Global Warming Has a Regressive Effect

CLIMATE CHANGE IS ROBIN HOOD IN REVERSE: IT STEALS FROM THE POOR TO GIVE TO THE RICH

by Roberto Roson and Martina Sartori, IEFE Bocconi
Translated by Alex Foti


 
Only recently the debate on climate change has started to focus on the effects on global income distribution. These effects are also recorded in our work which has collected data on the economic impact of climate change and analyzed how it alters the economic structure of countries and international trade around the world. The impacts studied were six: coastal erosion and loss of productive land due to the rise in sea level, impact of temperature on agricultural production, and the various impacts on labor productivity, health, tourism, and energy consumption.
 
For 54% of the countries of the world the most important effect will be a variation of tourist flows (and the demand for goods and services generated), both negative (a decline of tourist flows) and positive (an increase in tourist attractiveness). Following as dominant effects are changes in labor productivity, affecting 25% of the countries considered, and changes in agricultural productivity (12% of countries sampled).
 
The study also provides an estimate of the effect on national incomes, in the absence of mitigation policies and in correspondence with an increase in average temperatures of three degrees Celsius. For a large number of poor or developing countries, the estimated impact in terms of GDP loss is high. These are typically Central African countries, such as Togo (-18.29%), Nigeria (-13.93%), Benin (-13.63%), the countries in South-East Asia such as Cambodia (-18.25%), Laos (-13.57%), Malaysia (-10.21%), and Central American countries like Nicaragua (-12.13%), Jamaica (-11.38%) and Honduras (- 9.16%). Not all countries will suffer negative consequences from climate change. A number of countries will benefit from global warming, due to the increase in tourism, but also to a reduction of pathologies due to cold temperatures and savings on the energy bill. This group mostly contains developed countries located at high latitudes, such as Canada (+1.27%) and Russia (+1.39%), as well as other countries in Eastern and Northern Europe (Estonia +2.19%, Austria +1.95%, Denmark +1.82% Sweden +1.72%). The effect on Italian GDP is likely to be negligible (-0.18%), with a reduction in agricultural productivity the main factor in causing a negative impact (-0.13%).
 
Climate change will not create negative effects for all. There is an inverse correlation between decreases in income induced by climate change and GDP levels. The effects are similar for countries with comparable geographical, climatic and socio-economic conditions. In general, countries that are losers lose a lot, while winners gain little. So what seems to emerge is that the effect of climate change will be equivalent to that of a huge regressive tax on the world economy, causing a redistribution of income from poorer countries to richer ones. Global warming is thus like Robin Hood's doppelganger: it robs the poor and only gives little to the rich.