Quantifying the Potential Macroeconomic Consequences of Global Climate Change: What the Literature Says

Abstract

Increase of the Earth’s average surface temperature observed in the last century has affected almost all countries of the world. No state has managed to escape the effects of global warming, and scientists predict that no country will escape a further increase in temperature. However, the highest temperature increases are expected in countries with relatively colder climates. The contribution of low-income developing countries, typically located in some of the hottest geographic areas of the planet, to atmospheric greenhouse gas concentrations is negligible, both in absolute and per capita terms. This article provides a meta-analysis of quantitative estimates of the damage caused by global climate change occurring on the planet since the last century. A rise in temperature has been shown to decrease per capita production in countries with relatively high average annual temperatures, which include most low-income countries. In these countries, the negative effect has long-term nature and operates through several channels, including decrease in agricultural production and labor productivity in sectors more exposed to weather; reduction in capital accumulation and deterioration of human health. Moreover, as evidence shows, in recent years macroeconomic indicators have not become less sensitive to temperature shocks, which points at significant limitations on countries’ adaptation to climate change. Meta-analysis of climate change damage estimates documented in relevant literature will, first, provide an idea of the scale of such estimates and help to assess the current state of knowledge in this area. In addition, a meta-analysis will demonstrate sensitivity of the results of calculations regarding assessment approach, measurement errors or insufficient data, choice of sample, etc. Finally, systematization of climate damage quantitative estimates is highly likely to be of practical importance for authorities and international organizations responsible for developing measures to deal with climate change and mitigate its effects, especially for developing and poor countries, most affected by the negative effects of global warming.

Keywords

• meta-analysis
• climate change
• global warming
• climate damage
• macroeconomic effects
• integrated assessment models
• social cost of carbon