Effects of Temperature and Rainfall Shocks on Economic Growth in Africa

Abstract

This paper examines the impact of temperature and rainfall volatility on economic growth in 46 African countries. We employ the Bayesian hierarchical modeling approach which allows us to estimate both country level and Africa-wide impact of climate change and extreme events on economic growth in Africa. Our results show that a 1 0 Celsius increase in temperature leads to 1.58 percentage points decline in economic growth while temperature shock reduces economic growth by 3.22 percentage points. A 1 percent change or shock in rainfall leads to a 6.7 percent change in economic growth. The impact of temperature changes across the 46 countries ranges from-1.24 percent to-1.82 percent in GDP. There are proximity effects on the impact. To maximize the benefits of economies of scale, the paper suggests combined national, cross countries and continental approaches to climate change adaptation in Africa.