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Andersen and Verner
Figure 9.1
Theoretical Relationship between Temperature and Income high
or
po
or
po
income
rich
low too cold
climate
too hot
Source: Authors.
in the optimal range, where the slope is relatively flat, would cause only a minor change in incomes, whereas a small change at the extremes would cause large changes in incomes. Apart from this general relationship between average climate and average income, other good arguments exist to suggest that the poor face more serious consequences of climate change and variability than the rich. For example, the rural poor are more likely to depend on agriculture, an activity whose productivity fluctuates strongly in response to variations in rainfall and temperatures. The poor are also more likely to live on marginal lands, which are ecologically fragile and vulnerable to droughts, floods, mudslides, and other natural disasters. The poor are less likely to be served by public infrastructure, such as drainage canals, that can reduce the probability of weather events’ turning into natural disasters. In addition, the poor have smaller savings to cope with adverse shocks, which means that they may have to sell productive assets, take children out of school, reduce nutrient intake, or take other measures that have adverse long-run effects on the well-being of the household. A related issue is poor people’s inability to insure themselves against adverse shocks, as well as the generally lower level of social insurance in poor countries. If climate change and variability hurt the poor more than the rich, it would imply that poverty and inequality would increase as a consequence of climate change and variability. There is some evidence to back up this hypothesis. A recent crosscountry study by Dell, Jones, and Olken (2008) suggests that income growth in poor countries has been very sensitive to the climate change experienced over the last 50 years, whereas rich countries seem to