IDEAS home Printed from https://ideas.repec.org/p/ris/adbewp/0501.html
   My bibliography  Save this paper

Effects of Temperature Shocks on Economic Growth and Welfare in Asia

Author

Listed:
  • Lee, Minsoo

    (Asian Development Bank)

  • Villaruel, Mai Lin

    (Asian Development Bank)

  • Gaspar, Raymond

    (Asian Development Bank)

Abstract

Using the Burke, Hsiang, and Miguel (2015) framework, we examine the nonlinear response effect of economic growth to historic temperature and precipitation fluctuations. We confirm that aside from the significant effect of rising temperature on agricultural production, industrial production and investment endeavors also serve as other potential channels through which temperature significantly affects overall economic productivity. We find the overall economic productivity of developing Asia to be at least 10% lower by 2100 relative to business as usual. We also empirically analyze policy measures and factors that could help countries mitigate consumption volatility driven by climate change-related events. Consistent with several microlevel findings, financial inclusiveness helps households mitigate consumption volatility amid temperature change. Likewise, government plays a critical role in moderating the negative impact of rising temperature in both output and consumption.

Suggested Citation

  • Lee, Minsoo & Villaruel, Mai Lin & Gaspar, Raymond, 2016. "Effects of Temperature Shocks on Economic Growth and Welfare in Asia," ADB Economics Working Paper Series 501, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0501
    as

    Download full text from publisher

    File URL: https://www.adb.org/sites/default/files/publication/217061/ewp-501.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Sanket Mohapatra & George Joseph & Dilip Ratha, 2012. "Remittances and natural disasters: ex-post response and contribution to ex-ante preparedness," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 14(3), pages 365-387, June.
    2. Nkegbe, Paul Kwame & Kuunibe, Naasegnibe, 2014. "Climate variability and household welfare in northern Ghana," WIDER Working Paper Series 027, World Institute for Development Economic Research (UNU-WIDER).
    3. Paul Kwame Nkegbe & Naasegnibe Kuunibe, 2014. "Climate Variability and Household Welfare in Northern Ghana," WIDER Working Paper Series wp-2014-027, World Institute for Development Economic Research (UNU-WIDER).
    4. World Bank, 2007. "International trade and Climate Change : Economic, Legal, and Institutional Perspectives," World Bank Publications - Books, The World Bank Group, number 6831, December.
    5. Wolfram Schlenker & Michael J. Roberts, 2008. "Estimating the Impact of Climate Change on Crop Yields: The Importance of Nonlinear Temperature Effects," NBER Working Papers 13799, National Bureau of Economic Research, Inc.
    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. Acevedo, Sebastian & Mrkaic, Mico & Novta, Natalija & Pugacheva, Evgenia & Topalova, Petia, 2020. "The Effects of Weather Shocks on Economic Activity: What are the Channels of Impact?," Journal of Macroeconomics, Elsevier, vol. 65(C).
    2. Manoranjan Ghosh & Somnath Ghosal, 2021. "Climate change vulnerability of rural households in flood-prone areas of Himalayan foothills, West Bengal, India," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(2), pages 2570-2595, February.
    3. Reis, Lara Aleluia & Emmerling, Johannes & Tavoni, Massimo & Raitzer, David, 2016. "The Economics of Greenhouse Gas Mitigation in Developing Asia," ADB Economics Working Paper Series 504, Asian Development Bank.
    4. Alano, Emmanuel & Lee, Minsoo, 2016. "Natural Disaster Shocks and Macroeconomic Growth in Asia: Evidence for Typhoons and Droughts," ADB Economics Working Paper Series 503, Asian Development Bank.
    5. Daregot Berihun & Passel Steven, 2022. "Climate variability and macroeconomic output in Ethiopia: the analysis of nexus and impact via asymmetric autoregressive distributive lag cointegration method," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(3), pages 4064-4087, March.
    6. Matthew E. Kahn, 2017. "Will Climate Change Cause Enormous Social Costs for Poor Asian Cities?," Asian Development Review, MIT Press, vol. 34(2), pages 229-248, September.
    7. Tran Thi Kim Oanh & Nguyen Thi Hong Ha, 2023. "Impact of income inequality on climate change in Asia: the role of human capital," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-11, December.
    8. Mr. Sebastian Acevedo Mejia & Claudio Baccianti & Mr. Mico Mrkaic & Natalija Novta & Evgenia Pugacheva & Petia Topalova, 2019. "Weather Shocks and Output in Low-Income Countries: The Role of Policies and Adaptation," IMF Working Papers 2019/178, International Monetary Fund.
    9. Murat Doğanlar & Faruk Mike & Oktay Kızılkaya, 2022. "The impact of climate change on aggregate output in middle‐ and high‐income countries," Australian Economic Papers, Wiley Blackwell, vol. 61(1), pages 72-86, March.
    10. Manoranjan Ghosh & Somnath Ghosal, 2023. "Geographies of vulnerability to climate change: empirical evidences from the Indian Himalayan foothills," Asia-Pacific Journal of Regional Science, Springer, vol. 7(2), pages 405-431, June.

