The Long-Lived Effects of Historic Climate on the Wealth of Nations

Bluedorn, John C. and Valentinyi, Akos and Vlassopoulos, Michael (2009): The Long-Lived Effects of Historic Climate on the Wealth of Nations.

Abstract

We investigate the long-run consequences of historic, climatic temperatures (1730-2000) for the modern cross-country income distribution. Using a newly constructed dataset of climatic temperatures stretching over three centuries (18th, 19th, and 20th), we estimate a robust and significant time-varying, non-monotonic effect of climatic temperature upon current incomes for a cross-section of 167 countries. We find a large, positive effect of 18th century climatic temperature and an even larger, negative effect of 19th century climatic temperature upon current incomes. When historic, climatic temperature is introduced, the effect of 20th century climatic temperature on current income is either weakly positive or insignificant. Our findings are robust to various sub-samples, additional geographic controls, and alternative income measures. The negative relationship between current, climatic temperature and current income that is commonly estimated appears to reflect the long-run effect of climatic variations in the 18th and 19th centuries.

• Item Type: MPRA Paper
• Language: English
• Keywords: climate; temperature; economic performance; geography; history
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development; N - Economic History > N5 - Agriculture, Natural Resources, Environment, and Extractive Industries > N50 - General, International, or Comparative; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O57 - Comparative Studies of Countries; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O50 - General; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General

References

Daron Acemoglu, Simon Johnson, and James A. Robinson. The Colonial Origins of Comparative Development: An Empirical Investigation. American Economic Review, 91(5):1369–1401, December 2001.

Daron Acemoglu, Simon Johnson, and James A. Robinson. Reversal Of Fortune: Geography And Institutions In The Making Of The Modern World Income Distribution. The Quarterly Journal of Economics, 117(4):1231–1294, November 2002.

Robert J. Barro and Jong-Wha Lee. International Data on Educational Attainment: Updates and Implications. CID Working Paper, (042), April 2000. URL http://www. cid.harvard.edu/ciddata/ciddata.html.

R. S. Bradley, K. R. Briffa, J. Cole, M. K. Hughes, and T. J. Osborn. The Climate of the Last Millenium, chapter 6, pages 105–141. Springer-Verlag, Berlin and Heidelberg, Germany, 2003. ISBN 3-540-42402-4.

P. Brohan, J. J. Kennedy, I. Harris, S.F.B. Tett, and P. D. Jones. Uncertainty estimates in regional and global observed temperature changes: A new data set from 1850. Journal of Geophysical Research, 11(D12106), 2006. doi:10.1029/2005JD006548.

Center for International Earth Science Information Network (CIESIN), Columbia University and Centro Internacional de Agricultura Tropical (CIAT). Gridded Population of the World Version 3 (GPWv3), 2005. URL http://sedac.ciesin.columbia.edu/ gpw/.

University of East Anglia Climatic Research Unit. Temperature data, 2008. URL http://www.cru.uea.ac.uk/cru/data/temperature/. Accessed 2 February 2008.

Committee on Surface Temperature Reconstructions for the Last 2,000 Years. Surface Temperature Reconstructions for the Last 2,000 Years. National Academies Press, Washington, DC, USA, 2006. ISBN 0-309-10225-1. URL http://www.nap.edu/ catalog/11676.html. Board on Atmospheric Sciences and Climate, Division on Earth and Life Studies, National Research Council of the National Academies.

Melissa Dell, Benjamin F. Jones, and Benjamin A. Olken. Climate Change and Economic Growth: Evidence from the Last Half Century. NBER Working Paper, (14312), June 2008.

Melissa Dell, Benjamin F. Jones, and Benjamin A. Olken. Temperature and Income: Reconciling New Cross-Sectional and Panel Estimates. American Economic Review, 99(2):198–204, May 2009.

Olivier Deschenes and Michael Greenstone. The Economic Impacts of Climate Change: Evidence from Agricultural Profits and Random Fluctuations in Weather. American Economic Review, 97(1), March 2007.

Olivier Deschenes and Enrico Moretti. Extreme Weather Events, Mortality, and Migration. NBER Working Paper, (13227), July 2007.

Jared Diamond. Guns, Germs, and Steel: The Fates of Human Societies. W.W. Norton and Company, New York, NY, USA, 1997. ISBN 0393061310.

William Easterly and Ross Levine. Tropics, germs, and crops: How endowments influence economic development. Journal of Monetary Economics, 50(1):3–39, January 2003.

Stanley L. Engerman and Kenneth L. Sokoloff. Factor Endowments, Institutions, and Differential Paths of Growth Among New World Economies: A View from Economic Historians of the United States. NBER Historical Working Paper, (66), December 1994.

