How Might Climate Change Affect Economic Growth In Developing Countries ? A Review Of The Growth Literature With A Climate Lens

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Disasters and development: natural disasters, credit constraints, and economic growth

“…Although growth theories have tended to discount the relevance of volatility and shocks for long run economic performance (Lecocq and Shalizi, 2007), it has been shown that volatility can affect welfare both directly, through consumption volatility (especially problematic for the poor who find it difficult to smooth consumption in the face of a negative income shock), and indirectly through its effects on economic growth (Loayza et al, 2007).…”

How Might Climate Change Affect Microeconomic Wellbeing in Central Asia

“…al., 2015, Bell et al, 2007Dessai 2003;Fay et al, 2010;Flaherty, et al, 2016;Lecocq & Shalizi, 2007). The economic impacts of CC in many cases address on global scale effects are discussed by (Stern 2007;Fay et al, 2010;Metz 2007) and some predictions of these studies have been given in Appendix A.…”

Economic valuation of climate change adaptation in developing countries

“…In practice, this means that cost–benefit analysis, in a broad sense, is likely to be the only framework within which it is meaningful to assess climate‐change policies 2–4 . Most other frameworks, such as cost‐effectiveness analysis, will only work well when the adaptation policy is the main or single government policy objective; in practice, this is rarely the case.…”

“…Moreover, in practice there is considerable risk that cost‐effectiveness analysis and other partial methods will lead to the adaptation measures, and their costs, implicitly being compared to the current status quo rather than to the climate change–affected “no adaptation” outcome that will prevail if nothing is done. For cost–benefit analysis, where the correct procedure is to compare the alternatives actually available, the appropriate approach is to compare adaptation measures to the outcome that will prevail in the absence of adaptation 3 . Thus, comparing adaptation measures to the current status quo is explicitly incorrect, which is not the case with other methods where there is no explicit alternative option being considered.…”

“…An obvious argument against waiting would be that delaying adaptation may lead to far greater adaptation costs at the point when the costs are realized. A less obvious argument 3,9,10 is that introducing new technology tends to have spillover effects on human capital formation that can enhance growth; thus, given that the adaptive technology will need to be introduced at some point in any case, it may be better to introduce the technology earlier and hence get the spillover benefits sooner.…”