Empirical Analyses of the Effect of Climate Change on Economic and Political Development in Less Developed Countries

• Applicant: Professor Dr. Matthias Schündeln
• Subject Area: Economic Policy, Applied Economics
• Term: since 2021
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 471221245

Climate change, the human-caused rise in average global temperatures, has significant effects on crop yields and on livestock, and consequently on nutrition, health, and poverty in most parts of the world. Indirect effects attributed to climate change include social outcomes such as political instability and conflict. Low-income countries are particularly prone to suffer these negative consequences. Understanding the economic and social effects of climate change is an essential first step for designing policies and institutions to deal with these effects. The overarching goal of this project is therefore to expand the empirical knowledge base regarding the economic and political effects of climate change in less developed countries. Climate change is accompanied by shifts in weather patterns and an increase in extreme weather events, such as droughts and floods. The immediate goal of this project is to contribute to a better understanding of the effects of extreme weather events in three important domains. First, I will study the effect on political attitudes. This analysis will speak to the possible danger that climate change poses for destabilizing democratic regimes and strengthening authoritarian governments. Second, I plan to analyze the effect of weather shocks on cognitive ability. The analysis will contribute to a better understanding of the effects on human capital more generally. Finally, I propose to investigate differences between the effects of climate change on rural and urban livelihoods, with a particular focus on health and nutrition outcomes. Investigating heterogeneous impacts in rural and urban areas will help to understand potential implications of climate change for rural-urban migration and urbanization. Weather shocks will primarily be measured as the accumulated effect of past deviations from normal meteorological conditions, using the Palmer Drought Severity Index (PDSI). These data will be matched with spatially disaggregated individual-level data that measure political and socioeconomic outcomes across a large number of countries and years, namely from DHS and Afrobarometer. Methodologically, I employ econometric techniques from the natural experiments literature to identify causal effects.The broader objectives of this project are the following. First, the project uses extreme weather events as a means to improve our understanding of the effects of climate change on economic and political development in the medium to long term. Second, the weather shocks serve as natural experiments to achieve econometric identification and to obtain causal estimates to study more general questions related to economic and political development. In particular, the proposed work can contribute towards a better understanding of (a) the relationship between economic development and democracy, (b) the interrelationship between poverty and human capital development, and (c) the connection between poverty and migration.

• DFG Programme: Research Grants