An empirical analysis of the effects of climate variables on national level economic growth

The influence of climate on economic growth is a topic of growing interest. Few studies have investigated the potential role that climate hazards and their cumulative effects have on the growth prospects for a country. Due to the relatively stationary spatial patterns of global climate, some regions and countries are more prone to climate hazards and climate variability than others. This study uses a precipitation index that preserves the spatial and temporal variability of precipitation and differentiates between precipitation maximums (such as floods) and minimums (such as droughts). The authors develop a year and country fixed effects regression model to test the influence of climate variables on measures of economic growth and activity. The results indicate that precipitation extremes (floods and droughts) are the dominant climate influence on economic growth and that the effects are significant and negative. The drought index is associated with a highly significant negative influence on growth of growth domestic product, while the flood index is associated with a negative influence on growth of gross domestic product and lagged effects on growth. Temperature has little significant effect. These results have important implications for economic projections of climate change impacts. In addition, adaptation strategies should give new consideration to the importance of water resources given the identification of precipitation extremes as the key climate influence on historical growth of gross domestic product.Climate Change Mitigation and Green House Gases,Science of Climate Change,Global Environment Facility,Climate Change Economics,Climate Change Impacts

Hydroclimatic risk to economic growth in Sub-Saharan Africa

In order to plan strategies for adaptation to climate change, the current effects of climate on economic growth needs to be understood. This study reviews evidence of climate effects on economic growth and presents original analysis of the effect in Sub-Saharan Africa (SSA). Case studies from the literature demonstrate that historically, climate has had significant and negative effects on household income, agricultural productivity and economic growth in SSA. This study focuses on the effects hydroclimatic variability on economic growth in the countries of SSA. We utilize a new national level precipitation statistic that incorporates spatial and temporal variability within each country. Country level economic growth statistics are analyzed with cross-country and panel regressions. Persistent negative precipitation anomalies (drought) are found to be the most significant climate influence on economic growth. This result is consistent across all model specifications and across several measures of welfare and economic activity. Temperature and precipitation variability show significant effects in some cases. Results imply the consideration of hydroclimatic risks, namely drought, may be the priority concern for adaptation to a changing climate for Sub-Saharan Africa. This conclusion is contrary to the focus of many climate change impact assessments that focus on temperature increases as the primary concern

Exploring the effect of hydroclimate variability on economic growth in Sub-Saharan Africa: A water security index

Recent econometric studies provide evidence that climate variability in general, and rainfall variability in particular, has a negative effect on economic growth in the countries of Sub-Saharan Africa. In this study, we explore the factors that may explain why some countries are more resilient to climate variability than others. We use a range of data that is representative of the possible sources of resilience that are commonly hypothesized in the literature, including the state of water resources and water use, the inventory of infrastructure and the quality of institutions. Two analyses are undertaken. In the first, cross country regressions are used to explore aggregate associations of climate and resilience variables with economic growth. In the second, panel regressions for individual countries are performed with drought and flood indices. The results of these regressions are used to specify a water security index. The water security index is then analyzed through the prism of the resilience variables to draw inferences in regard to the sources of resilience that contribute to more water security. The results of these analyses are informative. Cross country regressions confirm the negative association between rainfall variability and economic growth within Sub-Saharan Africa. They also revealed strong associations between Foreign Direct Investment (FDI) and infrastructure inventory and economic growth. An index that accounts for climate variability and water storage (Seasonal Storage Index) is also strongly associated with both FDI and economic growth. The analysis of the Water Security Index revealed that more internal renewable water resources and irrigated agriculture as a percent of agricultural area were associated with more resilience to hydroclimate variability. Water storage was not a strong indicator of resilience, although when controlling for hydrologic variability with the SSI, it does become more important. There were no strong associations with institutions and weak positive associations with road density and phones