In this episode, I speak with Dr. Ishan Nath, assistant professor at the Harvard Kennedy School, about his research on climate change, agriculture, and trade. His forthcoming paper in the Journal of Political Economy explores how warming could actually increase the share of workers in agriculture in many low-income countries, especially those with limited access to trade.
We discuss why trade barriers matter for climate adaptation, what makes agricultural labor patterns persistent, and how economic development intersects with environmental vulnerability.
Dr. Nath's site : https://www.ishannath.com/
His paper "Climate Change, the Food Problem, and the Challenge of Adaptation through Sectoral Reallocation" can be downloaded here:
What We Cover in This Episode:
- The research question: Can farms move toward more temperate regions as the world warms? And what does that mean for global adaptation?
- Threshold temperatures: Why extreme heat—above 29°C (~84°F)—is especially damaging for agricultural productivity.
- Why the Global South is most at risk: We explore how countries that are already hot, poor, and heavily dependent on agriculture are hit hardest by climate change.
- The “food problem”: A key concept explaining why low-income countries remain stuck with large agricultural labor forces despite low productivity.
- Trade limitations: Ishan shares findings on why poor countries import very little food—and why that severely limits their ability to adapt.
- Counterfactual simulations: What happens when trade barriers like tariffs and regulatory frictions are reduced? The results show substantial reductions in climate-related economic losses.
- Why trade matters for adaptation: The conversation highlights how better trade integration could significantly soften the blow of climate change in vulnerable regions.
- Heterogeneous climate impacts: From Northern Europe to India, we discuss how temperature changes affect countries differently, and why wealth and infrastructure matter.
- Policy implications: Beyond emissions reductions, what role should global trade policy play in climate adaptation strategies?
💡 Key Takeaway:
Climate change isn't just an environmental issue—it’s a structural development challenge. If global trade systems remain as they are, many low-income countries may be pushed further into vulnerable, low-productivity sectors like agriculture. But if trade barriers are eased, international markets could play a powerful role in helping these countries adapt.
For questions, comments or suggestions, you can contact me at arvid.viaene.ce@gmail.com
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:05):
When we talk about climate policy, the focus is
often on reducing emissions, buttoday's guest, ishan Nath,
highlights another crucialdimension how we adapt to
climate change, particularly inthe global south.
Ishan is an assistant professorat the Harvard Kennedy School
and an affiliate of the SalataInstitute for Climate and
Sustainability.
His latest research examineshow climate change could
(00:27):
reinforce existing patterns ofagricultural labor and limit
development, and what's strikingis that, instead of moving
people away from vulnerablefarming regions, climate change
might actually push more peopleinto them, especially in poorer
countries where trade is limited, and we'll talk about how trade
policy could play a centralrole in helping vulnerable
countries adapt moresuccessfully to climate change.
(00:50):
Ishan, welcome to the podcast.
Speaker 2 (00:53):
Yeah, thanks so much for having me.
It's great to be here.
Speaker 1 (00:55):
I am very excited to have you on because I think you
wrote one of the best papers onestimating the impacts of
climate change on economicoutcomes and I learned a lot
from your paper, so I was veryexcited that you're willing to
join.
Would you mind maybe justdescribing what your paper is
about?
Speaker 2 (01:13):
Sure Well, first I guess I'll say thanks for the
kind words about the paper.
You know, in economics youwrite like a few papers and each
one takes years and years towrite and there's so much time
spent alone in a dark room doinganalysis and writing that it's
really cool when you get to thispoint and someone asks you
about your paper and you get totalk about it to the world.
So I appreciate that.
What's the paper about?
(01:33):
I think maybe the way to thinkabout the research question is
where will the world's farms bein the future as our climate
changes, and how does thataffect how bad the consequences
of climate change are likely tobe for economies throughout the
world?
I think there's this intuitiona lot of people have that has
been represented somewhat inother economics research, that
(01:55):
perhaps if some colder placesthat are getting warmer are
getting more suitable foragriculture, while other places
that are already hot are gettingtoo hot and much more
unsuitable for agriculture,perhaps we could really benefit
if the world's farms couldmigrate away from the hotter
parts of the world towards thecolder parts of the world and we
could grow more food in Canada,for example, and more food in
(02:19):
Europe, in Northern Europe andship more food to hotter parts
of the world, and that couldreally help us adapt to climate
change.
So that's kind of where Istarted with the research
question and that led me in allsorts of directions as I tried
to go about answering it, which,of course, we'll talk about.
