Tuesday, January 24, 2012

Adapting to the Heat through Increasing Per-Capita Income

Money can't buy you love but it can protect you from the heat.  Michael Greenstone has some smart things to say at the end of this piece.   This is a clean example of how economic development mitigates the sting of Mother Nature's punch and this is only the tip of the iceberg.  As I shed in my 2005 Restat paper, the same logic holds for deaths from natural disasters.

To quote the article:

"India and the United States provide a stark example of this. Michael Greenstone, a professor of environmental economics at the Massachusetts Institute of Technology, and his colleagues have pored over death records for the past several decades in those countries to see how changes in temperature affect national death rates. He found that hotter days have only a modest effect on the U.S. mortality rate. In rural India, however, changing just a single day from a comfortable low 70s to a stifling low 90s increases the annual mortality rate by more than 1 percent. That’s from just one day of additional heat. The scary part of the research is that most climate models predict a far more dramatic change than that, with 30 or more additional days of extreme heat in India by the end of the century.
“When these results are combined with the predictions from one of the more popular climate-change models, they indicate a 50 percent increase in the annual mortality rate in India by 2100,” says Greenstone.
Why does the United States deal so much better with heat than India? We have plentiful access to heating and cooling technologies and the resources to smooth out our consumption patterns, according to Greenstone. If extreme heat — or extreme cold, for the matter — increases the cost of food, most Americans could take out loans to get themselves through the lean time. Indian farmers don’t have that option. Their resources are stretched as far as possible in good times, and they rely on the cash that comes with the harvest. If it falls short, many are pushed to death."
Now, I think it is nuts to extrapolate out to the year 2100 for India. If India's economy grows by 4% a year for the next 88 years, then it will be more than 16 times richer then than it is now.  I believe that it will be sufficient income (given product improvements) for a large share of its population to achieve the adaptation that we in the U.S take for granted.
Again, this MIT economist's work highlights that economic development is an excellent path for helping us to adapt to climate change.  Now, this economic development doesn't have to scale up the mitigation challenge.