TOO HOT FOR SUSTAINABLE DEVELOPMENT: CLIMATE CHANGE AND ENERGY EFFICIENCY

Abstract

Previous studies have focused on the benefits of adaptation in mitigating the negative effect of climate change on economic production, neglecting that adaptive energy input cannot be directly translated into output, which may be a barrier to sustainable development. Based on panel data from 280 cities in China from 2003 to 2016, we first calculate the energy efficiency as a proxy for sustainable development by using the nonradial directional distance function (NDDF) method. Second, we estimate energy efficiency as a function of temperature shocks, and we use these estimates to predict future potential impacts from climate change. We find three primary results: First, higher temperatures substantially reduce energy efficiency. Second, the heat effect on energy efficiency is homogenous across regions with different climates, suggesting that while adaptations in hot regions can mitigate the harmful effects of heat on output, this mitigation is completely offset by the concomitant increase in energy costs. Third, the energy efficiency would decrease by 2.82% in the medium term (2041–2060) and by 12.02% in the long term (2061–2080), under the assumption that carbon dioxide emissions continue to increase throughout the 21st century. These findings suggest that moderate adaptations to climate change are crucial for sustainable development.