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The poverty impact of climate change in Mexico

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  • de la Fuente, Alejandro
  • Villarroel, Marcelo Olivera
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    Abstract

    This paper examines the effects of climate change on poverty through the relationship between indicators of climate change (temperature and rainfall change) and municipal level gross domestic product, and subsequently between gross domestic product and poverty. The evidence suggests that climate change could have a negative impact on poverty by 2030. The paper proposes a two-stage least squares regression where it first regresses temperature and rainfall (along with geographic controls and state and year fixed effects) on municipal gross domestic product per capita for 2000 and 2005 The resulting gross domestic product per capita is used in a second equation to estimate municipal poverty on the same years. The authors then incorporate projections of temperature and rainfall changes by 2030 into the estimated climate-gross domestic product coefficients to assess the effects of climate change in economic activity and how this in turn will influence poverty. At the same time, they account for the potential adaptive capacity of municipalities through higher population densities and economic growth. Both would reduce poverty by 31.72 percentage points between 2005 and 2030 with changing climate. However, poverty could have been reduced up to 34.15 percentage points over the same period had there been no climate change. This suggests that climate change slows down the pace of poverty reduction. An alternative reading is that poverty is expected to increase from 15.25 percent (without climate change) to 17.68 percent (with climate change) by 2030. Given the existing population projections for 2030, this represents 2,902,868 people remaining in poverty as a result of climate change.

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    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 6461.

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    Date of creation: 01 May 2013
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    Handle: RePEc:wbk:wbrwps:6461

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    Related research

    Keywords: Science of Climate Change; Climate Change Mitigation and Green House Gases; Climate Change Economics; Regional Economic Development; Rural Poverty Reduction;

    This paper has been announced in the following NEP Reports:

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    1. Emmanuel Skoufias & Mariano Rabassa & Sergio Olivieri & Milan Brahmbhatt, 2011. "The Poverty Impacts of Climate Change," World Bank Other Operational Studies 10102, The World Bank.
    2. Stefan Dercon & Luc Christiaensen, 2008. "Consumption risk, technology adoption and poverty traps: evidence from Ethiopia," WEF Working Papers, ESRC World Economy and Finance Research Programme, Birkbeck, University of London 0035, ESRC World Economy and Finance Research Programme, Birkbeck, University of London.
    3. Ahmed, Syud Amer & Diffenbaugh, Noah S. & Hertel, Thomas W. & Ramankutty, Navin & Rios, Ana R. & Rowhani, Pedram, 2009. "Climate Volatility and Poverty Vulnerability in Tanzania," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin, Agricultural and Applied Economics Association 49358, Agricultural and Applied Economics Association.
    4. Loayza, Norman V. & OlaberrĂ­a, Eduardo & Rigolini, Jamele & Christiaensen, Luc, 2012. "Natural Disasters and Growth: Going Beyond the Averages," World Development, Elsevier, Elsevier, vol. 40(7), pages 1317-1336.
    5. Mark Skidmore & Hideki Toya, 2002. "Do Natural Disasters Promote Long-Run Growth?," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 40(4), pages 664-687, October.
    6. Lykke E. Andersen & Dorte Verner, 2010. "Social Impacts of Climate Change in Mexico: A municipality level analysis of the effects of recent and future climate change on human development and inequality," Development Research Working Paper Series, Institute for Advanced Development Studies 09/2010, Institute for Advanced Development Studies.
    7. Tara Bedi & Aline Coudouel & Kenneth Simler, 2007. "More Than a Pretty Picture : Using Poverty Maps to Design Better Policies and Interventions," World Bank Publications, The World Bank, number 6800, August.
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