IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/8888.html
   My bibliography  Save this paper

Does Rainfall Matter for Economic Growth ? Evidence from Global Sub-National Data (1990-2014

Author

Listed:
  • Damania,Richard
  • Desbureaux,Sebastien Gael
  • Zaveri,Esha Dilip

Abstract

Much micro-econometric evidence suggests that precipitation has wide ranging impacts on vital economic indicators such as agricultural yields, human capital, and even conflict. And yet paradoxically most macro-econometric evidence (especially in the climate economy literature) finds that precipitation has no robust and significant impact on various measures of aggregate economic output. This paper argues that spatial aggregation of weather at the country level explains this result. The paper uses annual subnational gross domestic product data to show a concave relationship between precipitation and local gross domestic product growth between 1990 and 2014. It then demonstrates that when the data are aggregated at larger spatial scales, the impact decreases and eventually vanishes. The impact of precipitation on aggregate economic activity is predominantly felt in developing countries; it is insignificant in developed countries. Agriculture is found to be the dominant pathway. The results have significant consequences for measuring the economic impacts of climate change.

Suggested Citation

  • Damania,Richard & Desbureaux,Sebastien Gael & Zaveri,Esha Dilip, 2019. "Does Rainfall Matter for Economic Growth ? Evidence from Global Sub-National Data (1990-2014," Policy Research Working Paper Series 8888, The World Bank.
  • Handle: RePEc:wbk:wbrwps:8888
    as

    Download full text from publisher

    File URL: http://documents.worldbank.org/curated/en/368581560778208239/pdf/Does-Rainfall-Matter-for-Economic-Growth-Evidence-from-Global-Sub-National-Data-1990-2014.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Briant, A. & Combes, P.-P. & Lafourcade, M., 2010. "Dots to boxes: Do the size and shape of spatial units jeopardize economic geography estimations?," Journal of Urban Economics, Elsevier, vol. 67(3), pages 287-302, May.
    2. Kahn, Matthew E. & Mohaddes, Kamiar & Ng, Ryan N.C. & Pesaran, M. Hashem & Raissi, Mehdi & Yang, Jui-Chung, 2021. "Long-term macroeconomic effects of climate change: A cross-country analysis," Energy Economics, Elsevier, vol. 104(C).
    3. Gary Solon & Steven J. Haider & Jeffrey M. Wooldridge, 2015. "What Are We Weighting For?," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 301-316.
    4. 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.
    5. Sharon Maccini & Dean Yang, 2009. "Under the Weather: Health, Schooling, and Economic Consequences of Early-Life Rainfall," American Economic Review, American Economic Association, vol. 99(3), pages 1006-1026, June.
    6. Solomon Hsiang & Robert E. Kopp, 2018. "An Economist's Guide to Climate Change Science," Journal of Economic Perspectives, American Economic Association, vol. 32(4), pages 3-32, Fall.
    7. Martin Henseler & Ingmar Schumacher, 2019. "The impact of weather on economic growth and its production factors," Climatic Change, Springer, vol. 154(3), pages 417-433, June.
    8. Nicola Gennaioli & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2013. "Human Capital and Regional Development," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(1), pages 105-164.
    9. Tol, Richard S.J., 2019. "A social cost of carbon for (almost) every country," Energy Economics, Elsevier, vol. 83(C), pages 555-566.
    10. Marshall Burke & Vincent Tanutama, 2019. "Climatic Constraints on Aggregate Economic Output," NBER Working Papers 25779, National Bureau of Economic Research, Inc.
    11. Tatyana Deryugina & Solomon Hsiang, 2017. "The Marginal Product of Climate," NBER Working Papers 24072, National Bureau of Economic Research, Inc.
    12. Islam, Asif & Hyland, Marie, 2019. "The drivers and impacts of water infrastructure reliability – a global analysis of manufacturing firms," Ecological Economics, Elsevier, vol. 163(C), pages 143-157.
    13. World Bank, 2006. "Ethiopia : Managing Water Resources to Maximize Sustainable Growth," World Bank Publications - Reports 8170, The World Bank Group.
    14. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2012. "Temperature Shocks and Economic Growth: Evidence from the Last Half Century," American Economic Journal: Macroeconomics, American Economic Association, vol. 4(3), pages 66-95, July.
    15. Desbureaux, Sébastien & Rodella, Aude-Sophie, 2019. "Drought in the city: The economic impact of water scarcity in Latin American metropolitan areas," World Development, Elsevier, vol. 114(C), pages 13-27.
    16. El Khanji, Souha & Hudson, John, 2016. "Water utilization and water quality in endogenous economic growth," Environment and Development Economics, Cambridge University Press, vol. 21(5), pages 626-648, October.
    17. Conley, T. G., 1999. "GMM estimation with cross sectional dependence," Journal of Econometrics, Elsevier, vol. 92(1), pages 1-45, September.
    18. Hyland, Marie & Russ, Jason, 2019. "Water as destiny – The long-term impacts of drought in sub-Saharan Africa," World Development, Elsevier, vol. 115(C), pages 30-45.
    19. Colella, Fabrizio & Lalive, Rafael & Sakalli, Seyhun Orcan & Thoenig, Mathias, 2019. "Inference with Arbitrary Clustering," IZA Discussion Papers 12584, Institute of Labor Economics (IZA).
    20. Salvador Barrios & Luisito Bertinelli & Eric Strobl, 2010. "Trends in Rainfall and Economic Growth in Africa: A Neglected Cause of the African Growth Tragedy," The Review of Economics and Statistics, MIT Press, vol. 92(2), pages 350-366, May.
    Full references (including those not matched with items on IDEAS)

