Weather, Climate and Total Factor Productivity

Letta, Marco; Tol, Richard S.J.

doi:10.1007/s10640-018-0262-8

Cited by 144 publications

(84 citation statements)

References 50 publications

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“…The results in Table 5 indicate strong evidence that the ENSO events affect TFP growth through their interaction with weather patterns. The predominance of TFP growth for explaining the delayed ENSO effects on output growth is in line with other panel studies that find strong evidence of weather effects on TFP growth (Letta and Tol, 2018). Columns (1) and (4) show a less pronounced immediate impact of El Niño on TFP growth in both climate areas.…”

Section: Econometric Methodologysupporting

confidence: 88%

The Growth Effects of El Niño and La Niña: Local Weather Conditions Matter

Couharde¹,

Damette²,

Generoso³

et al. 2019

gwp

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This paper contributes to the climate-economy literature by analysing the role of weather patterns in influencing the transmission of global climate cycles to economic growth. More specifically, we focus on El Niño Southern Oscillation (ENSO) events and their interactions with local weather conditions, taking into account the heterogeneous and cumulative effects of weather patterns on economic growth and the asymmetry and nonlinearity in the global influence of ENSO on economic activity. Using data on 75 countries over the period 1975-2014, we provide evidence for the negative growth effects of ENSO events and show that there are substantial differences between its warm (El Niño) and cold (La Niña) phases and between climate zones. These differences are due to the heterogeneity in weather responses to ENSO events, known as teleconnections, which has so far not been taken into account by economists, and which will become more important in the climateeconomy relationship given that climate change may substantially strengthen longdistance relationships between weather patterns around the world. We also show that the negative growth effects associated with these teleconnections are robust to the definition of ENSO events and more important over shorter meteorological onsets.

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Section: Econometric Methodologysupporting

confidence: 88%

The Growth Effects of El Niño and La Niña: Local Weather Conditions Matter

Couharde¹,

Damette²,

Generoso³

et al. 2019

gwp

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“…The BHM estimates have initiated a necessary debate about possible methodological advances to estimate the growth impacts, in particular with respect to the assumed functional relationship 50 , the significance of using weather variables for insights into climate impacts 11,51 and on other methodological challenges 9 . Even though only short time series and small increases in temperature and other weather variables 52 are available for estimation, enriching cost-benefit analysis of climate policy with the currently existing empirical evidence about the impacts is a necessary and highly relevant improvement to be made 13 . As also stated in the main text, the implications of future damages evolving according to the BHM estimates have been investigated so far by using predetermined scenarios of warming and economic growth.…”

Section: Methodsmentioning

confidence: 99%

Paris Climate Agreement passes the cost-benefit test

2020

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The Paris Climate Agreement aims to keep temperature rise well below 2°C. This implies mitigation costs as well as avoided climate damages. Here we show that independent of the normative assumptions of inequality aversion and time preferences, the agreement constitutes the economically optimal policy pathway for the century. To this end we consistently incorporate a damage-cost curve reproducing the observed relation between temperature and economic growth into the integrated assessment model DICE. We thus provide an intertemporally optimizing cost-benefit analysis of this century's climate problem. We account for uncertainties regarding the damage curve, climate sensitivity, socioeconomic future, and mitigation costs. The resulting optimal temperature is robust as can be understood from the generic temperature-dependence of the mitigation costs and the level of damages inferred from the observed temperature-growth relationship. Our results show that the politically motivated Paris Climate Agreement also represents the economically favourable pathway, if carried out properly.

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“…Several recent contributions address the issue of weather and climate effects on productivity and efficiency with total factor productivity defined as the ratio of aggregate output to aggregate input and used as a measure of efficiency. Letta and Tol (2016) investigate the effects of temperature and precipitation shocks on total factor productivity from a macroeconomic perspective by examining the equation describing the production technology found in integrated assessment models like DICE (the Dynamic Integrated Climate-Economy model) [12]. More specifically, they introduce a factor explicitly accounting for the hypothesized dependence of the technical change on weather shocks, which are presumably unanticipated by economic agents, and subsequently econometrically test for it.…”

Section: Literature Reviewmentioning

confidence: 99%

Weather Volatility and Production Efficiency

Angelova

Kabel

2019

Sustainability

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We formulate a stochastic production frontier model to estimate the production efficiency scores while correcting for technical progress and weather effects in the form of temperature and precipitation levels and volatility. We econometrically estimate a model for European agriculture. Our results indicate that average temperature, unlike average precipitation levels, significantly influences aggregate agricultural output. We estimate that a marginal increase in temperature would decrease aggregate European agricultural output by about 1.6% percent. Further estimation results indicate a slight increase in output associated with marginal increases of precipitation and temperature volatilities.

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Weather, Climate and Total Factor Productivity

Cited by 144 publications

References 50 publications

The Growth Effects of El Niño and La Niña: Local Weather Conditions Matter

The Growth Effects of El Niño and La Niña: Local Weather Conditions Matter

Paris Climate Agreement passes the cost-benefit test

Weather Volatility and Production Efficiency

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