As planet warms, poor nations face economic chill

March 13, 2009 by Stephanie Schorow

( -- A rising tide is said to lift all boats. Rising global temperatures, however, may lead to increased disparities between rich and poor countries, according to a recent MIT economic analysis of the impact of climate change on growth.

After examining worldwide climate and economic data from 1950 to 2003, Benjamin A. Olken, associate professor in the Department of Economics, concludes that a 1 degree Celsius rise in temperature in a given year reduces by an average of 1.1 percentage points in the world's but has no measurable effect in rich countries.

Olken says his research suggests higher temperatures will be disproportionately bad for the economic growth of poor countries compared to rich countries.

The precise reasons why higher temperatures lower economic output are likely to be complex, but Olken's results suggest the importance of temperature's impact on agricultural output. His data also provide evidence for a relationship between temperature and industrial output, investment, research productivity and political stability.

"The potential impacts of an increase in temperature on poor countries are much larger than existing estimates have suggested," Olken says. "Although historical estimates don't necessarily predict the future, our results suggest that one should be particularly attentive to the potential impact of climate change on poorer countries."

Olken's analysis is contained in "Climate Shocks and Economic Growth: Evidence from the Last Half Century," a paper co-authored by MIT economics graduate student Melissa Dell and Benjamin F. Jones, associate management professor at Northwestern University. The paper is currently under review for publication. Olken, who has been researching issues of growth and temperature for about two years, presented some of the findings at a recent conference of the American Economic Association.

Growing hot-cold divide

It has long been observed that hotter countries, such as those in sub-Saharan Africa and parts of Latin America, tend to be poorer than cooler countries in North America and Europe; the main exceptions are hot, rich Middle East countries with oil reserves and cold, poor Communist or former Communist states like North Korea and Mongolia. What contemporary scholars have debated, however, is whether climate has a significant effect on a country's economy today or whether it is institutions and policies that now solely drive prosperity.

To conduct their research, Olken and his co-authors used existing data sets of economic growth and productivity -- everything from gross domestic product to the rate of publication of scientific papers -- and combined them with country-by-country temperature and precipitation data from 1950 to 2003.

Olken and his co-authors conclude that rising temperatures do substantially reduce economic output and growth rates in both agricultural and industrial sectors, but only in countries that are already poor. Higher temperatures also reduce investment and innovation but, again, only in poor nations.

Rising temperatures may also have political consequences, the authors found. A one-degree rise in temperature in poor countries raises the likelihood of a so-called irregular leader transition (i.e., a coup) by 3.9 percentage points.

Olken acknowledges that the long-term impact of temperature change might be different from the short-term effect since countries may adapt to a particular climate over time. But his research found no such adaptation over a 10-year time horizon.

Should the future effects mirror recent history, world policy makers should be prepared for a widening gap between rich and poor countries as the globe continues to warm, he says.

Provided by Massachusetts Institute of Technology (news : web)

Explore further: Study: Healthy living boosts economy

Related Stories

Recommended for you

The dark side of Nobel prizewinning research

October 4, 2015

Think of the Nobel prizes and you think of groundbreaking research bettering mankind, but the awards have also honoured some quite unhumanitarian inventions such as chemical weapons, DDT and lobotomies.

How much for that Nobel prize in the window?

October 3, 2015

No need to make peace in the Middle East, resolve one of science's great mysteries or pen a masterpiece: the easiest way to get yourself a Nobel prize may be to buy one.

Search for Egypt's Nefertiti gains new momentum (Update)

September 29, 2015

The search for ancient Egypt's Queen Nefertiti in an alleged hidden chamber in King Tut's tomb gained new momentum as Egypt's Antiquities Minister said Tuesday he is now more convinced a queen's tomb may lay hidden behind ...


Adjust slider to filter visible comments by rank

Display comments: newest first

3.8 / 5 (4) Mar 13, 2009
"Poor" nations are doing just fine because the world isn't even warming!
4 / 5 (4) Mar 13, 2009
haha more crap. Global Warming is a natural process due to sunspots.... We should be more worried about Global Cooling. How does being a poor nation make a difference? haha
4 / 5 (4) Mar 13, 2009
The world didn't uniformly rise in temperature over the interval selected. The late 1960s thru the 1970s had the ice age panic.
5 / 5 (2) Mar 13, 2009
"Poor" nations are doing just fine because the world isn't even warming!

It's great that the AGW proponents are the ones who continue to use the term denialist, yet, they're the ones perpetrating the stereotype.

Comments 1 and 3:
4 / 5 (4) Mar 13, 2009
This myopic study apparently hasn't looked at all the data available instead Olkin may have cherry-picked to get the results he wanted.

Check out the mind blowing application GapMinder at$inds= and change the "Y" axis to just about any of the UN data entered. (search for gapminder videos too and Notice how some poor countries do indeed fail to do well over time but most of the failures can be attributed to internal politics or AIDS, not global warming. Also notice that by just about any measurement, poorer countries have gotten "richer" faster than "richer" countries. This is all UN hard data.

This study is more AGW propaganda, i.e. the end justifies the means dishonesty.
2.3 / 5 (3) Mar 15, 2009
GAPMINDER>ORG is fascinating. Thank you for the link. I will spend the next week going through all that material.

Who knew that Florida and Massachusetts have the highest rates of child abuse in the nation.
3 / 5 (2) Mar 17, 2009
This is garbage data. Any correlation between climate and GDP of a nation would merely be coincident with other economic processes, which have a far more immediate and demonstrable effect on national GDP. larger nations are more diversified, thus more distributed over economic trends than small nations, whose single sources of income may be limited to a few commodities. The past few years have been steady down years for many economies, how can anyone make the case for a relationship between fractional average tempurature variations and GDP?

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.