Stanley L. Engerman and Kenneth L. Sokoloff. Institutional and Non-Institutional Explanations of Economic Differences. NBER Working Paper, (9989), September 2003.

Stanley L. Engerman and Kenneth L. Sokoloff. Colonialism, Inequality, and Long-Run Paths of Development. NBER Working Paper, (11057), January 2005.

Food and Agricultural Organization of the United Nations (FAO). ProdSTAT, Production Statistics, June 2009. URL http://faostat.fao.org/.

John Luke Gallup, Jeffrey D. Sachs, and Andrew D. Mellinger. Geography and Economic Development. NBER Working Paper, (6849), 1998.

John Luke Gallup, Jeffrey D. Sachs, and Andrew D. Mellinger. Geography and Economic Development. International Regional Science Review, 22(2):179–232, 1999.

Oded Galor. 2008 Lawrence R. Klein Lecture – Comparative Economic Development: Insights from Unified Growth Theory. Brown University, Department of Economics, Working Papers, (2009-10), 2009.

Alan Heston, Robert Summers, and Bettina Aten. Penn World Table Version 6.2, September 2006. URL http://pwt.econ.upenn.edu/.

John K. Horowitz. The income-temperature relationship in a cross-section of countries and its implications for predicting the effects of global warming. Environmental and Resource Economics, forthcoming. URL http://dx.doi.org/10.1007/s10640-009-9296-2.

Ellsworth Huntington. Civilization and climate. Yale University Press, New Haven, CT, USA, 1915.

P. D. Jones and M. E. Mann. Climate over past millenia. Review of Geophysics, 42, 2004. URL http://dx.doi.org/10.1029/2003RG000143.

P. D. Jones, T. J. Osborn, and K. R. Briffa. The Evolution of Climate Over the Last Millenium. Science, 292(5517):662–667, April 2001.

P.D. Jones, M. New, D.E. Parker, S. Martin, and I.G. Rigor. Surface air temperature and its variations over the last 150 years. Reviews of Geophysics, 37(2):173–199, May 1999.

Andrew M. Kamarck. The Tropics and Economic Development. Johns Hopkins University Press, Baltimore, MD, USA, 1976. ISBN 0801818915. Published for the World Bank.

K. Klein Goldewijk and G. van Drecht. HYDE 3.1: Current and historical population and land cover, 2006. URL http://www.mnp.nl/en/themasites/hyde/index.html. Netherlands Environmental Assessment Agency (MNP), Bilthoven, Netherlands.

K. Klein Goldewijk, R. de Man, J. Meijer, and S. Wonink. The Environmental Assessment Agency 2004: World Regions and Subregions, Global Sustainability and Climate. Technical Report KMD-M001/04, Netherlands Environmental Assessment Agency (MNP), Amsterdam, NLD, 2004.

Kees Klein Goldewijk. Three Centuries of Global Population Growth: A Spatial Referenced Population (Density) Database for 1700-2000. Population and Environment, 26 (4), March 2005.

David S. Landes. The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor. W. W. Norton and Company, New York, NY, USA, 1998. ISBN 0393040178.

W. Arthur Lewis. The Evolution of the International Economic Order. Eliot Janeway Lectures on Historical Economics in honor of Joseph Schumpeter. Princeton University Press, Princeton, NJ, USA, 1978.

Bo Li, Douglas W. Nychka, and Caspar M. Ammann. The ‘hockey stick’ and the 1990s: a statistical perspective on reconstructing hemispheric temperatures. Tel lus - Series A, Dynamic Meteorology and Oceanography, 59(5):591–598, 2007.

Angus Maddison. Monitoring the World Economy, 1820-1992. Development Centre of the OECD, Paris, France, 1995. ISBN 9264145494.

Angus Maddison. Measuring and interpreting world economic performance 1500-2001. Review of Income and Wealth, 51(1):1–35, March 2005.

Michael E. Mann, Raymond S. Bradley, and Malcolm K. Hughes. Global-scale temperature patterns and climate forcing over the past six centuries. Nature, 392:779–787, 23 April 1998a.

Michael E. Mann, Raymond S. Bradley, and Malcolm K. Hughes. Global Six Century Temperature Patterns. IGBP PAGES/World Data Center-A for Paleoclimatology, 1998b. URL http://picasso.ngdc.noaa.gov/paleo/data/mann/. Data Contribu tion Series No. 1998-016, NOAA/NGDC Paleoclimatology Progam, Boulder, CO, USA. Corrected 2004.

Michael E. Mann, Ed Gille, Raymond S. Bradley, Malcolm K. Hughes, Jonathan Overpeck, Frank T. Keimig, and Wendy Gross. Global Temperature Patterns in Past Centuries: An Interactive Presentations. Earth Interactions, 4(4):1–29, 2000. URL http://www.ncdc.noaa.gov/paleo/ei/ei_cover.html.

