[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/zbw/esprep/178288.html
   My bibliography  Save this paper

The Impact of Climate Conditions on Economic Production. Evidence from a Global Panel of Regions

Author

Listed:
  • Kalkuhl, Matthias
  • Wenz, Leonie
Abstract
We estimate the impacts of climate on economic growth using Gross Regional Product (GRP) for more than 1,500 regions in 77 countries. In temperate and tropical climates, annual temperature shocks reduce GRP whereas they increase GRP in cold climates. With respect to long-term climate conditions, one degree of temperature increase reduces output by 2-3%. The effect of annual or long-term precipitation is found to be less important and less robust among specifications. For projected global warming of 4°C until 2100, we find that regions lose 9\% of economic output on average and more than 20% of output in tropical regions.

Suggested Citation

  • Kalkuhl, Matthias & Wenz, Leonie, 2018. "The Impact of Climate Conditions on Economic Production. Evidence from a Global Panel of Regions," EconStor Preprints 178288, ZBW - Leibniz Information Centre for Economics.
    • Handle: RePEc:zbw:esprep:178288
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/178288/1/Kalkuhl_Wenz_2018_Climate_Regional_Economic_Impacts.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Fankhauser, Samuel & S.J. Tol, Richard, 2005. "On climate change and economic growth," Resource and Energy Economics, Elsevier, vol. 27(1), pages 1-17, January.
    2. Marshall Burke & Solomon M. Hsiang & Edward Miguel, 2015. "Global non-linear effect of temperature on economic production," Nature, Nature, vol. 527(7577), pages 235-239, November.
    3. Germán-Soto, Vicente, 2005. "Generación del producto interno bruto mexicano por entidad federativa, 1940-1992," El Trimestre Económico, Fondo de Cultura Económica, vol. 0(287), pages 617-653, julio-sep.
    4. William Nordhaus, 2018. "Evolution of modeling of the economics of global warming: changes in the DICE model, 1992–2017," Climatic Change, Springer, vol. 148(4), pages 623-640, June.
    5. Marshall Burke & Vincent Tanutama, 2019. "Climatic Constraints on Aggregate Economic Output," NBER Working Papers 25779, National Bureau of Economic Research, Inc.
    6. Joshua Graff Zivin & Matthew Neidell, 2014. "Temperature and the Allocation of Time: Implications for Climate Change," Journal of Labor Economics, University of Chicago Press, vol. 32(1), pages 1-26.
    7. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2005. "Institutions as a Fundamental Cause of Long-Run Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 6, pages 385-472, Elsevier.
    8. Marshall Burke & Kyle Emerick, 2016. "Adaptation to Climate Change: Evidence from US Agriculture," American Economic Journal: Economic Policy, American Economic Association, vol. 8(3), pages 106-140, August.
    9. Robert S. Pindyck, 2013. "Climate Change Policy: What Do the Models Tell Us?," Journal of Economic Literature, American Economic Association, vol. 51(3), pages 860-872, September.
    10. Chen, Shuai & Chen, Xiaoguang & Xu, Jintao, 2016. "Impacts of climate change on agriculture: Evidence from China," Journal of Environmental Economics and Management, Elsevier, vol. 76(C), pages 105-124.
    11. John Luke Gallup & Jeffrey D. Sachs & Andrew Mellinger, 1999. "Geography and Economic Development," CID Working Papers 1, Center for International Development at Harvard University.
    12. Detlef Vuuren & Jae Edmonds & Mikiko Kainuma & Keywan Riahi & Allison Thomson & Kathy Hibbard & George Hurtt & Tom Kram & Volker Krey & Jean-Francois Lamarque & Toshihiko Masui & Malte Meinshausen & N, 2011. "The representative concentration pathways: an overview," Climatic Change, Springer, vol. 109(1), pages 5-31, November.
    13. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2009. "Temperature and Income: Reconciling New Cross-Sectional and Panel Estimates," American Economic Review, American Economic Association, vol. 99(2), pages 198-204, May.
    14. Dietz, Simon & Stern, Nicholas, 2015. "Endogenous growth, convexity of damage and climate risk: how Nordhaus’ framework supports deep cuts in carbon emissions," LSE Research Online Documents on Economics 58406, London School of Economics and Political Science, LSE Library.
    15. Tatyana Deryugina & Solomon M. Hsiang, 2014. "Does the Environment Still Matter? Daily Temperature and Income in the United States," NBER Working Papers 20750, National Bureau of Economic Research, Inc.
