Working Paper: CEPR ID: DP15491
Authors: Bruno Conte; Klaus Desmet; David Krisztin Nagy; Esteban Rossi-Hansberg
Abstract: This paper quantitatively assesses the world's changing economic geography and sectoral specialization due to global warming. It proposes a two-sector dynamic spatial growth model that incorporates the relation between economic activity, carbon emissions, and temperature. The model is taken to the data at the 1º by 1º resolution for the entire world. Over a 200-year horizon, rising temperatures consistent with emissions under Representative Concentration Pathway 8.5 push people and economic activity northwards to Siberia, Canada, and Scandinavia. Compared to a world without climate change, clusters of agricultural specialization shift from Central Africa, Brazil, and India's Ganges Valley, to Central Asia, parts of China and northern Canada. Equatorial latitudes that lose agriculture specialize more in non-agriculture but, due to their persistently low productivity, lose population. By the year 2200, predicted losses in real GDP and utility are 6% and 15%, respectively. Higher trade costs make adaptation through changes in sectoral specialization more costly, leading to less geographic concentration in agriculture and larger climate-induced migration.
Keywords: global warming; sectoral specialization; trade; migration; geography; growth
JEL Codes: F18; O13; O41; Q56; R11; R12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Rising temperatures (Q54) | Push economic activity northward towards Siberia, Canada, and Scandinavia (N71) |
| Rising temperatures (Q54) | Decrease utility (L97) |
| Climate change (Q54) | Geographic concentration of agricultural specialization (Q19) |
| Climate change (Q54) | Clusters moving from Central Africa and Brazil to Central Asia and Northern Canada (F29) |
| Higher trade costs (F12) | Exacerbate effects of climate change (Q54) |
| Higher trade costs (F12) | Limit adaptation through sectoral specialization (L52) |
| Higher trade costs (F12) | Increase climate-induced migration (F22) |
| Trade and migration (O24) | Substitutes in response to climate shocks (Q54) |
| Higher trade costs (F12) | Greater relocations of people and economic activity towards more productive regions (R11) |