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The impact of climate change on economic output across industries in Chile

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  • Hernández, Karla
  • Madeira, Carlos

Abstract

Using region-industry panel data for Chile over the period 1985 to 2017, we find no effect of precipitation changes on GDP and a negative impact of higher summer temperatures on Agriculture-Silviculture and Fishing. An increase of one Celsius degree in the month of January implies a 3% and 12% GDP reduction in Agriculture and Fishing, respectively. There is also a negative effect of higher temperatures in January on Construction and Electricity, Gas, and Water. Our analysis suggests that climate change did not have a big impact on the Chilean economy during this period. Stress test exercises that select only the negative and statistically significant coefficients imply that the Chilean GDP would fall between -14.8% and -9% in 2050 and between -29.6% and -16.8% in 2100, according to our model.

Suggested Citation

  • Hernández, Karla & Madeira, Carlos, 2021. "The impact of climate change on economic output across industries in Chile," MPRA Paper 118973, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:118973
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    References listed on IDEAS

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    1. Riccardo Colacito & Bridget Hoffmann & Toan Phan, 2019. "Temperature and Growth: A Panel Analysis of the United States," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 51(2-3), pages 313-368, March.
    2. Kahn, Matthew E. & Mohaddes, Kamiar & Ng, Ryan N.C. & Pesaran, M. Hashem & Raissi, Mehdi & Yang, Jui-Chung, 2021. "Long-term macroeconomic effects of climate change: A cross-country analysis," Energy Economics, Elsevier, vol. 104(C).
    3. Erick C.M. Fernandes & Ayat Soliman & Roberto Confalonieri & Marcello Donatelli & Francesco Tubiello, 2012. "Climate Change and Agriculture in Latin America, 2020-2050 : Projected Impacts and Response to Adaptation Strategies," World Bank Publications - Reports 12582, The World Bank Group.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    climate change; economic damages from climate change; economic growth; global warming; Chile; Latin America;
    All these keywords.

    JEL classification:

    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q59 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Other
    • 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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