    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. Tol, Richard S.J., 2024. "A meta-analysis of the total economic impact of climate change," Energy Policy, Elsevier, vol. 185(C).
    2. Desbordes, Rodolphe & Eberhardt, Markus, 2024. "Climate change and economic prosperity: Evidence from a flexible damage function," Journal of Environmental Economics and Management, Elsevier, vol. 125(C).
    3. Gregory Casey & Stephie Fried & Ethan Goode, 2023. "Projecting the Impact of Rising Temperatures: The Role of Macroeconomic Dynamics," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 71(3), pages 688-718, September.
    4. Meierrieks, Daniel & Stadelmann, David, 2024. "Is temperature adversely related to economic development? Evidence on the short-run and the long-run links from sub-national data," Energy Economics, Elsevier, vol. 136(C).
    5. Berg, Kimberly A. & Curtis, Chadwick C. & Mark, Nelson C., 2024. "GDP and temperature: Evidence on cross-country response heterogeneity," European Economic Review, Elsevier, vol. 169(C).
    6. Rising, James A. & Taylor, Charlotte & Ives, Matthew C. & Ward, Robert E.T., 2022. "Challenges and innovations in the economic evaluation of the risks of climate change," Ecological Economics, Elsevier, vol. 197(C).
    7. Schultes, Anselm & Piontek, Franziska & Soergel, Bjoern & Rogelj, Joeri & Baumstark, Lavinia & Kriegler, Elmar & Edenhofer, Ottmar & Luderer, Gunnar, 2020. "Economic damages from on-going climate change imply deeper near-term emission cuts," MPRA Paper 103655, University Library of Munich, Germany.
    8. Chang, Jun-Jie & Mi, Zhifu & Wei, Yi-Ming, 2023. "Temperature and GDP: A review of climate econometrics analysis," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 383-392.
    9. 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).
    10. Yubin Zhao & Shuguang Liu, 2023. "Effects of Climate Change on Economic Growth: A Perspective of the Heterogeneous Climate Regions in Africa," Sustainability, MDPI, vol. 15(9), pages 1-22, April.
    11. Bareille, François & Chakir, Raja & Regnacq, Charles, 2024. "Rainwater shocks and economic growth: The role of the water cycle partition," Journal of Environmental Economics and Management, Elsevier, vol. 128(C).
    12. 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.
    13. Martin Henseler & Ingmar Schumacher, 2019. "The impact of weather on economic growth and its production factors," Climatic Change, Springer, vol. 154(3), pages 417-433, June.
    14. Serhan Cevik, 2024. "Climate change and energy security: the dilemma or opportunity of the century?," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 26(3), pages 653-672, July.
    15. Richard S. J. Tol, 2021. "The Economic Impact of Climate in the Long Run," World Scientific Book Chapters, in: Anil Markandya & Dirk Rübbelke (ed.), CLIMATE AND DEVELOPMENT, chapter 1, pages 3-36, World Scientific Publishing Co. Pte. Ltd..
    16. Kahn, Matthew E. & Mohaddes, Kamiar & Ng, Ryan N.C. & Pesaran, M. Hashem & Raissi, Mehdi & Yang, Jui-Chung, 2021. "Long-term macroeconomic effects of climate change: A cross-country analysis," Energy Economics, Elsevier, vol. 104(C).
    17. Aguilar-Gomez, Sandra & Gutierrez, Emilio & Heres, David & Jaume, David & Tobal, Martin, 2024. "Thermal stress and financial distress: Extreme temperatures and firms’ loan defaults in Mexico," Journal of Development Economics, Elsevier, vol. 168(C).
    18. Cevik Serhan & Jalles Joao, 2024. "Eye of the Storm: The Impact of Climate Shocks on Inflation and Growth," Review of Economics, De Gruyter, vol. 75(2), pages 109-138.
    19. Richard S.J. Tol, 2020. "The Economic Impact of Weather and Climate," Video Library 2094, Department of Economics, University of Sussex Business School.
    20. José-Luis Cruz & Esteban Rossi-Hansberg, 2024. "The Economic Geography of Global Warming," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(2), pages 899-939.

    More about this item

    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:wbk:wbrwps:8888. 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: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.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.