Michael E. Mann, Raymond S. Bradley, and Malcolm K. Hughes. Corrigendum: Global-scale temperature patterns and climate forcing over the past six centuries. Nature, 430: 105, 1 July 2004.

Michael E. Mann, Scott Rutherford, Eugene Wahl, and Caspar Ammann. Testing the Fidelity of Methods Used in Proxy-Based Reconstructions of Past Climate. Journal of Climate, 18:4097–4107, October 2005.

Michael E. Mann, Scott Rutherford, Eugene Wahl, and Caspar Ammann. Robustness of proxy-based climate field reconstruction methods. Journal of Geophysical Research, 112:4097–4107, October 2007. URL http://dx.doi.org/10.1029/2006JD008272.

Monty G. Marshall, Keith Jaggers, and Ted Gurr. Polity IV Project: Political Regime Characteristics and Transitions, 1800-2002, 2007.

William A. Masters and Margaret S. McMillan. Climate and Scale in Economic Growth. Journal of Economic Growth, 6(3):167–86, September 2001.

Brian R. Mitchell. International Historical Statistics 1750-2005. Palgrave Macmillan, New York, NY, USA, 6th edition, 2007. 5 volumes, covering Africa, Americas, Asia, Europe, and Oceania.

Charles de Secondat, Baron de Montesquieu. The Spirit of the Laws. Cambridge Texts in the History of Political Thought. Cambridge University Press, Cambridge, UK, 1989 edition, 1748. ISBN 0521369746.

Gunnar Myrdal. Asian Drama: An Inquiry into the Poverty of Nations. Pantheon, New York, NY, USA, 1968. 3 volumes, sponsored by the Twentieth Century Fund.

William D. Nordhaus. Geography and macroeconomics: New data and new findings. Proceedings of the National Academy of Science, 103(10):3510–3517, March 7 2006.

Nathan Nunn. The Importance of History for Economic Development. Annual Review of Economics, 1(1):65–92, September 2009.

Nathan Nunn and Diego Puga. Ruggedness: The Blessing of Bad Geography in Africa. CEPR Discussion Paper, (6253), April 2007.

Ola Olsson and Douglas A. Hibbs, Jr. Biogeography and Long-Run Economic Development. European Economic Review, 49(4):909–938, May 2005.

Louis Putterman. Agriculture, Diffusion and Development: Ripple Effects of the Neolithic Revolution. Economica, 75(300):729–748, November 2008.

Dani Rodrik, Arvind Subramanian, and Francesco Trebbi. Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development. Journal of Economic Growth, 9(2):131–165, June 2004.

Jeffrey D. Sachs. Tropical Underdevelopment. NBER Working Paper, (8119), February 2001.

Jeffrey D. Sachs. Institutions Don’t Rule: Direct Effects of Geography on Per Capita Income. NBER Working Paper, (9490), February 2003.

Kenneth L. Sokoloff and Stanley L. Engerman. History Lessons: Institutions, Factors Endowments, and Paths of Development in the New World. Journal of Economic Perspectives, 14(3):217–232, Summer 2000.

Waldo Tobler, Uwe Deichmann, Jon Gottsegen, and Kelly Maloy. The Global Demography Project. Technical Report TR-95-6, National Center for Geographic Information and Analysis, Dept. of Geography, University of California, Santa Barbera, CA, USA, April 1995.

U.S. Census Bureau . Centers of Population Computation. Technical report, U.S. Department of Commerce, Washington, DC, USA, April 2001. URL http://www.census.gov/geo/www/cenpop/calculate2k.pdf.

U.S. Geological Survey. Global GIS Global Coverage. DVD-ROM, 2003. URL http://webgis.wr.usgs.gov/globalgis/index.html.

Hans von Storch, Eduardo Zorita, and Fidel Gonz´alez-Rouco. Assessment of three temperature reconstruction methods in the virtual reality of a climate simulation. International Journal of Earth Sciences, 98(1):67–82, February 2009. URL http://dx.doi.org/10.1007/s00531-008-0349-5/.

Eugene R. Wahl and Caspar M. Ammann. Robustness of the Mann, Bradley, Hughes reconstruction of northern hemisphere surface temperatures: Examination of criticisms based on the nature and processing of proxy climate evidence. Climatic Change, 85 (1-2):33–69, November 2007.

World Meteorological Organization. Climate FAQs, 2008. URL http://www.wmo.ch/pages/prog/wcp/ccl/faqs.html. Accessed 4 February 2008.

World Bank . Country Classification, July 2009a. URL http://www.worldbank.org/data/countryclass/classgroups.htm. Accessed 5 August 2009.

World Bank . World Development Indicators, July 2009b. URL http://www.esds.ac.uk/international/. Accessed 11 October 2009.