Speaker 1 (02:34):
Yeah, and I think it's worth mentioning, because I
actually did my PhD too on thistopic, but not as extensive as
you did.
I was just looking at theUnited States and I think a key
feature to keep in mind is that,as you also do in the papers,
these extreme hot days oftemperatures above 30 degrees or
like 80 Fahrenheit are reallydamaging for crops, and I think
(02:54):
that's what you're saying, like,northern Europe is colder, so
we can move it there as a way ofadapting, which I think some of
the papers were showing is hey,there's this way to adapt to
climate change in this way.
Speaker 2 (03:09):
That's right.
That's true in agriculture andit turns out to be true for a
number of different outcomesthat affect humans, both
economic and non-economicoutcomes.
What's really bad it turns outwhen it comes to temperature and
the same is also going to betrue of precipitation is the
extremes.
If you have a day where it's 65degrees Fahrenheit I don't
actually know off the top of myhead what that is in Celsius If
you go from 65 to 75 degreesFahrenheit, sort of in the nice
(03:30):
range of temperatures, it turnsout that in the data that
doesn't really seem to affectpeople, whether it's
productivity in a factory,productivity on a farm, people's
health effects that they sufferfrom exposure to temperature.
Those things really tend toscale up when you go into the
extremes.
Speaker 1 (03:47):
A quick note for listeners outside the United
States.
Ishan is using Fahrenheit whentalking about temperatures.
For reference, 68 degreesFahrenheit is about 20 degrees
Celsius.
So the range he just mentionedroughly falls between 18 and 24
degrees Celsius.
And in his paper extremetemperatures are defined as
anything above 29 degreesCelsius, which is about 84
(04:09):
degrees Fahrenheit.
So that's the threshold abovewhich temperatures begin to
negatively affect agriculturalproductivity.
Back to Ishan.
Speaker 2 (04:18):
Yeah, exactly, and so that's why it really matters
how hot a place is in thebaseline.
If you're in a colder placethat's experiencing climate
change, then you don't have alot of days of the year that are
close to these thresholds whereit starts to get too hot, so
you have a lot of days whereit's cold and you're getting to
be less cold, which turns out tobe beneficial for productivity
(04:38):
and beneficial for people'shealth and things like that.
I grew up in Chicago.
The winters were really cold,it turns out they're really cold
.
Yeah, exactly, it turns out.
It's actually really good forpeople in many ways when winters
get less cold, but the flipside of that is when summers
that are already hot in placeslike New Delhi, where I was born
, if it's 110 degrees andclimate change is going to make
(05:01):
those 110 degree days 116degrees, that turns out to be
really, really harmful foreverything from crops to human
health to a wide variety ofother things.
Speaker 1 (05:12):
Exactly and then.
But then the way you show itkind of in your paper is like
people were saying there'ssubstantial adaptation that can
happen because of trade, whichis like this 2016 paper, but
then you were like building ontop of it to show it's not as
easily adaptable as people think.
Speaker 2 (05:29):
Right.
So yeah, that's kind ofdefinitely, I think, to sort of
skip ahead to the bottom line ofthe paper.
I think that you've sort ofnailed it there.
You have this potentialintuition where perhaps, since
colder places getting warmer awide variety of evidence has
shown is better for agriculture.
It's going to be better forparts of Canada, parts of
(05:52):
Northern Europe as they getwarmer, because they're colder
than kind of the optimal rangeof temperature for agriculture
right now.
So perhaps we can have a lotmore agricultural activity in
those places and reduce theamount of people working on
farms in hotter parts of theworld.
So that's like really niceintuition.
But it turns out that if youjust kind of look at the pattern
(06:13):
of where the world's farms areright now and how productive
they are, then you run into someproblematic facts for that
narrative and it turns out thatthose problematic facts are
going to be the core of why,unfortunately, in my paper I
find it's unlikely that theworld's farms are going to move
away from these hotter, morevulnerable parts of the world
(06:33):
and instead that climate changecould actually perversely
intensify agriculturalspecialization and the share of
workers working on farms,especially in those places that
are too hot, which are gettinghotter and really harmed, and
that's kind of why the paper'sentitled the Food Problem, which
we can talk more about.
But it turns out there's specialdynamics about food in the
(06:56):
world and the way theagricultural trade currently
works in the world.
