IDEAS home Printed from https://ideas.repec.org/a/eee/ecolec/v70y2011i5p963-970.html
   My bibliography  Save this article

No matter how it is measured, income declines with global warming

Author

Listed:
  • Ng, Pin
  • Zhao, Xiaobing

Abstract

The contemporaneous relationship between temperature and income is important because it enables economists to estimate the economic impact of global warming without assuming a structural model. Until recently, empirical evidence generally suggests that there is a negative relationship between temperature and income, and, therefore, global warming has an adverse impact on economic activity. However, Nordhaus (2006) argues that the temperature-income relationship depends on how income is measured. We show in this paper that the results of Nordhaus (2006) may be due to an omitted-variable problem. Based on a well-motivated temperature-income model, we find that the relationship between temperature and income is not dependent on income measurement. Our regression results show that the adverse impact of an increase of 1 °C in temperature can be as much as a 3% decrease in total income for the G-7 nations. Therefore, our results suggest an aggressive climate mitigation policy.

Suggested Citation

  • Ng, Pin & Zhao, Xiaobing, 2011. "No matter how it is measured, income declines with global warming," Ecological Economics, Elsevier, vol. 70(5), pages 963-970, March.
    • Handle: RePEc:eee:ecolec:v:70:y:2011:i:5:p:963-970
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0921-8009(10)00508-2
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, June.
    2. Stern,Nicholas, 2007. "The Economics of Climate Change," Cambridge Books, Cambridge University Press, number 9780521700801.
    3. Richard Tol, 2002. "Estimates of the Damage Costs of Climate Change, Part II. Dynamic Estimates," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 21(2), pages 135-160, February.
    4. Easterly, William & Levine, Ross, 2003. "Tropics, germs, and crops: how endowments influence economic development," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 3-39, January.
    5. Ram, Rati, 1997. "Tropics and economic development: An empirical investigation," World Development, Elsevier, vol. 25(9), pages 1443-1452, September.
    6. Gallup, John L. & Sachs, Jeffrey D. & Mellinger, Andrew, "undated". "Geography and Economic Development," Instructional Stata datasets for econometrics geodata, Boston College Department of Economics.
    7. John Horowitz, 2009. "The Income–Temperature Relationship in a Cross-Section of Countries and its Implications for Predicting the Effects of Global Warming," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 44(4), pages 475-493, December.
    8. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2009. "Temperature and Income: Reconciling New Cross-Sectional and Panel Estimates," American Economic Review, American Economic Association, vol. 99(2), pages 198-204, May.
    9. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    10. John Luke Gallup & Jeffrey D. Sachs & Andrew D. Mellinger, 1998. "Geography and Economic Development," NBER Working Papers 6849, National Bureau of Economic Research, Inc.
    11. Richard Tol, 2002. "Estimates of the Damage Costs of Climate Change. Part 1: Benchmark Estimates," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 21(1), pages 47-73, January.
    12. Roger Koenker & Kevin F. Hallock, 2001. "Quantile Regression," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 143-156, Fall.
    13. John Luke Gallup & Jeffrey D. Sachs & Andrew D. Mellinger, 1998. "Geography and Economic Development," Harvard Institute of Economic Research Working Papers 1856, Harvard - Institute of Economic Research.
    14. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2008. "Climate Change and Economic Growth: Evidence from the Last Half Century," NBER Working Papers 14132, National Bureau of Economic Research, Inc.
    15. Jeffrey Sachs & Pia Malaney, 2002. "The economic and social burden of malaria," Nature, Nature, vol. 415(6872), pages 680-685, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Anderson, Blake & M'Gonigle, Michael, 2012. "Does ecological economics have a future?," Ecological Economics, Elsevier, vol. 84(C), pages 37-48.
    2. Howard, Peter H. & Sterner, Thomas, 2022. "Between Two Worlds: Methodological and Subjective Differences in Climate Impact Meta-Analyses," RFF Working Paper Series 22-10, Resources for the Future.
    3. Zhao, Xiaobing & Du, Ding & Xiong, Jun & Springer, Abraham & Masek Lopez, Sharon R. & Winkler, Blake & Hubler, Kenedy, 2019. "The impact of forest restoration on agriculture in the Verde River watershed, Arizona, USA," Forest Policy and Economics, Elsevier, vol. 109(C).
    4. Ding Du & Pin Ng, 2018. "The impact of climate change on tourism economies of Greece, Spain, and Turkey," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(2), pages 431-449, April.
