Thursday, January 07, 2010

Climate change hits poor countries more than rich

The chaps over at EnvEcon have covered this AEA press release and has been covered in the Wall Street Journal.

The question raised is whether climate change discriminates against the poor? Now if I was to ask my class of undergraduates to vote I would hope that the vast majority would say yes. Of course the poor will be hardest hit. I was frankly be astonished if the results found anything else.

What did the authors expect to find? This is the dilemma that China and India face as I have blogged about many times. It is the poor countries that need a deal at Copenhagen but they are not, at this time, prepared to sacrifice growth for the environment. Down the line the cost-benefit analysis will be reversed and only then will be make significant progress.

Apart from this obvious point I remain unconvinced by the analysis in this paper although the approach is interesting.

Climate Change May Increase Income Inequality [WSJ]

It’s still hard to say whether a warming climate will hurt the world’s economy. But if history is any guide, it’s likely to increase the gap between rich and poor.

In a paper presented at the annual meeting of the American Economic Association, Ben Olken of MIT and Ben Jones of Northwestern University make an important discovery: In poor countries, a temperature increase of only one degree Celsius reduces annual export growth by as much as 5.7 percentage points. The decline occurs in a wide variety of products, ranging from footwear to firearms. In rich countries, by contrast, Messrs. Olken and Jones find no effect.

That’s troubling, given the fact that scientists expect the global climate to warm by two to five degrees Celsius over the next 90 years. “To the extent that the historical impact is a reasonable predictor of the future impact, we should be particularly concerned about the effect of warming on poor countries,” says Mr. Olken.

The new results support previous research done by Messrs. Olken and Jones together with Melissa Dell of MIT. That research found that in poor countries, a one-degree-Celsius temperature rise was associated with a drop in annual economic growth of one to two percentage points. Again, they found no effect in rich countries.

Why poor countries? Mr. Olken says it’s hard to know. One possibility is that poor countries are more vulnerable because they’re more dependent on agriculture, though the export data suggest that’s not the whole story. Another is that poorer countries have less access to air conditioning. Finding an explanation is “an important area for further research,” says Mr. Olken.



bram said...

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