    16. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    17. Charles D. Kolstad & Frances C. Moore, 2020. "Estimating the Economic Impacts of Climate Change Using Weather Observations," Review of Environmental Economics and Policy, University of Chicago Press, vol. 14(1), pages 1-24.
    18. Lecocq, Franck & Shalizi, Zmarak, 2007. "How might climate change affect economic growth in developing countries ? a review of the growth literature with a climate lens," Policy Research Working Paper Series 4315, The World Bank.
    19. Joshua Graff Zivin & Solomon M. Hsiang & Matthew Neidell, 2018. "Temperature and Human Capital in the Short and Long Run," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 5(1), pages 77-105.
    20. John Luke Gallup & Jeffrey D. Sachs & Andrew Mellinger, 1999. "Geography and Economic Development," CID Working Papers 01A, Center for International Development at Harvard University.
    21. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2014. "What Do We Learn from the Weather? The New Climate-Economy Literature," Journal of Economic Literature, American Economic Association, vol. 52(3), pages 740-798, September.
    22. Nicholas Stern, 2016. "Economics: Current climate models are grossly misleading," Nature, Nature, vol. 530(7591), pages 407-409, February.
    23. Millner, Antony & McDermott, Thomas K. J., 2016. "Model confirmation in climate economics," LSE Research Online Documents on Economics 67122, London School of Economics and Political Science, LSE Library.
    24. Gallup, J.L. & Sachs, J.D. & Mullinger, A., 1999. "Geography and Economic Development," Papers 1, Chicago - Graduate School of Business.
    25. Detlef Vuuren & Elmar Kriegler & Brian O’Neill & Kristie Ebi & Keywan Riahi & Timothy Carter & Jae Edmonds & Stephane Hallegatte & Tom Kram & Ritu Mathur & Harald Winkler, 2014. "A new scenario framework for Climate Change Research: scenario matrix architecture," Climatic Change, Springer, vol. 122(3), pages 373-386, February.
    26. Sachs, Jeffrey D & Warner, Andrew M, 1997. "Fundamental Sources of Long-Run Growth," American Economic Review, American Economic Association, vol. 87(2), pages 184-188, May.
    27. Frances C. Moore & Delavane B. Diaz, 2015. "Temperature impacts on economic growth warrant stringent mitigation policy," Nature Climate Change, Nature, vol. 5(2), pages 127-131, February.
    28. Brian O’Neill & Elmar Kriegler & Keywan Riahi & Kristie Ebi & Stephane Hallegatte & Timothy Carter & Ritu Mathur & Detlef Vuuren, 2014. "A new scenario framework for climate change research: the concept of shared socioeconomic pathways," Climatic Change, Springer, vol. 122(3), pages 387-400, February.
    29. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2012. "Temperature Shocks and Economic Growth: Evidence from the Last Half Century," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(3), pages 66-95, July.
    30. Burke, M. & Craxton, M. & Kolstad, C.D. & Onda, C. & Allcott, H. & Baker, E. & Barrage, L. & Carson, R. & Gillingham, K. & Graff-Zivin, J. & Greenstone, M. & Hallegatte, S. & Hanemann, W.M. & Heal, G., 2016. "Opportunities for advances in climate change economics," ISU General Staff Papers 3565, Iowa State University, Department of Economics.
    31. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    32. Nicholas Stern, 2013. "The Structure of Economic Modeling of the Potential Impacts of Climate Change: Grafting Gross Underestimation of Risk onto Already Narrow Science Models," Journal of Economic Literature, American Economic Association, vol. 51(3), pages 838-859, September.
    33. North, Douglass C, 1987. "Institutions, Transaction Costs and Economic Growth," Economic Inquiry, Western Economic Association International, vol. 25(3), pages 419-428, July.
    34. Katharine Ricke & Laurent Drouet & Ken Caldeira & Massimo Tavoni, 2018. "Country-level social cost of carbon," Nature Climate Change, Nature, vol. 8(10), pages 895-900, October.
    35. Sachs, Jeffrey D & Warner, Andrew M, 1997. "Sources of Slow Growth in African Economies," Journal of African Economies, Centre for the Study of African Economies, vol. 6(3), pages 335-376, October.
    36. Nordhaus, William D., 1993. "Rolling the 'DICE': an optimal transition path for controlling greenhouse gases," Resource and Energy Economics, Elsevier, vol. 15(1), pages 27-50, March.
    37. Deschenes, Olivier, 2014. "Temperature, human health, and adaptation: A review of the empirical literature," Energy Economics, Elsevier, vol. 46(C), pages 606-619.
    38. Nicholas Crafts, 2005. "Regional Gdp In Britain, 1871–1911: Some Estimates," Scottish Journal of Political Economy, Scottish Economic Society, vol. 52(1), pages 54-64, February.
