Climate change and developing country growth: the cases of Malawi, Mozambique, and Zambia

Abstract

We consider the interplay of climate change impacts, global mitigation policies, and the economic interests of developing countries to 2050. Focusing on Malawi, Mozambique, and Zambia, we employ a structural approach to biophysical and economic modeling that incorporates climate uncertainty and allows for rigorous comparison of climate, biophysical, and economic outcomes across global mitigation regimes. We find that effective global mitigation policies generate two sources of benefit. First, less distorted climate outcomes result in typically more favorable and less variable economic outcomes. Second, successful global mitigation policies reduce global fossil fuel producer prices, relative to unconstrained emissions, providing a substantial terms of trade boost of structural fuel importers. Combined, these gains are on the order of or greater than estimates of mitigation costs. These results highlight the interests of most developing countries in effective global mitigation policies, even in the relatively near term, with much larger benefits post-2050.