Two Essays on Climate Change in Developing Countries
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Developing countries are expected to be the most vulnerable to future climate change due to their reliance on agriculture, their geographic location as well as their lack of resources for mitigation and adaptation. It is crucial to (1) measure the economic impacts of climate change on the developing world, (2) understand which regions will be affected the most to be able to efficiently allocate the scarce resources available for adaptation (3) study which measures towards mitigation and adaptation improve development in these regions. In these two essays, I address these issues using (1) macroeconomic data and a cointegration model to quantify the effects of renewable energy on GDP in 15 developing countries and (2) microeconomic data and a fixed-effects panel model to measure the impacts of climate change on agriculture in Chile. In the first essay, I find that switching from fossil fuels to renewable energy has a positive effect on GDP in developing countries both in the long and the short-run. These results show that using renewable energy will not only help mitigate the effects of climate change by reducing the amount of CO2 in the atmosphere, but also allow them to get out of poverty. In the second essay, I find that high temperatures are extremely harmful for corn and potato production in Chile. I find that one more day of temperatures above the upper threshold of 29C reduces corn and potato yields by almost 20% and that these reductions in yields are strongest for the poorest regions of the country. These results give evidence that future climate change will have significant negative impacts on agriculture in Chile and could also increase inequality and poverty.