Climate Change and Economic Growth in Africa: An Econometric Analysis

Abstract

The economic landscape of most Africa countries depends essentially on the dynamics of climate change. Key sectors driving their economic performance and livelihoods such as agriculture, forestry, energy, tourism, coastal and water resources are highly vulnerable to climate change. This paper examines the empirical linkage between economic growth and climate change in Africa. Using annual data for 34 countries from 1961 to 2009, we find a negative impact of climate change on economic growth in Africa. Our results show that a 1 degree Celsius increase in temperature reduces GDP growth by 0.27 percentage point for the region. A higher impact of 0.41 percentage point was however observed when the sample period was reduced to 1961 to 2000 indicating a reduction in the influence possibly given increase in efforts towards adapting to climate change. The two largest economies in the Sub-Saharan Africa (South Africa and Nigeria) played some significant role in ameliorating the negative economic impact of climate change in the region. Some policy options emerged from this study. First, mainstreaming climate change adaptation into National Development Strategy and budgets could promote proactive engagement on the formulation and implementation of climate change adaptation strategy. Second, the potential of regional or multiple countries approach to climate change adaptation is high due to possibility of economies of scale. Third, the role of South Africa and Nigeria in cushioning the negative impact of climate change on other African countries tends to suggest the benefit of regional integration in addressing this challenge.

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Effects of Temperature and Rainfall Shocks on Economic Growth in Africa

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