    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. William Adzawla & Heike Baumüller, 2021. "Effects of livelihood diversification on gendered climate vulnerability in Northern Ghana," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(1), pages 923-946, January.
    2. Anslem Bawayelaazaa Nyuor & Emmanuel Donkor & Robert Aidoo & Samuel Saaka Buah & Jesse B. Naab & Stephen K. Nutsugah & Jules Bayala & Robert Zougmoré, 2016. "Economic Impacts of Climate Change on Cereal Production: Implications for Sustainable Agriculture in Northern Ghana," Sustainability, MDPI, vol. 8(8), pages 1-17, August.
    3. Shaikh M. S. U. Eskander & Sam Fankhauser, 2022. "Income Diversification and Income Inequality: Household Responses to the 2013 Floods in Pakistan," Sustainability, MDPI, vol. 14(1), pages 1-12, January.
    4. Christian Hubert Ebeke, 2011. "Does the dual-citizenship recognition determine the level and the utilization of international remittances? Cross-Country Evidence," CERDI Working papers halshs-00559528, HAL.
    5. Christian Hubert Ebeke, 2011. "Remittances, Countercyclicality, Openness and Government Size," Recherches économiques de Louvain, De Boeck Université, vol. 77(4), pages 89-114.
    6. Joshi, Niraj Prakash & Maharjan, Keshav Lall & Piya, Luni, 2011. "Effect of climate variables on yield of major food-crops in Nepal -A time-series analysis-," MPRA Paper 35379, University Library of Munich, Germany.
    7. David Antonio C., 2011. "How do International Financial Flows to Developing Countries Respond to Natural Disasters?," Global Economy Journal, De Gruyter, vol. 11(4), pages 1-38, December.
    8. Zeynep K. Hansen & Gary D. Libecap & Scott E. Lowe, 2011. "Climate Variability and Water Infrastructure: Historical Experience in the Western United States," NBER Chapters, in: The Economics of Climate Change: Adaptations Past and Present, pages 253-280, National Bureau of Economic Research, Inc.
    9. Hoekman, Bernard & Martin, Will & Mattoo, Aaditya, 2010. "Conclude Doha: it matters!," World Trade Review, Cambridge University Press, vol. 9(3), pages 505-530, July.
    10. Sébastien Mary & Kelsey Shaw & Sergio Gomez y Paloma, 2019. "Does the sectoral composition of growth affect child stunting reductions?," Development Policy Review, Overseas Development Institute, vol. 37(2), pages 225-244, March.
    11. Mohammad Salahuddin & Jeff Gow, 2015. "The relationship between economic growth and remittances in the presence of cross-sectional dependence," Journal of Developing Areas, Tennessee State University, College of Business, vol. 49(1), pages 207-221, January-M.
    12. Christian Hubert Ebeke, 2010. "The Effect of Remittances on Child Labor: Cross-Country Evidence," Economics Bulletin, AccessEcon, vol. 30(1), pages 351-364.
    13. Lin, Weiming & Chen, Jianling & Zheng, Yi & Dai, Yongwu, 2019. "Effects of the EU Emission Trading Scheme on the international competitiveness of pulp-and-paper industry," Forest Policy and Economics, Elsevier, vol. 109(C).
    14. Fisher, Anthony, 2009. "Climate Change and Agriculture Reconsidered," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt33v2d7vc, Department of Agricultural & Resource Economics, UC Berkeley.
    15. Éric Rougier & Nicolas Yol, 2019. "The volatility effect of diaspora's location," The World Economy, Wiley Blackwell, vol. 42(6), pages 1796-1827, June.
    16. Sarker, Md. Abdur Rashid & Alam, Khorshed & Gow, Jeff, 2012. "Exploring the relationship between climate change and rice yield in Bangladesh: An analysis of time series data," Agricultural Systems, Elsevier, vol. 112(C), pages 11-16.
    17. ZhongXiang Zhang, 2013. "Trade in environmental goods, with focus on climate-friendly goods and technologies," Chapters, in: Geert Van Calster & Denise Prévost (ed.), Research Handbook on Environment, Health and the WTO, chapter 19, pages 673-699, Edward Elgar Publishing.
    18. Ebeke, Christian Hubert, 2012. "The power of remittances on the international prevalence of child labor," Structural Change and Economic Dynamics, Elsevier, vol. 23(4), pages 452-462.
    19. Artatrana Ratha and Eungmin Kang, 2020. "Macroeconomic Determinants of International Remittances: Evidence from Time-Series and Panel Methods," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 45(3), pages 51-76, September.
    20. Baojing Sun & Changhao Guo & G. Cornelis van Kooten, 2013. "Weather Derivatives and Crop Insurance in China," Working Papers 2013-02, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.

    More about this item

    Keywords

    climate change; consumption volatility; developing Asia; global warming;
    All these keywords.

    JEL classification:

    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:ris:adbewp:0501. 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: Orlee Velarde (email available below). General contact details of provider: https://edirc.repec.org/data/eradbph.html .

    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.