CAMBRIDGE, Mass. — Even temporary rises in local temperatures significantly damage long-term economic growth in the world’s developing nations, according to a new study co-authored by an MIT economist.
Looking at weather data over the last half-century, the study finds that every 1-degree-Celsius increase in a poor country, over the course of a given year, reduces its economic growth by about 1.3 percentage points. However, this only applies to the world’s developing nations; wealthier countries do not appear to be affected by the variations in temperature.
“Higher temperatures lead to substantially lower economic growth in poor countries,” says Ben Olken, a professor of economics at MIT, who helped conduct the research. And while it’s relatively straightforward to see how droughts and hot weather might hurt agriculture, the study indicates that hot spells have much wider economic effects.
“What we’re suggesting is that it’s much broader than [agriculture],” Olken adds. “It affects investment, political stability and industrial output.”
Varied effects on economies
The paper, “Temperature Shocks and Economic Growth: Evidence from the Last Half Century,” was published this summer in the American Economic Journal: Macroeconomics. Along with Olken, the authors are Melissa Dell PhD ’12, of Harvard University, who was a PhD candidate in MIT’s Department of Economics when the paper was produced, and Ben Jones PhD ’03, an economist at Northwestern University.
The study first gained public attention as a working paper in 2008. It collects temperature and economic-output data for each country in the world, in every year from 1950 through 2003, and analyzes the relationship between them. “We couldn’t believe no one had done it before, but we weren’t really sure we’d find anything at all,” Olken says.
By looking at economic data by type of activity, not just aggregate output, the researchers concluded there are a variety of “channels” through which weather shocks hurt economic production — by slowing down workers, commerce, and perhaps even capital investment.
“If you think about people working in factories on a 105-degree day with no air conditioning, you can see how it makes a difference,” Olken says.
One consequence of this, borne out in the data, is that the higher temperatures in a given year affect not only a country’s economic activity at the time, but its growth prospects far into the future; by the numbers, growth lagged following hot years.
To see why, Olken suggests, first think of a dry year for vegetables in your backyard garden: The bad weather would hurt the plants, but if the weather is reasonable the following year, the backyard crop would return to its normal level. Now contrast that with problems that affect, say, industrial and technological development, and capital investment; temperature shocks limiting those activities can compound over time.
“If you think about economic growth, you build on where you were last year,” Olken explains. For longer-term industrial or technological projects, he adds, “If it’s that kind of activity that’s lost, then it affects the country’s long-run growth rate, [and it’s] not a one-off hit.”
Political change in the weather
Olken, Dell and Jones also integrated data about forms of government into the study, and found that temperature shocks are associated with an increase in political instability. A 1-degree-Celsius rise in a given year, they found, raises the probability of “irregular leader transitions,” such as coups, by 3.1 percentage points in poor countries. In turn, the authors write, “poor economic performance and political instability are likely mutually reinforcing.”
Olivier Deschenes, an economist at the University of California at Santa Barbara, calls the study “an important finding because most of the prior research on the economic impacts of climate change have focused on a few sectors of the economy, predominantly the agricultural sector.” By contrast, he notes, the broader finding of the current paper matters “because the growth rate is a key measure of the economic success of a nation and the standard of living of its population.”
Deschenes, who also conducts research on the economic and health effects of temperature changes, suggests that the “next step” for scholars “is to identify adaptation strategies that can moderate the negative impacts of global climate change in the coming decades.”
As Olken observes, the study does not try to account for all the possible problems that could be generated by long-term climate change, such as rising oceans, floods or increased storms. Still, he adds, the paper does suggest some general points about the economic impact of a warming atmosphere. It is vital, he says, to “think about the heterogeneity of the impact between the poor and rich countries” when leaders and policymakers map out the problems the world may confront in the future.
“The impacts of these things are going to be worse for the countries that have the least ability to adapt to it,” he adds. “[We] want to think that through for the implications for future inequality. It’s a double whammy.”
Written by: Peter Dizikes, MIT News Office
Discover more from Watts Up With That?
Subscribe to get the latest posts sent to your email.
Leonard
You will remember that a couple years ago I wrote an article on the history of co2 carried at the air vent. In it I quoted you extensively.
Having examined Tens of thousands of contemporary observations and hundreds of climate papers I am coming to the conclusion that as temperatures have been higher in the past and lower in the past, all at a supposed 280ppm, we have perhaps reached the limited of the logarithmic curve and sensitivity and adding more co2 will make little difference to temperatures. What do you think?
Tonyb
David Schofield says:
August 7, 2012 at 8:51 am
“If you think about people working in factories on a 105-degree day with no air conditioning, you can see how it makes a difference,” Olken says.
As opposed to the dramatically increased output when it is only 104?