    39. Matthias Kalkuhl & Ottmar Edenhofer, 2016. "Knowing the Damages is not Enough: The General Equilibrium Impacts of Climate Change," CESifo Working Paper Series 5862, CESifo.
    40. Simon Dietz & Nicholas Stern, 2015. "Endogenous Growth, Convexity of Damage and Climate Risk: How Nordhaus' Framework Supports Deep Cuts in Carbon Emissions," Economic Journal, Royal Economic Society, vol. 0(583), pages 574-620, March.
    41. Auffhammer, Maximilian & Mansur, Erin T., 2014. "Measuring climatic impacts on energy consumption: A review of the empirical literature," Energy Economics, Elsevier, vol. 46(C), pages 522-530.
    42. Alan Barreca & Karen Clay & Olivier Deschenes & Michael Greenstone & Joseph S. Shapiro, 2016. "Adapting to Climate Change: The Remarkable Decline in the US Temperature-Mortality Relationship over the Twentieth Century," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 105-159.
    43. Maximilian Auffhammer, 2018. "Quantifying Economic Damages from Climate Change," Journal of Economic Perspectives, American Economic Association, vol. 32(4), pages 33-52, Fall.
    44. Maximilian Auffhammer & Solomon M. Hsiang & Wolfram Schlenker & Adam Sobel, 2013. "Using Weather Data and Climate Model Output in Economic Analyses of Climate Change," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 7(2), pages 181-198, July.
    45. Peter H. Howard & Thomas Sterner, 2017. "Few and Not So Far Between: A Meta-analysis of Climate Damage Estimates," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(1), pages 197-225, September.
    46. Elmar Kriegler & Jae Edmonds & Stéphane Hallegatte & Kristie Ebi & Tom Kram & Keywan Riahi & Harald Winkler & Detlef Vuuren, 2014. "A new scenario framework for climate change research: the concept of shared climate policy assumptions," Climatic Change, Springer, vol. 122(3), pages 401-414, February.
    47. Solomon Hsiang, 2016. "Climate Econometrics," Annual Review of Resource Economics, Annual Reviews, vol. 8(1), pages 43-75, October.
    48. Arby, Muhammad Farooq, 2008. "Some Issues in the National Income Accounts of Pakistan (Rebasing, Quarterly and Provincial Accounts and Growth Accounting)," MPRA Paper 32048, University Library of Munich, Germany.
    49. Gallup, John & Sachs, Jeffrey, 1999. "Geography and Economic Development," Harvard Institute for International Development (HIID) Papers 294434, Harvard University, Kennedy School of Government.
    50. J. Farmer & Cameron Hepburn & Penny Mealy & Alexander Teytelboym, 2015. "A Third Wave in the Economics of Climate Change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(2), pages 329-357, October.
    51. Burke, M & Craxton, M & Kolstad, CD & Onda, C & Allcott, H & Baker, E & Barrage, L & Carson, R & Gillingham, K & Graf-Zivin, J & Greenstone, M & Hallegatte, S & Hanemann, WM & Heal, G & Hsiang, S & Jo, 2016. "Opportunities for advances in climate change economics," University of California at Santa Barbara, Recent Works in Economics qt4tc5d9pb, Department of Economics, UC Santa Barbara.
    52. Frances C. Moore & Delavane B. Diaz, 2015. "Erratum: Temperature impacts on economic growth warrant stringent mitigation policy," Nature Climate Change, Nature, vol. 5(3), pages 280-280, March.
    53. Solomon M. Hsiang & Amir S. Jina, 2015. "Geography, Depreciation, and Growth," American Economic Review, American Economic Association, vol. 105(5), pages 252-256, May.
    54. Solomon M. Hsiang, 2016. "Climate Econometrics," NBER Working Papers 22181, National Bureau of Economic Research, Inc.
    55. Nicholas Stern, 2008. "The Economics of Climate Change," American Economic Review, American Economic Association, vol. 98(2), pages 1-37, May.
    56. Franziska Piontek & Matthias Kalkuhl & Elmar Kriegler & Anselm Schultes & Marian Leimbach & Ottmar Edenhofer & Nico Bauer, 2019. "Economic Growth Effects of Alternative Climate Change Impact Channels in Economic Modeling," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(4), pages 1357-1385, August.
    57. Kristie Ebi & Stephane Hallegatte & Tom Kram & Nigel Arnell & Timothy Carter & Jae Edmonds & Elmar Kriegler & Ritu Mathur & Brian O’Neill & Keywan Riahi & Harald Winkler & Detlef Vuuren & Timm Zwickel, 2014. "A new scenario framework for climate change research: background, process, and future directions," Climatic Change, Springer, vol. 122(3), pages 363-372, February.
    58. Elisabeth J. Moyer & Mark D. Woolley & Nathan J. Matteson & Michael J. Glotter & David A. Weisbach, 2014. "Climate Impacts on Economic Growth as Drivers of Uncertainty in the Social Cost of Carbon," The Journal of Legal Studies, University of Chicago Press, vol. 43(2), pages 401-425.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chang, Jun-Jie & Mi, Zhifu & Wei, Yi-Ming, 2023. "Temperature and GDP: A review of climate econometrics analysis," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 383-392.
