Forecasting fluctuations in Western African countries' macroeconomic indicators - Our Common Future Conference 2015

Climate Analytics’ Florent Baarsch presents historical analogies to forecast climate change induced fluctuations of Western African countries’ macroeconomic indicators as part of Theme Day 4 at Our Common Future Conference in Paris.

Date2015, July 10
Cotton seller in Cameroon ©Photo by Carsten ten Brink courtesy Flickr

Due to the increased impacts of climate-related extreme events, a rapidly growing literature has documented the relation between macroeconomic outputs, climate variability and human induced climate change. Methodologies either rely on modelling or on statistical approaches showing that climate variability and future human induced climate change could have effects on gross domestic product (GDP). However, current statistical approaches mostly rely on linear econometric regressions with limited specifications of climate variables, while models have a limited evidence basis.

Using a statistical approach for its evidence basis, we investigate the relationships between macroeconomic variables (investment, trade balance, sectoral value added and GDP) and climate variables in Africa from the 1960s to the present. The approach is based on a nonlinear econometric model using a piecewise regression function adapted from Schlenker and Robert (2009). Time-lagged effects are also investigated.

A large set of specifications of climate variability is assessed as regressors including among others: weighted anomaly standardized precipitation, and Palmer drought severity index. For each “piece” of climate variability in Western Africa we infer climate analogy coefficients estimating the relation between climate variability and a climate-induced fluctuation of macroeconomic output.
Applying the inferred coefficients to projections from global and regional climate models, we estimate their effects on GDP and adjust African Development Bank’s forecasts for Western Africa.

This research project is supported by the United Nations Environment Programme
(Regional Office for Africa), the African Development Bank and the United Nations Economic Commission for Africa.

Our Common Future under Climate Change is the largest conference of the scientific community ahead of the climate summit COP21 in Paris in December. 2000 scientists will meet to address key issues concerning climate change in the broader context of global change and to discuss solutions for both mitigation and adaptation issues.