Abstract |
It has been documented that global warming may increase the average temperature in 5°C by the end of the century, which would imply a global GDP loss of up to 20 percent. However, the impact of climate change is not distributed uniformly across countries. Countries such as China and USA would be the least affected, even though they are the main producers of greenhouse gases. On the other hand, the most affected regions would be Africa, South and South-East Asia and Latin America. Following Dell et al. (2008), we show that in Peru an increase of the upper bound of the temperature range in 2°C and the variance of rainfall in 20% by 2050, would reduce potential GDP in 6% and 20% by 2030 and 2050, respectively. We then show that certain environmental policies would offset the effects of climate change. |