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Impact of Climate Change On Rich and Poor Countries

This document analyzes the distributional impacts of climate change on rich and poor countries using three climate models and two response functions. It finds that the poorest half of the world's nations will suffer the majority of damages from climate change by 2100, while the wealthiest quarter will experience little to no negative impacts. Poor countries located in warm, low latitudes that are already hotter than optimal temperatures will be disproportionately harmed because further warming will damage climate-sensitive sectors like agriculture. In contrast, richer countries located in cooler, high latitudes will experience fewer negative consequences and may even see some benefits from climate change.

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Asma Rasheed Visiting Teacher
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24 views

Impact of Climate Change On Rich and Poor Countries

This document analyzes the distributional impacts of climate change on rich and poor countries using three climate models and two response functions. It finds that the poorest half of the world's nations will suffer the majority of damages from climate change by 2100, while the wealthiest quarter will experience little to no negative impacts. Poor countries located in warm, low latitudes that are already hotter than optimal temperatures will be disproportionately harmed because further warming will damage climate-sensitive sectors like agriculture. In contrast, richer countries located in cooler, high latitudes will experience fewer negative consequences and may even see some benefits from climate change.

Uploaded by

Asma Rasheed Visiting Teacher
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 19

The Distributional Impact of

Climate Change on Rich and


Poor Countries
1. Introduction
 There is a broad consensus among climate scientists that further
emissions of greenhouse gases will cause temperatures to increase 1.5◦C
to 5.8◦C and precipitation patterns to shift by 2100.

These changes in temperature will in turn cause ecosystems to move


poleward and seas to rise.

 All of these changes will have effects on the global economy and the
quality of life around the globe.

This paper focuses the distributional impact of climate change on the


economies of rich and poor countries.
Continued…..
The standard neoclassical economic growth
framework asserts that growth depends
primarily on basic economic inputs such as
trained labor, capital, and technological
development.

These basic economic factors have been


extended to incorporate government policies,
the accumulation of human capital, fertility
decisions, and the diffusion of technology
The early and lateral consequences of climate change

The early literature on greenhouse gases did not raise serious concerns
about the distributional impact of climate change

The early models predicted that every country would suffer damages from
warming and that they would be roughly proportional to income.

The literature at this time, however, assumed that almost every region would
be damaged by warming.

Subsequent empirical research on climate impact sensitivity has revealed


new insights into how temperature affects climate-sensitive economic
sectors
• The new research indicates that several
climate-sensitive sectors have a hill-shaped
relationship with absolute temperature.

• Figure 1 illustrates this relationship in


general.

• For each sector, there is an optimum


temperature that maximizes welfare in that
sector.
Distributional impacts of climate change…….
The world’s population is divided into quartiles on the basis of per capita
income in 2100.

The predicted impacts of the three climate models and two response
functions are displayed for each quartile.

The results indicate that the poorest half of the world’s nations suffer the
bulk of the damages from climate change, whereas the wealthiest quarter
has almost no net impacts.

As a fraction of GDP, poorer nations would still suffer higher climate
damages than richer nations, but the difference is small.
2. Climate scenarios
Three models were selected to demonstrate the consequences of a full
range of climate scenarios.

The PCM comes from the National Center Atmospheric Research. CSSR
model was developed at NIES. CGCM1 was developed at the Canadian
Climate Centre.

Each model predicts changes in individual grid points across the earth.

Grid points in each country use to create a climate change scenario by


country for 2100.
Continued….
The grid points are weighted by population and not by area.

We also use population weights to generate regional average change in


temperature and precipitation.

These three models make very different forecasts of global temperature


change: PCM predicts 2.5C, CCSR predicts 4.0C, and CGCM1 predicts
5.2C.
Continued…
PCM and CCSR show more warming in the polar and temperate regions versus
the tropical regions.

PCM predicts higher precipitation in every continent, but especially in Africa,


North Asia, and South Asia.

