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Adaptation to climate change and economic growth in developing countries

Millner, Antony and Dietz, Simon (2015) Adaptation to climate change and economic growth in developing countries. Environment and Development Economics, 20 (3). pp. 380-406. ISSN 1355-770X

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Identification Number: 10.1017/S1355770X14000692

Abstract

Developing countries are vulnerable to the adverse effects of climate change, yet there is disagreement about what they should do to protect themselves from antic- ipated damages. In particular, it is unclear what the optimal balance is between investments in traditional productive capital (which increases output but is vulner- able to climate change), and investments in adaptive capital (which is unproductive in the absence of climate change, but ‘climate-proofs’ vulnerable capital). We show that, while it is unlikely that the optimal strategy involves no investment in adapta- tion, the scale and composition of optimal investments depends on empirical context. Our application to sub-Saharan Africa suggests, however, that in most contingencies it will be optimal to grow the adaptive sector more rapidly than the vulnerable sector over the coming decades, although it never exceeds 1% of the economy. Our sensi- tivity analysis goes well beyond the existing literature in evaluating the robustness of this finding.

Item Type: Article
Official URL: http://www.cambridge.org/
Additional Information: © 2014 Cambridge University Press
Subjects: G Geography. Anthropology. Recreation > GE Environmental Sciences
H Social Sciences > HC Economic History and Conditions
JEL classification: D - Microeconomics > D6 - Welfare Economics > D61 - Allocative Efficiency; Cost-Benefit Analysis
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development
O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q54 - Climate; Natural Disasters
Sets: Departments > Geography and Environment
Research centres and groups > Grantham Research Institute on Climate Change and the Environment
Collections > Economists Online
Date Deposited: 18 Jul 2014 09:43
Last Modified: 05 Oct 2017 09:28
Funders: Economic and Social Research Council, Munich Re
URI: http://eprints.lse.ac.uk/id/eprint/57863

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