Rising temperatures could bring increase in economic inequality
Climate change would favour colder nations as productivity declines above 13 C, study says
In a sweeping new study published this month in Nature, a team of researchers says there is a strong relationship between a region’s average temperature and its economic productivity — adding another potential cost to a warming climate, though also signalling a surprising potential benefit for Canada.
Culling economic and temperature data from more than 100 wealthy and poorer countries alike over 50 years, they assert that the optimum temperature for human productivity seems to be around 13 Celsius, as an annual average for a particular place. Once things get hotter than that, the researchers add, economic productivity declines “strongly.”
“The relationship is globally generalizable, unchanged since 1960 and apparent for agricultural and non-agricultural activity in both rich and poor countries,” write the authors, led by Marshall Burke of Stanford’s department of Earth system science, who call their study “the first evidence that economic activity in all regions is coupled to the global climate.” Burke published the study with Solomon Hsiang and Edward Miguel, economists at the University of California, Berkeley.
If the findings are correct, they add, that means that unmitigated global warming could lead to a more than 20-per-cent decline in incomes around the world, compared with a world that does not experience climate change. And this would also mean growing global inequality because “hot, poor countries will probably suffer the largest reduction in growth.” Indeed, some already wealthier countries with cold weather, such as Canada or Sweden, will benefit greatly based on the study, moving closer to the climatic optimum.
“If you’re in a country where the average temperature is cooler than 13 C, a little bit of warming could actually be beneficial,” says Burke. “On the other hand, if you’re already at 13 C, a little extra warming is going to hurt you.”
Assuming this relationship between temperature and productivity is correct, that naturally leads to deep questions about its cause. The researchers locate them in two chief places: agriculture and people. In relation to rising temperature, Burke says, “We see that agricultural productivity declines, labour productivity declines, kids do worse on tests and we see more violence.”
Indeed, Burke and his two co-authors have previously published research suggesting a strong relationship between rising temperatures and violence, even as Hsiang has found a relationship between warmer temperatures and lower math- test scores. “We find that math performance declines linearly above 21 C, with the effect statistically significant beyond 26 C,” that previous paper reported.
There is also recent research suggesting global warming will reduce wheat yields, one of many major projected effects on agriculture. In other words, there is a body of existing research that’s consistent with the new, more sweeping conclusion of the Nature paper.
At the centre of the new paper is a historical, economic analysis that culls data from 166 countries over half a century, analyzing GDP per capita against temperature fluctuations that the countries experienced.
Importantly, the researchers did not compare countries with one another — an approach that would have been beset with many confounding factors. Rather, they compared each country “to itself in years when it is exposed to warmer- versus cooler-than-average temperatures due to naturally occurring stochastic atmospheric changes.
“An economy observed during a cool year is the ‘control’ for that same society observed during a warmer ‘treatment’ year,” the authors wrote.
The second half of the study then projected the toll of a steady warming trend based on these relationships. “In 2100, we estimate that unmitigated climate change will make 77 per cent of countries poorer in per-capita terms than they would be without climate change,” the paper says.
However, it is important to note that this is based on a scenario in which the world does nothing to curtail global warming — a scenario that is becoming increasingly difficult to believe.
Some countries fare considerably better in such a future because they are located in currently cold places — reinforcing the idea that northern countries will benefit from climate change. On top of easier shipping, resource exploitation and tourism, there could be a productivity boost due to more favourable temperatures.
Many tropical countries, in contrast, suffer economic damages in this scenario. “Warming may amplify global inequality because hot, poor countries will probably suffer the largest reduction in growth,” the study concludes.
One obvious question is whether air conditioning, which is expected to spread widely around the world in coming decades, can mitigate these effects. And the answer appears to be largely no.
“Air conditioning absolutely can help, but the data suggests that it does not fully insulate you from the effects of temperature,” says Burke.
More generally, the researchers say that “we do not find that technological advances or the accumulation of wealth and experience since 1960 has altered the relationship between productivity and temperature.”