Rising global temperatures spell chilling economics for world’s poor

March 17th, 2009 - 3:53 pm ICT by IANS  

Washington, March 17 (IANS) Rising global temperatures are likely to aggravate the rich poor-divide, according to a recent economic analysis at the MIT.
Benjamin A. Olken, MIT associate professor of economics, concluded on the basis of global data from 1950 to 2003 that a degree Celsius rise in a given year reduces economic growth by an average of 1.1 percentage points in the world’s poor countries but has no measurable effect in rich countries.

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

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

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 said.

“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 concludes 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, said an MIT release.

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.

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