We find substantial effects of climate shocks, but only in poor countries. In poor countries, a 1◦C rise in temperature in a given year reduces economic growth by 1.1 percentage points on average. The estimates suggest that climate change may affect the rate of economic growth, rather than just the level of output. Moreover, estimates using the overall change in climate from 1970 to 2000 rather than annual variation produce even larger estimates, suggesting that adaptation may not undo these effects in the medium term. ... Despite these large, negative effects for poor countries, we find very little impact of long-run climate change on world GDP. This result follows from (a) the absence of estimated temperature effects in rich countries and (b) the fact that rich countries make up the bulk of world GDP. Moreover, if rich countries continue to grow at historical rates, their share of world GDP becomes more pronounced by 2099, so even a total collapse of output in poor countries has a relatively small impact on total world output.(via James Pethokoukis in US News & World Report.
Saturday, January 10, 2009
From Melissa Dell, Benjamin Jones & Benjamin Olken, Climate Shocks and Economic Growth: Evidence from the Last Half Century (Nov. 2008) at 25: