Temperature rise 'slows economy in poor countries'

By Paula Park, August 16, 2012, SCiDevNet Small increases in temperature may have reduced the industrial and agricultural production of poor countries, according to a study by US economists. Higher temperatures may also have contributed to political instability in these countries — defined as those with below-median per capita income, adjusted for the purchasing power of the country's currency — according to the study published in the American Economic Journal: Macroeconomics last month. In contrast, rich countries have so far shown no measurable economic or political consequences resulting from temperature change. "Temperature fluctuations can have large negative impacts on poor countries," said Benjamin Olken, an economics professor at the Massachusetts Institute of Technology, and one of the authors of the study. "If fluctuations affect the growth rate each year, over time that adds to a really big impact." The authors compared annual temperature and precipitation changes from 1950 to 2003 with aggregate economic output data. Based on the data, the researchers estimated that a one degree Celsius rise in temperature in a given year had reduced economic growth by about 1.3 percentage points on average. By correlating the temperature and precipitation data with regular changes of government, such as elections, and irregular changes, such as coups, the researchers found that higher temperatures are also associated with political instability in poor countries. The impact of temperature on political instability may be "one mechanism through which temperature might affect productivity growth", according to the paper. But further work is needed to determine why both a country's economy and its political stability are affected by temperature, the authors said. The findings could be used to tweak the traditional climate change models, allowing them to better distinguish the effects of climate from other factors influencing economies, the paper said. "There is a huge amount of literature looking at the [impact of temperature] fluctuations," said Melissa Dell, one of the authors of the paper. "We're more able [than before] to convincingly isolate the temperature and not just something that's correlated with it." Previous findings published in American Economic Review: Papers & Proceedings in 2010 also found that a one degree Celsius warming in a poor country had reduced the growth of all exports by between two and 5.7 percentage points. Rich countries had not experienced such slowdowns that could be correlated with temperature increases, although the decline in imports from poor countries might have led to consumers in rich countries paying higher prices for commodities, the researchers speculated. "It has generally been a reasonable assumption that poor countries are disproportionately affected by climate change, which is what the study showed," said Saleemul Huq, a senior fellow in the climate change group at the International Institute for Environment and Development, in United Kingdom. Huq said there was now a need to analyse the impact that severe temperature fluctuations in major food-producing countries may have on developing countries. For example, high temperatures in the United States have resulted in sharp price increases in corn around the world this year. "I would like to see more about how changes in temperature in one part of the world have repercussions in another part of the world," said Huq. "Climate change in one part of the world can have a tremendous impact in another, that we are not yet aware of." Source