Does Rainfall Matter for Economic Growth ? Evidence from Global Sub-National Data (1990-2014

Richard Damania, Sébastien Desbureaux and Esha Zaveri

No 8888, Policy Research Working Paper Series from The World Bank

Abstract: Much micro-econometric evidence suggests that precipitation has wide ranging impacts on vital economic indicators such as agricultural yields, human capital, and even conflict. And yet paradoxically most macro-econometric evidence (especially in the climate economy literature) finds that precipitation has no robust and significant impact on various measures of aggregate economic output. This paper argues that spatial aggregation of weather at the country level explains this result. The paper uses annual subnational gross domestic product data to show a concave relationship between precipitation and local gross domestic product growth between 1990 and 2014. It then demonstrates that when the data are aggregated at larger spatial scales, the impact decreases and eventually vanishes. The impact of precipitation on aggregate economic activity is predominantly felt in developing countries; it is insignificant in developed countries. Agriculture is found to be the dominant pathway. The results have significant consequences for measuring the economic impacts of climate change.

Date: 2019-06-17
New Economics Papers: this item is included in nep-agr, nep-env and nep-gro
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Journal Article: Does rainfall matter for economic growth? Evidence from global sub-national data (1990–2014) (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:8888

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