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The impact of climate change on developed economies

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  • Du, Ding
  • Zhao, Xiaobing
  • Huang, Ruihong

Abstract

We use sub-national data to examine the relationship between temperature and growth within the United States and the European Union. Different from previous studies based on national data, we find that the optimal temperature is much lower. Because most of production takes place in areas with temperatures above the optimal temperature, projected temperature increases have significantly negative impact on the economic growth of the United States and the European Union. Our results suggest more proactive climate policy.

Suggested Citation

  • Du, Ding & Zhao, Xiaobing & Huang, Ruihong, 2017. "The impact of climate change on developed economies," Economics Letters, Elsevier, vol. 153(C), pages 43-46.
    • Handle: RePEc:eee:ecolet:v:153:y:2017:i:c:p:43-46
    DOI: 10.1016/j.econlet.2017.01.017
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    1. Marshall Burke & Solomon M. Hsiang & Edward Miguel, 2015. "Global non-linear effect of temperature on economic production," Nature, Nature, vol. 527(7577), pages 235-239, November.
    2. 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.
    3. Riccardo Colacito & Bridget Hoffmann & Toan Phan, 2016. "Temperature and Growth: A Panel Analysis of the United States," IDB Publications (Working Papers) 94298, Inter-American Development Bank.
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    Cited by:

    1. Renatas Kizys & Wael Rouatbi & Zaghum Umar & Adam Zaremba, 2024. "Air temperature and sovereign bond returns," Financial Markets, Institutions & Instruments, John Wiley & Sons, vol. 33(2), pages 179-209, May.
    2. Afrifa, Godfred Adjapong & Tingbani, Ishmael & Yamoah, Fred & Appiah, Gloria, 2020. "Innovation input, governance and climate change: Evidence from emerging countries," Technological Forecasting and Social Change, Elsevier, vol. 161(C).
    3. Donadelli, Michael & Grüning, Patrick & Jüppner, Marcus & Kizys, Renatas, 2021. "Global temperature, R&D expenditure, and growth," Energy Economics, Elsevier, vol. 104(C).
    4. Ashish Dwivedi & Claudio Sassanelli & Dindayal Agrawal & Md. Abdul Moktadir & Idiano D'Adamo, 2023. "Drivers to mitigate climate change in context of manufacturing industry: An emerging economy study," Business Strategy and the Environment, Wiley Blackwell, vol. 32(7), pages 4467-4484, November.
    5. Burhan Can Karahasan & Mehmet Pinar, 2023. "Climate change and spatial agricultural development in Turkey," Review of Development Economics, Wiley Blackwell, vol. 27(3), pages 1699-1720, August.
    6. Liang, Chao & Goodell, John W. & Li, Xiafei, 2024. "Impacts of carbon market and climate policy uncertainties on financial and economic stability: Evidence from connectedness network analysis," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 92(C).
    7. Carolyn Chisadza & Matthew Clance & Xin Sheng & Rangan Gupta, 2023. "Climate Change and Inequality: Evidence from the United States," Sustainability, MDPI, vol. 15(6), pages 1-11, March.
    8. Donadelli, M. & Jüppner, M. & Riedel, M. & Schlag, C., 2017. "Temperature shocks and welfare costs," Journal of Economic Dynamics and Control, Elsevier, vol. 82(C), pages 331-355.
    9. Baarsch, Florent & Granadillos, Jessie R. & Hare, William & Knaus, Maria & Krapp, Mario & Schaeffer, Michiel & Lotze-Campen, Hermann, 2020. "The impact of climate change on incomes and convergence in Africa," World Development, Elsevier, vol. 126(C).
    10. Michael Donadelli & Marcus Jüppner & Antonio Paradiso & Christian Schlag, 2019. "Temperature Volatility Risk," Working Papers 2019:05, Department of Economics, University of Venice "Ca' Foscari".
    11. Tiago Sequeira & Liliana Reis (ed.), 2019. "Climate Change and Global Development," Contributions to Economics, Springer, number 978-3-030-02662-2, December.
    12. 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).
    13. Esra KADANALI & Omer YALCINKAYA, 2020. "Effects of Climate Change on Economic Growth: Evidence from 20 Biggest Economies of the World," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 93-118, September.
    14. García-Sánchez, Isabel-María & Aibar-Guzmán, Beatriz & Raimo, Nicola & Vitolla, Filippo & Schiuma, Giovanni, 2024. "Climate governance, growth opportunities, and innovation in addressing climate change: Empirical evidence from emerging countries," Finance Research Letters, Elsevier, vol. 70(C).
    15. Tsigaris, Panagiotis & Wood, Joel, 2019. "The potential impacts of climate change on capital in the 21st century," Ecological Economics, Elsevier, vol. 162(C), pages 74-86.
    16. Majid Khan & Abdul Rashid, 2022. "(A)symmetry effects of climate changes on economic growth: a panel data analysis," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 69(4), pages 571-607, December.
    17. Veronica Alampi Sottini & Elena Barbierato & Iacopo Bernetti & Irene Capecchi, 2021. "Impact of Climate Change on Wine Tourism: An Approach through Social Media Data," Sustainability, MDPI, vol. 13(13), pages 1-18, July.
    18. Frank Vöhringer & Marc Vielle & Philippe Thalmann & Anita Frehner & Wolfgang Knoke & Dario Stocker & Boris Thurm, 2019. "Costs And Benefits Of Climate Change In Switzerland," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 10(02), pages 1-34, May.
    19. Panagiotis Tzouvanas & Renatas Kizys & Ioannis Chatziantoniou & Roza Sagitova, 2019. "Can Variations in Temperature Explain the Systemic Risk of European Firms?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(4), pages 1723-1759, December.
    20. Michael Donadelli & Marcus Jüppner & Antonio Paradiso & Christian Schlag, 2021. "Computing Macro-Effects and Welfare Costs of Temperature Volatility: A Structural Approach," Computational Economics, Springer;Society for Computational Economics, vol. 58(2), pages 347-394, August.
    21. Philip A. White & Durban G. Keeler & Daniel Sheanshang & Summer Rupper, 2022. "Improving piecewise linear snow density models through hierarchical spatial and orthogonal functional smoothing," Environmetrics, John Wiley & Sons, Ltd., vol. 33(5), August.

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    More about this item

    Keywords

    Climate change; Economic growth; Sub-national data;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

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