[MCN] Can/will climate put the brakes on economic growth?

Lance Olsen lance at wildrockies.org
Sun Aug 6 17:01:48 EDT 2017

The Economist Jan 18th 2014 

Finance and economics

Economists are getting to grips with the impact of climate change

http://www.economist.com/news/finance-and-economics/21594252-economists-are-getting-grips-impact-climate-change-weather <http://www.economist.com/news/finance-and-economics/21594252-economists-are-getting-grips-impact-climate-change-weather>
Excerpts:[bold added]

The link between more heat and more poverty is robust. Tropical countries are poorer. In a review of the literature, Melissa Dell of Harvard University, Benjamin Jones of Northwestern University and Benjamin Olken of the Massachusetts Institute of Technology find that, for each 1°C rise in the average temperature of a country, its GDP per head is 8.5% lower. Another study of poor countries alone showed that being 1°C warmer in any given year reduces income per head by 1.4%. These findings would not have surprised Montesquieu, who in 1748 argued that hot climates were inimical to the material conditions of the good life.

However, a correlation also exists between heat and growth, suggesting a longer-run effect. Despite some successes, tropical countries grew by 0.9 percentage points a year more slowly than the global average in 1965-90. In a sample of 28 Caribbean countries national output fell by 2.5% for each 1°C of warming. Again, this does not prove that high temperatures were to blame. But the correlation is strong enough to make it worth investigating whether the weather itself might be dragging down countries' growth rates directly. The new literature suggests several ways in which it might do that.

First, natural disasters still wreak a lot of damage. …. So if global warming were associated with more extreme weather, it would lower growth.

Next, higher temperatures and worse droughts tend to reduce farm yields. This hurts poor and middle-income countries most because agriculture has a bigger share in their GDP. … There seems to be a threshold of 29°-32°C below which rising temperatures can be beneficial; above it they are sharply harmful. With some crops, rising night-time temperatures do more damage than rising noontime ones.

It is often assumed that the economic effects of climate change will be confined mainly to poor countries. That may be wrong. A study of time-use surveys and temperatures in the United States found that when temperatures reach 100°F (38°C), the labour supply in farming, forestry, construction and utilities falls by an hour a day, compared with what happens at 76-80°F. These are outdoor activities, which may explain why workers fail to show up. But a study of call centres also showed that each 1°C rise between 22°C and 29°C cut labour productivity by 1.8%. And in car factories in America, a week of outside temperatures above 90°F reduced output by 8%. Perhaps the heat disrupts the supply chain-or perhaps air conditioners fail to work properly.

Lastly, the weather influences basic conditions of life and hence factors of production. …. Heatwaves cause early deaths (especially of mothers and infants) and, by affecting the harvest, damage nutrition. This in turn has long-lasting effects on the economy.

... the new literature is a start. …. And --who knows-- it may one day show how public policy, now so ineffective, might stem the emissions that are causing the mess in the first place.

"What do we learn from the weather?", by Melissa Dell, Benjamin Jones and Benjamin Olken. Journal of Economic Literature, forthcoming.
"Informing climate adaptation", by Carolyn Kousky. Energy Economics   
"Quantifying the influence of climate on human conflict", by Solomon Hsiang, Marshall Burke and Edward Miguel
"Envirodevonomics" by Michael Greenstone and Kelsey Jack. MIT Working Paper series    

"We live in a moment of history where change is so speeded up that 
we begin to see the present only when it is already disappearing."

"We are not able even to  think  adequately about the behavior that 
is at the annihilating edge."

R. D. Laing. Introduction, The Politics of Experience. 
1967, New York. Pantheon Books, a division of Random House
“Consumer expectations of ever-higher living standards were fuelled by more lenient and readily available bank lending, …. Social status 
and identity became closely associated with consumption, in particular with the concept of luxury. 

"Identifying oneself with the good life meant being able to live beyond traditional understandings of basic needs. Debt was the price 
one paid for the joys of being part of a hedonistic consumer culture.”

Kenneth Dyson. The Morality of Debt. Foreign Affairs. May 3, 2015

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