[Editors] MIT: As planet warms, poor nations face economic chill

[Elizabeth Thomson]

http://web.mit.edu/newsoffice/2009/climate-shock-0313.html


======================================
As planet warms, poor nations face economic chill
--Climate change may widen gap between rich and poor, study finds
======================================

For Immediate Release
MONDAY, MAR. 16, 2009

Contact: Elizabeth A. Thomson, MIT News Office
E: thomson at mit.edu, T: 617-258-5402

Photo Available

CAMBRIDGE, Mass.--A rising tide is said to lift all boats. Rising  
global temperatures, however, may lead to increased disparities  
between rich and poor countries, according to a recent MIT economic  
analysis of the impact of climate change on growth.

After examining worldwide climate and economic data from 1950 to 2003,  
Benjamin A. Olken, associate professor in the Department of Economics,  
concludes that a 1 degree Celsius rise in temperature in a given year  
reduces economic growth by an average of 1.1 percentage points in the  
world’s poor countries but has no measurable effect in rich countries.

Olken says his research suggests higher temperatures will be  
disproportionately bad for the economic growth of poor countries  
compared to rich countries.

The precise reasons why higher temperatures lower economic output are  
likely to be complex, but Olken’s results suggest the importance of  
temperature's impact on agricultural output. His data also provide  
evidence for a relationship between temperature and industrial output,  
investment, research productivity and political stability.

“The potential impacts of an increase in temperature on poor countries  
are much larger than existing estimates have suggested,” Olken says.  
“Although historical estimates don’t necessarily predict the future,  
our results suggest that one should be particularly attentive to the  
potential impact of climate change on poorer countries.”

Olken’s analysis is contained in “Climate Shocks and Economic Growth:  
Evidence from the Last Half Century,” a paper co-authored by MIT  
economics graduate student Melissa Dell and Benjamin F. Jones,  
associate management professor at Northwestern University. The paper  
is currently under review for publication. Olken, who has been  
researching issues of growth and temperature for about two years,  
presented some of the findings at a recent conference of the American  
Economic Association.

Growing hot-cold divide

It has long been observed that hotter countries, such as those in sub- 
Saharan Africa and parts of Latin America, tend to be poorer than  
cooler countries in North America and Europe; the main exceptions are  
hot, rich Middle East countries with oil reserves and cold, poor  
Communist or former Communist states like North Korea and Mongolia.  
What contemporary scholars have debated, however, is whether climate  
has a significant effect on a country’s economy today or whether it is  
institutions and policies that now solely drive prosperity.

To conduct their research, Olken and his co-authors used existing data  
sets of economic growth and productivity — everything from gross  
domestic product to the rate of publication of scientific papers — and  
combined them with country-by-country temperature and precipitation  
data from 1950 to 2003.

Olken and his co-authors conclude that rising temperatures do  
substantially reduce economic output and growth rates in both  
agricultural and industrial sectors, but only in countries that are  
already poor. Higher temperatures also reduce investment and  
innovation but, again, only in poor nations.

Rising temperatures may also have political consequences, the authors  
found. A one-degree rise in temperature in poor countries raises the  
likelihood of a so-called irregular leader transition (i.e., a coup)  
by 3.9 percentage points.

Olken acknowledges that the long-term impact of temperature change  
might be different from the short-term effect since countries may  
adapt to a particular climate over time. But his research found no  
such adaptation over a 10-year time horizon.

Should the future effects mirror recent history, world policy makers  
should be prepared for a widening gap between rich and poor countries  
as the globe continues to warm, he says.

--END--

Written by Stephanie Schorow, MIT News Office
-------------- next part --------------
An HTML attachment was scrubbed...
URL: http://mailman.mit.edu/pipermail/editors/attachments/20090316/64a96cae/attachment.htm