_________________________
Actually having worked in the south in the chemical industry I found it was the COLD temperatures that were the real problem. The “Plant” was a roof with no walls so heat build up was not a real problem but you darn well better wear those woolies in winter and have a space heater to warm your hands. And yes it got up into the hundreds on occasion. Heck I am further north now and we just had a few days of 102F. You get used to. Just make sure you wear a hat and drink a lot. BTDT and have the shirt
So What is behind this ‘Study’
Humans can deal with higher temperatures just fine it is cold that really KILLS as shown in the UK. …no change to the estimates of excess winter deaths (25,700 is the provisional figure for 2010-11, and most recent winters show comparable numbers… from Academics wrangle over fuel poverty and winter deaths
I guess a possibility of work slowing down from a slight increase in heat is considered much more of a problem than 25,700 extra deaths in the elderly…. But then the UK has no problem killing off its elderly population The Liverpool Care Pathway (LCP) Or the young and the disabled. More on the subjecthere
It goes along with the philosophy of one of the founders of the Fabian Society. George Bernard Shaw.
Older people are not workers or consumers of corporate goodies so are expendable to the corporations. They normally do not have large out standing loans so are expendable to banks. They consume tax money instead of providing tax money so are expendable to governments. They are normally too smart to be as easily conned so are expendable to the NGOs. In short they are considered ‘useless eaters’ by just about all blocks of power.
From reading the PR and abstract I think there is a significant weather vs climate issue in how the results are being spun. The statistical results appear to be based on year-to-year changes in temperature (i.e. weather) and hence would pick up the effects of the occasional extreme heat wave or hot summer (which would show up in the statistics a small change in average annual temperature) on output, political unrest, etc. Such effects could occur with either rising or falling longer-term temperature trends (i.e. climate).
These temporary changes (effects of “even temporary rises in local temperatures” in the words of the PR) do no necessarily translate into climate change effects. In particular, the adaptation of people, agricultural practices, industry, etc. to an environment that is permanently one degree warmer every day to the year may be quite different than the temporary response to an extreme heat event. E.g. somebody may want to take time off on those days when temperatures of 10 degrees above baseline in the warm season, but not respond at all to a fractional degree change in the baseline. Agricultural trends and industry practice presumably also have much greater adaptability to longer-term trends. As for political volatility, I am guessing that it’s the unusual weather (e.g. the occasional “long hot summer”) that’s the trigger rather than a small change in temperature throughout the year.
The cost
‘The average household electricity bill would increase from £528 per year at 2010 prices to a range from £730 to £840 in 2020.’
http://www.dailymail.co.uk/news/article-2184802/Energy-bills-soar-300-year-obsession-wind-power-report-claims.html
Today prices £840 is $1314
I was in Lagos, Nigeria in the mid 60s and the temp was always around 30C (86F). Here are the monthly averages since 1866 and even the variation month to month is only a couple of degrees.
http://www.worldclimate.com/cgi-bin/data.pl?ref=N06E003+1200+0027105G2
Also in Sokoto in NW Nigeria, some 400 mi north of Lagos. Hotter and dryer
http://www.worldclimateguide.co.uk/climateguides/nigeria/sokoto.php
These temperatures haven’t changed materially in 50 years. They had several military coups, political assassinations and a civil war during my time there. It had nothing to do with the weather.
I suspect if the good doctor had plotted the same data by latitude it would have obtained a better fit. One of the factors touched upon frequently in comments is that good cheap electricity. Would fix the problem. That and getting rid of the socialist NGO aid people who interfere in every effort at foreign development investment. These groups and the UN are really on safari and don’t want Africans to industrialize.
Don’t the poorest countries have the least accurate and least complete temperature records? How can such profound conclusions be reached from such weak data?
IPCC scenarios for high warming require high economic growth in the developing world. Thus WG2 is making a mistake in saying that high warming would cause devastating impacts in the developing world, because it has not accounted for the economic growth there.
Backasswards. Warmer means longer growing seasons, more rainfall (not less!), more agricultural productivity, and as a consequence more wealth creation.
What happens to that increased wealth is another thing. Evidently the faculty at MIT prefers Third Worlders to work in windowless factories producing cheap goods for their (the MIT faculty’s) enjoyment. It’s the “small brown children” slave labor lobby. MIT has a few engineers that study ways to improve the human condition, but the vast majority of the faculty are opposed to such and prefer to crack whips on their fellow man.
That means when temperatures have risen 80°C they will be broke!
Cheap energy will do more for productivity. Cheap energy provides the A/C for better adaptation to the heat. With more productivity, then the rise of the middle class. Witht the rise of the middle class, then better and more stable political governments.
Many lesser developed countries don’t have much of a stable middle class. The despots don’t want a better educated, middle class. They would lose their “office”.
For a dose of reality on the far greater harm caused by cold weather see:
Neumann, J., S. Lindgrén, 1979: Great Historical Events That Were Significantly Affected by the Weather: 4, The Great Famines in Finland and Estonia, 1695–97. Bull. Amer. Meteor. Soc., 60, 775–787. doi: http://dx.doi.org/10.1175/1520-0477(1979)0602.0.CO;2
See also NIPCC links to Health effects of Temperature – (Hot vs Cold weather).
e.g., Buntgen, U., Tegel, W., Nicolussi, K., McCormick, M., Frank, D., Trouet, V., Kaplan, J.O., Herzig, F., Heussner, K.-U., Wanner, H., Luterbacher, J. and Esper, J. 2011. 2500 years of European climate variability and human susceptibility. Science 331: 578-582.
