Are the Economic Consequences of Climate Change Really “Pro-Poor”?

Abstract

Abstract In order to comprehensively study the influence of climate change on economic growth and energy conservation & emission reduction, this paper first uses the non-radial directional distance function (NDDF) to calculate the city-level green economic efficiency in China during 2003-2016. The causal effect of daily temperature changes on green economic efficiency is then identified to evaluate the economic consequences of climate change. It finds that relative to the 6~12℃ temperature benchmark, any decrease or increase in temperature will pose negative influence on green economic efficiency; moreover, such effects are only observed in developed cities, but not significant in less-developed ones. This reflects that the economic consequences of climate change are “robbing the rich” to some extents, which differs widely from the “pro-poor” conclusion in the majority of literature previously. Subject to the robustness test and with possible competitive explanations excluded, this finding still stands. The mechanism test reveals that temperature rise brings about economic consequences that “rob the rich” by affecting labor productivity, efficiency of energy conservation & emission reduction and execution of environmental regulations by local government. This study brings a different perspective for understanding the economic consequences of climate change and offers empirical basis for identifying responsibilities of local government in climate governance.