This paper examines the impact of climate change on rich and poor countries across the world. We measure two indices of the relative impact of climate across countries, impact per capita, and impact per GDP. These measures sum market impacts across the climate-sensitive economic sectors of each country. Both indices reveal that climate change will have serious distributional impact across countries, grouped by income per capita. We predict that poor countries will suffer the bulk of the damages from climate change. Although adaptation, wealth, and technology may influence distributional consequences across countries, we argue that the primary reason that poor countries are so vulnerable is their location. Countries in the low latitudes start with very high temperatures. Further warming pushes these countries ever further away from optimal temperatures for climate-sensitive economic sectors.

The largest known economic impact of climate change is upon agriculture because of the size and sensitivity of the sector. Warming causes the greatest harm to agriculture in developing countries primarily because many farms in the low latitudes already endure climates that are too hot. This paper reviews several studies that measure the size of the impact of warming on farms in developing countries. Even though adaptation will blunt some of the worst predicted outcomes, warming is expected to cause large damages to agriculture in developing countries over the next century.

Measurement of the likely magnitude of the economic impact of climate change on African agriculture has been a challenge. Using data from a survey of more than 9,000 farmers across 11 African countries, a cross-sectional approach estimates how farm net revenues are affected by climate change compared with current mean temperature. Revenues fall with warming for dryland crops (temperature elasticity of −1.9) and livestock (−5.4), whereas revenues rise for irrigated crops (elasticity of 0.5), which are located in relatively cool parts of Africa and are buffered by irrigation from the effects of warming. At first, warming has little net aggregate effect as the gains for irrigated crops offset the losses for dryland crops and livestock. Warming, however, will likely reduce dryland farm income immedia-tely. The final effects will also depend on changes in precipitation, because revenues from all farm types increase with precipitation. Because irrigated farms are less sensitive to climate, where water is available, irrigation is a practical adaptation to climate change in Africa.

This paper examines the distribution of climate change impacts across the sixteen Agro-Ecological Zones (AEZs) of Africa. We combine net revenue from livestock and crops and regress total net revenue on a set of climate, soil, and socio-economic variables with and without country fixed effects. Although African crop net revenue is very sensitive to climate change, combined livestock and crop net revenue is more climate resilient. With the hot and dry CCC climate scenario, average damage estimates reach 27% by 2100, but with the mild and wet PCM scenario, African farmers will benefit. The analysis of AEZs implies that the effects of climate change will be quite different across Africa. For example, currently productive areas such as dry/moist savannah are more vulnerable to climate change while currently less productive agricultural zones such as humid forest or sub-humid AEZs become more productive in the future.

This article examines the methodological issues associated with using cross-sectional methods to study climate impacts on agriculture. In particular, we describe and address concerns that have been raised about this method, including missing variable bias, irrigation, prices, and carbon fertilization. We review cross-sectional studies of estimated climate impacts on agriculture around the world. These studies suggest that both temperature and precipitation have modest effects on farmland value and net revenue. The studies also suggest that marginal warming will likely be harmful in low latitudes but beneficial in higher latitudes and that marginal increases in rainfall will be beneficial in semiarid locations but harmful in very wet places. The impacts differ for rain-fed versus irrigated farms and for crops versus livestock. The results imply that global warming will likely have only modest impacts on global food production for the next century since the harm from higher temperatures will likely be offset by the benefits of carbon fertilization and adaptations by farmers.