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Temperature shocks, growth and poverty thresholds: evidence from rural Tanzania

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  • Marco Letta

    (Sapienza University of Rome)

  • Pierluigi Montalbano

    (Sapienza University of Rome
    University of Sussex)

  • Richard S.J. Tol

    (University of Sussex
    Vrije Universiteit, Amsterdam
    Tinbergen Institute, Amsterdam
    CESifo, Munich)

Abstract

Using the LSMS-ISA Tanzania National Panel Survey by the World Bank, we study the relationship between rural household consumption growth and temperature shocks over the period 2008 – 2013. Temperature shocks have a negative and significant impact on household growth only if their initial consumption lies below a critical threshold. As such, temperature shocks slow income convergence among households. Agricultural yields and labour productivity are the main transmission channels. These findings support the Schelling Conjecture: economic development would allow poor farming households to cope with climate change, and closing the yield gap and modernizing agriculture is crucial for adaptation to the negative impacts of global warming.

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  • Marco Letta & Pierluigi Montalbano & Richard S.J. Tol, 2017. "Temperature shocks, growth and poverty thresholds: evidence from rural Tanzania," Working Paper Series 2117, Department of Economics, University of Sussex Business School.
  • Handle: RePEc:sus:susewp:2117
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    File URL: http://www.sussex.ac.uk/economics/documents/wps-21-2017.pdf
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    Cited by:

    1. Ulrike Kornek & David Klenert & Ottmar Edenhofer & Marc Fleurbaey, 2019. "The social cost of carbon and inequality: when local redistribution shapes global carbon prices," CESifo Working Paper Series 7628, CESifo Group Munich.

    More about this item

    Keywords

    weather shocks; climate change; household consumption growth; rural development;

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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