intensities in the state of Maharashtra - India's largest sugar producer. We document persistent effects of competition at each stage of the sugar value chain with significant benefits for both sugarcane farmers and sugar manufacturers.

Voluntary carbon markets can mobilise climate finance for low-income countries through nature-based solutions like agroforestry, which combines carbon sequestration with farmer resilience. Yet existing projects exhibit very low tree survival rates, reflecting two key failures in standard contracting models: adverse selection - as low-commitment landowners self-select into programs, and moral hazard - as farmer distrust of developers depresses maintenance effort. We study how contract design can mitigate these information asymmetries to improve market performance and strengthen climate adaptation. Partnering with a large agroforestry project developer in India, we implement a 2×2 cross-randomised controlled trial across 250 village clusters and 2,500 farmers. Each dimension of the factorial design targets a distinct information asymmetry: one varies contract features that screen on farmer commitment to address adverse selection, while the other varies developer-side investments that build relational trust to address moral hazard. We will evaluate impacts on four outcome families: selection; tree survival and carbon sequestration measured via drone-based digital MRV; income diversification and consumption smoothing under climate shocks; and environmental co-benefits including soil health and groundwater recharge.