    2. Richard S J Tol, 2018. "The Economic Impacts of Climate Change," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 12(1), pages 4-25.
    3. Newell, Richard G. & Prest, Brian C. & Sexton, Steven E., 2021. "The GDP-Temperature relationship: Implications for climate change damages," Journal of Environmental Economics and Management, Elsevier, vol. 108(C).
    4. Kahn, Matthew E. & Mohaddes, Kamiar & Ng, Ryan N.C. & Pesaran, M. Hashem & Raissi, Mehdi & Yang, Jui-Chung, 2021. "Long-term macroeconomic effects of climate change: A cross-country analysis," Energy Economics, Elsevier, vol. 104(C).
    5. Franziska Piontek & Matthias Kalkuhl & Elmar Kriegler & Anselm Schultes & Marian Leimbach & Ottmar Edenhofer & Nico Bauer, 2019. "Economic Growth Effects of Alternative Climate Change Impact Channels in Economic Modeling," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(4), pages 1357-1385, August.
    6. Marco Letta & Richard S. J. Tol, 2019. "Weather, Climate and Total Factor Productivity," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(1), pages 283-305, May.
    7. Letta, Marco & Montalbano, Pierluigi & Tol, Richard S.J., 2018. "Temperature shocks, short-term growth and poverty thresholds: Evidence from rural Tanzania," World Development, Elsevier, vol. 112(C), pages 13-32.
    8. Rising, James A. & Taylor, Charlotte & Ives, Matthew C. & Ward, Robert E.T., 2022. "Challenges and innovations in the economic evaluation of the risks of climate change," Ecological Economics, Elsevier, vol. 197(C).
    9. Schultes, Anselm & Piontek, Franziska & Soergel, Bjoern & Rogelj, Joeri & Baumstark, Lavinia & Kriegler, Elmar & Edenhofer, Ottmar & Luderer, Gunnar, 2020. "Economic damages from on-going climate change imply deeper near-term emission cuts," MPRA Paper 103655, University Library of Munich, Germany.
    10. Desbordes, Rodolphe & Eberhardt, Markus, 2024. "Climate change and economic prosperity: Evidence from a flexible damage function," Journal of Environmental Economics and Management, Elsevier, vol. 125(C).
    11. Lamperti, Francesco & Bosetti, Valentina & Roventini, Andrea & Tavoni, Massimo & Treibich, Tania, 2021. "Three green financial policies to address climate risks," Journal of Financial Stability, Elsevier, vol. 54(C).
    12. Rising, James A. & Taylor, Charlotte & Ives, Matthew C. & Ward, Robert E.t., 2022. "Challenges and innovations in the economic evaluation of the risks of climate change," LSE Research Online Documents on Economics 114941, London School of Economics and Political Science, LSE Library.
    13. Song, Yanwu & Wang, Can & Wang, Zhaohua, 2023. "Climate risk, institutional quality, and total factor productivity," Technological Forecasting and Social Change, Elsevier, vol. 189(C).
    14. Li Chen & Bin Jiang & Chuan Wang, 2023. "Climate change and urban total factor productivity: evidence from capital cities and municipalities in China," Empirical Economics, Springer, vol. 65(1), pages 401-441, July.
    15. Tol, Richard S.J., 2019. "A social cost of carbon for (almost) every country," Energy Economics, Elsevier, vol. 83(C), pages 555-566.
    16. Richard S.J. Tol, 2020. "The Economic Impact of Weather and Climate," Video Library 2094, Department of Economics, University of Sussex Business School.
    17. Pierre Mérel & Matthew Gammans, 2021. "Climate Econometrics: Can the Panel Approach Account for Long‐Run Adaptation?," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(4), pages 1207-1238, August.
    18. Bassino, Jean-Pascal & Lagoarde-Segot, Thomas & Woitek, Ulrich, 2020. "The irreversible welfare cost of climate anomalies. Evidence from Japan (1872-1917)," Discussion Paper Series 704, Institute of Economic Research, Hitotsubashi University.
    19. Themann, Michael, 2021. "At boiling point: Temperature shocks in global business groups," Ruhr Economic Papers 905, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    20. Duan, Hongbo & Yuan, Deyu & Cai, Zongwu & Wang, Shouyang, 2022. "Valuing the impact of climate change on China’s economic growth," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 155-174.

    More about this item

    Keywords

    climate change; climate damages; climate impacts; growth regression;
    All these keywords.

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:esprep:178288. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/zbwkide.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.