Valuing China’s Economic Impacts of Climate Change

Abstract

There are still many uncertainties regarding the possible influences of global climate change in the mid-latitude regions, owing to rather limited research and lack of empirical evidence. This paper systematically evaluates the economic impacts of climate variation by constructing a 27-year panel dataset of 274 prefecture cities and 816 weather stations in China. Our results document some significant climate-economic relationships, with the increase of 1℃-temperature, 100mm-rainfall, and 1%-humidity associated with a 0.78% decrease, 0.86% increase and 1.34% decrease in output, respectively. Higher temperature damages are reflected in less-developed regions, while the positive impacts of rainfall mainly appear in more-developed regions. Using integrated assessment models, we project that the model-average climate damage of China may account for up to 4.23 percent of GDP by 2100, based on a nonlinear historical climate-economic interaction.