How climate change affects trade.
- By Kayvan FarzanehKayvan Farzaneh is an editorial researcher at Foreign Policy.
For years, scientists have forecast that global warming will have a disproportionate impact on the world’s poorest countries. Flooding will worsen in Bangladesh; the deserts in East Africa will expand; bigger, stronger cyclones will hit Indonesia. Now, two economists have divined yet another negative outcome of a hotter world for low-income countries: less trade.
Benjamin Jones of Northwestern and Benjamin Olken of MIT analyzed global import-export data as well as temperature and precipitation readings. They found that for poor countries, in a given year, every 1-degree Celsius increase in average nationwide temperature cut the growth rate of exports 2 to 5.7 percentage points. For rich countries, hotter or cooler temperatures had no measurable effect.
Poor countries are especially at risk because they depend so heavily on farming and light manufacturing — think cornfields and T-shirt factories. Temperature rises wipe out crops and hurt performance among factory workers. And because such countries tend to have little domestic trade and derive most of their income from exports, small changes can add up fast. If global warming cuts the export growth rate only half a percentage point per year, after 20 years it adds up to 10 points, Jones explains — a difference that could be even more disastrous for poor countries than the punishing weather that will accompany it.