Temperature shocks, growth and poverty thresholds: evidence from rural Tanzania

Marco Letta, Pierluigi Montalbano and Richard Tol

Working Paper Series from Department of Economics, University of Sussex Business School

Abstract: Using the LSMS-ISA Tanzania National Panel Survey by the World Bank, we study the relationship between rural household consumption growth and temperature shocks over the period 2008 – 2013. Temperature shocks have a negative and significant impact on household growth only if their initial consumption lies below a critical threshold. As such, temperature shocks slow income convergence among households. Agricultural yields and labour productivity are the main transmission channels. These findings support the Schelling Conjecture: economic development would allow poor farming households to cope with climate change, and closing the yield gap and modernizing agriculture is crucial for adaptation to the negative impacts of global warming.

Keywords: weather shocks; climate change; household consumption growth; rural development (search for similar items in EconPapers)
JEL-codes: I32 O12 Q12 Q54 (search for similar items in EconPapers)
Date: 2017-11
New Economics Papers: this item is included in nep-agr, nep-dev and nep-env
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Working Paper: Temperature shocks, growth and poverty thresholds: evidence from rural Tanzania (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:sus:susewp:2117

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