    5. J. Javid, Roxana & Nejat, Ali & Hayhoe, Katharine, 2014. "Selection of CO2 mitigation strategies for road transportation in the United States using a multi-criteria approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 38(C), pages 960-972.
    6. Ling Tan & Kun Zhou & Hui Zheng & Lianshui Li, 2021. "Revalidation of temperature changes on economic impacts: a meta-analysis," Climatic Change, Springer, vol. 168(1), pages 1-19, September.
    7. Antoci, Angelo & Borghesi, Simone & Galeotti, Marcello & Russu, Paolo, 2022. "Maladaptation to environmental degradation and the interplay between negative and positive externalities," European Economic Review, Elsevier, vol. 143(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Richard S J Tol, 2018. "The Economic Impacts of Climate Change," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 12(1), pages 4-25.
    2. Bluedorn, John C. & Valentinyi, Akos & Vlassopoulos, Michael, 2009. "The Long-Lived Effects of Historic Climate on the Wealth of Nations," MPRA Paper 18701, University Library of Munich, Germany.
    3. David Castells-Quintana & Maria del Pilar Lopez-Uribe & Tom McDermott, 2015. "Climate change and the geographical and institutional drivers of economic development," GRI Working Papers 198, Grantham Research Institute on Climate Change and the Environment.
    4. Lopez-Uribe, Maria del Pilar & Castells-Quintana, David & McDermott, Thomas K. J., 2017. "Geography, institutions and development: a review ofthe long-run impacts of climate change," LSE Research Online Documents on Economics 65147, London School of Economics and Political Science, LSE Library.
    5. Raphael A. Auer, 2013. "Geography, institutions, and the making of comparative development," Journal of Economic Growth, Springer, vol. 18(2), pages 179-215, June.
    6. Jeffrey D. Sachs, 2003. "Institutions Don't Rule: Direct Effects of Geography on Per Capita Income," NBER Working Papers 9490, National Bureau of Economic Research, Inc.
    7. Alan Martina, 2007. "A Class of Poverty Traps: A Theory and Empirical Tests," ANU Working Papers in Economics and Econometrics 2007-482, Australian National University, College of Business and Economics, School of Economics.
    8. Ding Du & Pin Ng, 2018. "The impact of climate change on tourism economies of Greece, Spain, and Turkey," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(2), pages 431-449, April.
    9. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2014. "What Do We Learn from the Weather? The New Climate-Economy Literature," Journal of Economic Literature, American Economic Association, vol. 52(3), pages 740-798, September.
    10. Grimm, Michael & Klasen, Stephan, 2007. "Geography vs. Institutions at the Village Level," Proceedings of the German Development Economics Conference, Göttingen 2007 9, Verein für Socialpolitik, Research Committee Development Economics.
    11. Enrico Spolaore & Romain Wacziarg, 2009. "The Diffusion of Development," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(2), pages 469-529.
    12. José Antonio Alonso & Carlos Garcimartín, 2013. "The Determinants Of Institutional Quality. More On The Debate," Journal of International Development, John Wiley & Sons, Ltd., vol. 25(2), pages 206-226, March.
    13. Holger Strulik, 2008. "Social composition, social conflict and economic development," Economic Journal, Royal Economic Society, vol. 118(530), pages 1145-1170, July.
    14. Bernardo Blum, 2003. "The Course of Geography: A View about the Process of Wealth. Creation and Distribution," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 40(121), pages 423-433.
    15. José Antonio Alonso & Carlos Garcimartín & Luis Rivas, 2011. "Taxes, Foreign Aid and Quality of Governance Institutions," Chapters, in: Mehmet Ugur & David Sunderland (ed.), Does Economic Governance Matter?, chapter 7, Edward Elgar Publishing.
    16. José Antonio Alonso & Carlos Garcimartín, 2011. "Does Aid Hinder Tax Efforts? More Evidence," Discussion Papers 11/04, University of Nottingham, CREDIT.
    17. Mehmet Pinar, 2015. "Measuring world governance: revisiting the institutions hypothesis," Empirical Economics, Springer, vol. 48(2), pages 747-778, March.
    18. Rok Spruk & Mitja Kovac, 2019. "Transaction costs and economic growth under common legal system: State‐level evidence from Mexico," Economics and Politics, Wiley Blackwell, vol. 31(2), pages 240-292, July.
    19. Richard S. J. Tol, 2009. "The Economic Effects of Climate Change," Journal of Economic Perspectives, American Economic Association, vol. 23(2), pages 29-51, Spring.
    20. Alberto Alesina & Johann Harnoss & Hillel Rapoport, 2016. "Birthplace diversity and economic prosperity," Journal of Economic Growth, Springer, vol. 21(2), pages 101-138, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolec:v:70:y:2011:i:5:p:963-970. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolecon .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.