Global climate change can cause an adverse impact on long-term real GDP economic growth.

Dan Rochefort

2019-10-27 17:37:00 Sun ET

International climate change can cause an adverse impact on long-term real GDP economic growth. USC climate change economist Hashem Pesaran and his co-authors analyze a panel dataset of 174 countries for the years from 1960 to 2014The major empirical punchline suggests that persistent changes in the temperature above or below its historical norm cause per-capita real economic output growth ceteris paribus. Specifically, a persistent increase in average global temperature by 0.04°C reduces global real GDP per capita by at least 7.22% by 2100 once the econometrician controls for all other relevant covariates and endogenous effects.

However, if all the sample countries abide by the Paris climate agreement to limit the temperature increase to 0.01°C per annum, this climate policy coordination can lower the economic output loss substantially to no more than 1.07%. Canada, India, Japan, New Zealand, Switzerland, and the U.S. can experience 10% larger losses of economic output growth. Also, climate change can cause a long-term adverse impact on economic output, labor productivity, and employment across at least 48 U.S. states and industrial sectors for the period from 1963 to 2016. This landmark study confirms and corroborates the progressive agenda that climate change can cause a first-order adverse impact on economic consequences.

 


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