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The non-linear effect of daily weather on economic performance: Evidence from China

Author

Listed:
  • Li, Chengzheng
  • Cong, Jiajia
  • Gu, Haiying
  • Zhang, Peng

Abstract

This paper thoroughly examines the impacts of daily weather on the aggregate economic outcomes in China and identifies the underlying channels. Using within-county variations in daily weather between 1996 and 2012, we find that daily temperature and precipitation have non-linear effects on county-level economic outcomes. An additional day with an average temperature above 20 °C reduces county-level GDP by 0.05% to 0.08%, and the detrimental effects tend to intensify when the temperature rises. The precipitation does not have robust effects on county-level GDP. By examining the effects of daily weather on primary, secondary, and tertiary industries, we find that the primary industry is the main channel of the negative impacts of high temperatures. Heavy precipitation is inclined to harm agricultural output, especially grains and oil crop yields. Besides, we discover heterogeneous responses to weather extremes across counties and find suggestive evidence of adaptation.

Suggested Citation

  • Li, Chengzheng & Cong, Jiajia & Gu, Haiying & Zhang, Peng, 2021. "The non-linear effect of daily weather on economic performance: Evidence from China," China Economic Review, Elsevier, vol. 69(C).
    • Handle: RePEc:eee:chieco:v:69:y:2021:i:c:s1043951x21000651
    DOI: 10.1016/j.chieco.2021.101647
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    References listed on IDEAS

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    More about this item

    Keywords

    Extreme weather events; Temperature; Precipitation; Economic performance; Adaptation;
    All these keywords.

    JEL classification:

    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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