A staff writer for a news agency of an academic institution? Plenty of room for mischief even before combining the opinion-based soft sciences of economics and climate. Way to go, person who gets paid to string together arguments in a way that makes things look important.and clear that aren’t!
Using economists to control the global thermostat to the perceived benefit of an unreal but usefully emblematic person will produce important results – just not on the global thermostat. And importance is not synomomous with good.
Conflating heat with drought again. Dryer air results in higher local temps. The Sonoran desert was dry and hot during the LIA.
This is one of the most absurd peer-reviewed pieces of nonsense I’ve ever come across. The idea that a single variable can be responsible for what the authors claim is pereposterous.
“Peers” reviewed means reviewed by the “birds of the same feather”.
Warmists review warmists, alarmists review alarmists and modelers review
modelers and all clap each others back….
Mr Olken’s central argument is in the comfortably-long tradition of begging the question. The real issue is not whether mankind has anything at all to do with the world’s temperatures or weather extremes, which are naturally in continuous flux, but, what how can we adapt and provide for those ongoing changes?
Olken asks,
A moment’s reflection about the scurvy logic – that we somehow are causing the conditions that led to the worker’s discomfort – reveal why the nation’s top technical universities are still churning out papers and students inured in AGW-speak.
Even in the midst of the recent, massive power outage in India, with some 650 million people affected, there were minimal reports of heat-related fatalities (some 35 died in a railroad fire, and perhaps other statistics are forthcoming). The reason for the outage, which has a plausible sollution, should interest Mr. Olken more than another analysis of heat / financial loss:
What role do weak, corrupt central governments and environmentalist movements have in hampering the provision of cheap, efficient energy to the people who need it the most?
Indur Goklany, whose excellent articles have been published here for years, has been all over the actuarial statistics regarding hot and cold, and his key finding, over and over, has been this: in a world of (expected and naturally-occuring) weather extremes, greater wealth and less mortality result from heat than from cold.
“Is a Richer-but-warmer World Better than Poorer-but-cooler Worlds?” Energy & Environment, vol. 18, nos. 7 and 8, pp. 1023-1048 (2007).
Wealth and Safety: The Amazing Decline in Deaths from Extreme Weather in an Era of Global Warming, 1900–2010, Reason Foundation, Policy Study No. 393, September 2011.
http://goklany.org/publications.html
Someone really gets his PhD with this nonsense?
The study provides legitimation for NOT INVESTING in poor countries,
because “future climate conditions will obstruct working and living conditions
in Africa in warmer decades to come…” another anti-African/anti-development
piece of the arrogant cold Northerners……
“Hot & bothered” finally explained by academics is useful for making sense out of how Idi Amin got rousted from Uganda in 1979. Everyone thought it was due to timely brotherly help from Tanzanian forces further south.
Thanks to academia we now know those Tanzanians just wanted a spell of respite from the heat that rising man made global warming was causing them to get all “hot & bothered” about. Don’t believe me – then look at the BEST study’s charts to see how April 11, 1979 matches up with a rise in CO2 as proof !
The Miami Heat won the NBA Championship this year. The signs are everywhere!!!!
Yet the Medieval Warming Period, a time in which essentially every place could be classified as a “developing nation” was a period of almost unprecedented growth and economic improvement.
Sorry but I’m not buying this study. There may be a correlation but there is no hint of causation. I consider it significantly more likely that the political instability and other economic outcomes are related to factors other than climate that have all be changing in the half-century since WWII.
Herders in Mongolia might be very interested in this theory given their livestock losses due unusually cold winter temperatures in recent years – worst since the 1940s. NOT
The economic cost of climate alarmism was about $99 Billion in 2009 [lots more $$$ since]. And they have nothing worthwhile to show for it. Nothing.
On top of that, there is the eco-despoiling of our countryside with 400 foot tall windmills, and converting half our corn crop to fuel at decreased efficiency, and skyrocketing utility bills. Thanks a lot, ‘environmentslists’.
Bring on the warm weather! Bring on more CO2! Because it’s all good.
I guess this explains why the Sunbelt has done so poorly economically compared to the Rustbelt over the last few decades.
Temperature affects 3rd world economies more than 1st world.
Shouldn’t the conclusion be to grow 3rd world economies into 1st world ones so that they are not affected?
And hasn’t cheap energy been shown to be the fastest route from 3rd world to 1st world?
War, Pestilence, Tribalism, Ignorance, over population, Religion and Politics all trumped by a small increase in temperature. Perhpas we should be rewriting history. Had only Gibbon been aware that the Decline of Rome was actually due to Global Warming, we could have spent more time on much more worthwhile pursuits such as sociology or gender studies.