Does rainfall matter for economic growth? Evidence from global sub-national data (1990–2014)

R. Damania, Sébastien Desbureaux and Esha Zaveri

Journal of Environmental Economics and Management, 2020, vol. 102, issue C

Abstract: This paper addresses a seldom recognized empirical puzzle. 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 economics literature) finds that precipitation has no robust and significant impact on various measures of aggregate economic output. Here, we argue that spatial aggregation of weather at the country level explains this result. We use annual sub-national GDP data to show a concave relationship between precipitation and local GDP growth between 1990 and 2014. We demonstrate that when data are aggregated at larger spatial scales, the significance of the impact decreases and eventually it vanishes. The impact of precipitation on aggregate economic activity is predominantly felt in developing countries and is insignificant in developed countries. Agriculture is found to be a key pathway. Our results have substantial consequences for measuring the economic impact of climate change.

Keywords: Economic growth; Rainfall (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (30)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0095069620300589
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:102:y:2020:i:c:s0095069620300589

DOI: 10.1016/j.jeem.2020.102335

Access Statistics for this article

Journal of Environmental Economics and Management is currently edited by M.A. Cole, A. Lange, D.J. Phaneuf, D. Popp, M.J. Roberts, M.D. Smith, C. Timmins, Q. Weninger and A.J. Yates

More articles in Journal of Environmental Economics and Management from Elsevier
Bibliographic data for series maintained by Catherine Liu ().