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Climate Change in Developing Countries: Global Warming Effects,Transmission Channels and Adaptation Policies

Olivier de Bandt (), Luc Jacolin and Thibault Lemaire ()

Working papers from Banque de France

Abstract: Using panel data covering 126 low- and middle-income countries over 1960-2017, we find that sustained positive temperature deviations from their historical norms have a non-linear negative effect on economic growth and growth per capita. A sustained 1°C temperature increase lowers real GDP per capita annual growth by 0.74–1.52 percentage points, irrespective of levels of development. We also find that temperature rise affects the households’ intertemporal trade-off between consumption and investment, since the share of private consumption in total value-added increases while the share of investment declines. A sectoral decomposition shows that the share of industrial value-added also declines. While the share of agricultural value-added increases, agricultural output and productivity declines. Taken together, our results suggest that global warming will reinforce development traps, hindering further adaptation to climate change, particularly in the countries with the lowest levels of income given their lower resilience and higher socioeconomic vulnerability.

Keywords: Climate Change; Economic Growth; Adaptation; Developing Countries (search for similar items in EconPapers)
JEL-codes: C33 E20 O11 O13 Q54 (search for similar items in EconPapers)
Pages: 68 pages
Date: 2021
New Economics Papers: this item is included in nep-agr, nep-dev, nep-env, nep-isf and nep-mac
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Working Paper: Climate Change in Developing Countries: Global Warming Effects, Transmission Channels and Adaptation Policies (2021) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:822

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