CSSR predicts large losses of precipitation in Latin America and North America
and small losses in Europe but large gains elsewhere.

CGCM1 predicts losses of precipitation in every continent except North America


and North Asia.

The climate scenarios provide four driving forces that can have effect on
economic sectors: change in mean or seasonal temperature, change in mean or
seasonal precipitation, increases in carbon dioxide, and increases in sea level.
3. Impact Methodology
Two empirical approaches to determine the climate sensitivity of each economic
sector: experimental and cross-sectional studies.

 The experimental method has the added advantage that it can measure the direct
effect of carbon dioxide, which the cross sectional method can’t.

Both models predict that temperature has a hill-shaped relationship with agriculture,
forestry, water, and energy; that increased precipitation is generally beneficial; and
the coastal damages increases as sea level rises.

The experimental model predicts that countries that are cooler than optimum will
gain more from warming.

The countries that are warmer than optimum will lose more than the cross-sectional.
In cross-sectional model, precipitation is predicted to have a beneficial
impact on agriculture, forestry, and water but no effect on energy.
CS Exp CS Exp CS Exp

Table.2. Aggregate market impacts in 2100 (USD Billion/yr)

 Empirical research suggests that agriculture in developing countries is more


climate sensitive, but this particular income cutoff value is arbitrary.

 The cutoff roughly separates out the poorer from the richer half of all nations.
Continued….
Each country has numerous characteristics such as land, length of coasts,
population, and GDP that also play a role in determining country-specific impacts.

Population growth is assumed to decline over time in every country.

The average population growth over the next century for developed countries is
0.7% a year, for China it is 0.5% a year, and for all other developing countries it is
0.9% a year.

GDP is expected to grow by 1.9% a year for developed countries, by 0.9% a year
for Sub-Saharan Africa, and by 2.9% a year for developing countries.

Agriculture is expected to grow at 0.25% a year for Africa and at 0.5% a year for
the rest of the world.
4. The Distributional Impacts Of Climate
Change
Global impacts are positive or beneficial under the PCM climate.

 The more severe climate change scenario is predicted in CCSR.

 The different climate change scenarios have a large impact on the overall
results.

 In order to understand how these climate impacts affect countries of


different income levels, they order countries by per capita income in 2100.
Table 3 shows the market impact results by quartile

 Poorest Quartile earns less than $4,380 per capita.


 Second Quartile earns from $4,380 to $5,785 per capita.
 Third Quartile earns between $5,785 and $ 25,000.
 Bulk countries from warm latitudes, few cooler countries.
 It also shows, poorest quartile suffers, all six scenarios.
 Second poorest quartile suffers in all, PCM scenario, cross-sectional response
function.
 Third richest quartile suffers in all, PCM scenario, cross-sectional response
function.
 Table 3, impact as a percentage of GDP.
Illustrates geographical distribution. Reveal both impact models
Continued…..
Africa and Southeast Asia, harmed by climate change, 2100.

Results demonstrate, low latitude, hit by climate change.

 All poor countries, lie in low latitudes.

 Maps suggest, warming will be hard on poor countries.

 Countries hotter than optimal( The top of the hill), suffer.

 Poor countries, low latitudes( Already hot), Rich countries, high


latitudes( currently cool).
5. CONCLUSION
In order to capture outcomes, results of six scenarios.
For each scenario, aggregate income per capita.
Divides population into quartiles, basis of GDP per capita.
Results indicate, poorest quartile suffer, all scenarios.
Third richest quartile suffers damages, mildest scenario.
Overall poor suffer bulk, richest countries benefit.
Number of tests taken, poor countries suffer, rich.
By 2100, importance of GDP, shrunk.
Poor, suffer larger damages, poor do not have, capital.
Finally, poor cannot purchase, reductions in crop productivity.
One possibility, international fund, GEF, could subsidize adaptation.
Climate Impact Insurance Fund, low latitude countries.
Investing, low latitude countries, economic development.
Thank You

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