An Analysis of Climate Change and Its Effect on Economic Growth in Kenya

Erastus Kaiba Njoroge ()

American Journal of Economics, 2025, vol. 9, issue 1, 88-104

Abstract: Purpose: This study investigates the effect of climate change on economic growth in Kenya using multivariate time-series data spanning the period 2004 to 2023. Materials and Methods: Adopting a quantitative, non-experimental research design, the analysis employed a multivariate time-series regression model to estimate the impact of temperature variability on real GDP. Findings: The results reveal a statistically significant, negative relationship between climate change and economic growth (β = –0.634, p = 0.047), signifying that a unit increase in mean annual temperature results in a 0.634-unit decline in GDP. The model explains 40.2% of the variation in GDP. These results affirm that rising temperatures, intensified by recurrent droughts and floods, are constraining Kenya’s economic performance, particularly through adverse effects on agriculture, water resources, infrastructure, and tourism. Unique Contribution to Theory, Practice and Policy: Accordingly, it recommends the institutionalization of climate-resilient policies through adaptive infrastructure planning, disaster early warning systems, and climate-smart agriculture. Further, the Ministry of Environment, Climate Change and Forestry should strengthen public-private partnerships and resource mobilization frameworks to finance mitigation and adaptation efforts. Integrating climate risk into national economic planning and investment strategies is essential to safeguarding GDP growth and ensuring sustainable development.

Keywords: Climate Change; Climate Policy; Economic Growth; Temperature anomaly; Gross Domestic Product; Climate Variability; Sustainable development; climate-smart Agriculture; Economic Vulnerability (search for similar items in EconPapers)
Date: 2025
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