Effects of Temperature Shocks on Economic Growth and Welfare in Asia

Publication | December 2016

Findings reflect the high cost of inaction against rising temperature, and estimated impacts of 21st century warming could lead to macroeconomic impacts extending beyond the agriculture sector.

This study finds that overall economic productivity of developing Asia would be at least 10% lower by 2100 relative to a business as usual scenario as it examines the nonlinear response effect of economic growth to historic temperature and precipitation fluctuations. This paper confirms that aside from the significant effect of rising temperature on agricultural production, industrial production and investment endeavors also serve as other potential channels through which temperature significantly affects overall economic productivity. It empirically analyzes policy measures and factors that could help countries mitigate consumption volatility driven by climate change-related events. Likewise, government plays a critical role in moderating the negative impact of rising temperature in both output and consumption.

Contents 

  • Tables and Figures
  • Abstract
  • Introduction
  • Data
  • Framework and Empirical Approach
  • Results: Potential Loss and Benefits
  • Temperature and Welfare: Dealing with Risks and Volatilities
  • Policy Recommendation
  • Conclusion
  • Appendixes
  • References

Additional Details

Authors
Type
Series
Subjects
  • Climate change
SKU
  • WPS168568-2
ISSN
  • 2313-6537 (Print)
  • 2313-6545 (e-ISSN)

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