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 station...
| Main Authors: | , , , |
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| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100719133806 http://hdl.handle.net/10986/3841 |
| Summary: | 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. |
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