The effects of extreme temperatures on carbon total factor productivity: Evidence from China

Abstract

Climate change poses a severe threat to the low-carbon and high-quality development of Chinese cities. This paper uses panel data from 2007 to 2019 for Chinese cities, which covers the transition of China's economy from high-speed growth to high-quality development. Then, this paper investigates the causal effects and mechanisms of extreme temperatures on carbon total factor productivity (CTFP). There are four main findings. First, CTFP calculated by biennial non-radial Luenberger productivity index grows by 3%, which comes from technological advances rather than efficiency gains. Second, both extremely high and low temperatures significantly reduce CTFP, and this negative effect is persistent, especially in poor and southern cities. Third, this negative effect comes from the decline in efficiency change rather than technology change and can also be explained by a decline in the productivity and efficiency of the desired output. Fourth, the forecasted outcomes for the future scenarios under the Shared Socioeconomic Pathways 1 (SSP1) and 5 (SSP5) indicate a persistent escalation in the adverse effects of extreme high temperatures. The research provides a new perspective for China to cope with climate change on low-carbon development and provides a reference for other developing countries.