IMPACT of CLIMATE CHANGE on ECONOMIC INEQUALITY
Global warming and climate events have been featured prominently and considered as a serious issue in sustainable development assessments over the last decades. Understanding the correlation between global warming and economic inequality is crucial for achieving equitable sustainable development. Therefore, quantifying all the evidence and historical indications is critical for investigating and assessing the cost and benefit analysis of this issue. Many studies have considered global warming as one of the main reasons for investigating the main causes of economic inequality. Empirical and historical studies generated modern climate models to find the impact of anthropogenic climate forcing on historical economic output. They contribute to framing the challenges of dealing with climate events and responding to global warming sensitivities in the context of risk management. Despite the relatively equal distribution of fossil fuels among poor and rich nations, poor countries have been highly harmed by the remarkable energy consumption of wealthy nations. This paper aims to provide empirical and historical evidence concerning the impact of climate change on economic inequality.
Many studies argue that warming increases economic development in cool regions while it decreases in hot countries. For instance, according to an empirical study, “per capita gross domestic product (GDP) has been reduced by 17–31% at the poorest four deciles of the population weighted country-level per capita GDP distribution, yielding a ratio between the top and bottom deciles that is 25% larger than in a world without global warming.”1 As a result, it shows that in the absence of global warming there is a high likelihood probability that per capita GDP would be higher than it is today in poor countries. Moreover, the figure below indicates the sensitivity of GDP per capita and temperature towards global warming. Part (A) resembles the difference in annual temperature through historical and natural forcing experiments for a baseline of 1985. Part (B) depicts the natural and observed temperatures, and the darker the red colors, the lower the temperature resembles (cooler), indicating a higher likelihood of negative effects from global warming. Parts C and D show how anthropogenic pollutants and global warming affect annual GDP per capita and economic growth rates in Norway and India, respectively. the figure2 gives a clear and quantified picture of the country-level economic impact of historical global warming;
There are arguments for the reverse impact of economic inequality on global warming. For instance, the special report of the Intergovernmental Panel on Climate Change (ICCP) highlights the severity of impacts from climate change as highly dependent on exposure and vulnerability.3 Most importantly, the report claims the reverse impact of economic development on climate change. It cites economic inequality as a result of the natural distribution of resources and the high energy consumption of wealthy countries, which led to climate extremes. Therefore, it can be concluded that there is a reverse causality regarding the correlation between economic inequality and global warming.
Furthermore, countries that are highly dependent on agricultural GDP and the agrarian labor market will be significantly affected by climate change. For example, an empirical study conducted by the World Bank estimated climate impacts on economic growth, allowing for non linearities in the relationship.4 It considered 166 countries from 1960-2020 (the data is collected on an annual basis). The result of the study clearly indicates the different impacts of global warming on countries. In part (a), it is shown that hot countries like Indonesia, India, and Nigeria will be highly harmed by climate change while Japan, China, and the US will gain the most. Histograms show the different distributions of climate change, population, and income globally. Part (b) compares rich and poor countries differentiating them by red above the median and blue below the median. Part (c) is the same as (b) but for two different periods of time, such as early 1960-1989 and late 1990-2010. Likewise, part (d) reflects agricultural income and part (e) non agricultural income. Hence, it can be claimed that agricultural GDP in poor countries will be highly harmed by an annual average temperature rise.
Agricultural productivity and the rise of primary and staple food prices significantly depend on climate change events. Assessing the poverty impact of climate volatility, taking into account developing countries, is critical under current circumstances for understanding which specific groups of countries will be more vulnerable to poverty increase. According to an empirical study which considered 16 developing countries as a sample, “climate volatility increase poverty across our developing country sample—particularly in Bangladesh, Mexico, Indonesia, and Africa—with urban wage earners the most vulnerable group.”5 Thus, it can be determined that the largest climate-induced poverty comebacks will target Africa, as sub-Saharan countries are highly sensitive to climate change and agriculture. Nevertheless, there is evidence that indicates climate change slightly affects cooler regions as well. For instance, “in 2010 and 2012, high nighttime temperatures affected corn yields across the U.S. Corn Belt, and premature budding due to a warm winter caused $220 million in losses of Michigan cherries in 2012.”
To conclude, global warming has exacerbated economic inequality around the world. Empirical studies and statistics show that warming has significantly impacted economic growth and led to a rise in economic inequality. Studies have combined counterfactual climate trajectories from updated climate models to figure out the relationship between economic growth and climate change. As a result of the studies, there are two main arguments. Some of them consider global warming as one of the main causes of economic inequality, while some claim the reverse causality relationship between economic inequality and global warming.
Burke, Marshall, Solomon M. Hsiang, and Edward Miguel. “Global Non-Linear Effect of Temperature on Economic Production.” Nature 527, no. 7577 (2015): 235–39. https://doi.org/10.1038/nature15725.
“Climate Impacts on Agriculture and Food Supply | Climate Change Impacts | US EPA.” Accessed July 16, 2020. https://19january2017snapshot.epa.gov/climate-impacts/climate impacts-agriculture-and-food-supply_.html.
Diffenbaugh, Noah S, and Marshall Burke. “Global Warming Has Increased Global Economic Inequality,” 2019. https://doi.org/10.1073/pnas.1816020116.
Dokken, David. “SPECIAL REPORT OF THE INTERGOVERNMENTAL PANEL ON CLIMATE CHANGE MANAGING THE RISKS OF EXTREME EVENTS AND DISASTERS TO ADVANCE CLIMATE CHANGE ADAPTATION,” n.d.
Hussein, Zekarias, Thomas Hertel, and Alla Golub. “Climate Volatility Deepens Poverty Vulnerability in Developing Countries Related Content Climate Change Mitigation Policies and Poverty in Developing Countries,” 2009. https://doi.org/10.1088/1748- 9326/4/3/034004.