That suggests that actuallyit's really hard to achieve this
story that some other researchhas suggested might be
achievable of moving the world.
That suggests that actuallyit's really hard to achieve this
story that some other researchhas suggested might be
achievable of moving the world'sfarms away from the most
vulnerable locations.
Speaker 1 (07:11):
Exactly, you already brought up this additional food
problem that's preventing someof this reallocation from
happening, and what are thensome of the contributions you
did in your paper?
So it's like this food problemshowing that this is like a big
impact.
Speaker 2 (07:25):
So yeah, so let's talk about what this food
problem is and what it means forthe economy working in
different sectors.
So first of all, I should say Idid not come up with this
phrase.
It's something that's beenaround in the literature and
economics.
There's paper by Doug Gollin,stephen Parenti and Richard
Rogerson in 2007.
That is the first one I know ofthat kind of frames this
(07:47):
development story as the foodproblem, and the story here is
really trying to figure out why,as economies develop and grow
richer, the share of people inagriculture declines
dramatically over time.
A fascinating fact is that in1850 in the US, 60% of Americans
worked on farms.
In the early 1900s, it wasstill over 40% of Americans who
(08:11):
worked on farms.
Today it's about 1.2% ofAmericans who work on farms, and
you see a similar patternthroughout many parts of the
world.
Whereas economies grow moreproductive and grow richer,
people tend to leave farms, andso economists have been trying
to figure out for a while whytend to leave farms?
And so economists have beentrying to figure out for a while
why is that the case?
And it turns out thatinterestingly, unlike some other
(08:31):
things in the economy, when youget more productive at farming,
that's when you have fewerfarmers, because you can only
eat so much food in the economy.
You can have like better foodand higher quality food to some
degree, but you only need somuch food.
So when you get better atproducing food, the share of
people's incomes that they spendon food tends to decline, which
(08:52):
means the share of economicactivity and the share of
workers in agriculture alsotends to decline phenomenon in
economics, where the way to havefewer farmers is to get better
at farming.
But now the flip side of thatis if you're not very good at
(09:12):
farming which it turns out thatthe low-income countries in the
world are especially bad atfarming then you have a lot of
farmers and you have a lot ofpeople working in the sector
that you're really, reallyunproductive in.
But that's because you needfood, and so if you're
unproductive at producing it, itjust takes more of your labor,
more of your land, more of yourcapital in the agricultural
sector in order to meet thepopulation's demand to eat.
And so what you have right nowin the world just to extend this
(09:36):
explanation a bit what you haveright now in the world is this
situation where the countriesthat specialize really heavily
in agriculture are actuallyrelatively really unproductive
at farming.
And so the fact that I point toin my paper, which has been well
established by other economistsand literature, is that the
richest countries in the world,of course they're richer because
(09:59):
they're more productive.
We think that productivity iswhat drives economic growth and
drives income levels acrosscountries.
But the rich countries, inmanufacturing, the 90th
percentile richest countries inthe world are about four times
more productive than the 10thpercentile poorest countries in
the world.
So the rich countries factoriesare four times better at
(10:21):
producing output from a givenlevel of labor input and capital
input than the poorestcountries' factories.
But in agriculture the richcountries are 45 times more
productive per worker 45.
45.
So the gap between rich andpoor countries is 10 times
greater in agriculture than inmanufacturing.
(10:44):
So if the world followed kind ofthe simplest econ 101
international trade equilibriumis what economists would call it
where you specialize in thething you're relatively good at,
then we would expect to seeeverybody in rich countries as a
farmer and everybody in poorcountries works in a factory.
Because in a relative sense therich countries are like even
(11:06):
more awesome at farming thanthey are at producing things in
factories, or in offices, forthat matter.
But the actual pattern we seein the world is the opposite.
In India, something like 60% ofthe population works on farms,
in the US it's 1%, and so wehave the countries in the world
that are really reallyunproductive at farming, are the
(11:28):
ones where all the farmers are,and so that's kind of the fact
we have to confront.
If we have this hope thatperhaps climate change, which is
likely to make poor countriesmuch less productive in
agriculture, if we hope thatit'll drive people out of
farming, we have to confrontthis fact that they're already
really really unproductive inagriculture without much global
(11:50):
warming having happened yet, andyet the population is highly
concentrated in agriculture.
So that's kind of where thisfood problem story that I'll
explain the economics of morecomes in, to try to explain that
existing pattern and help usthink about how climate change
might alter these patterns ofspecialization.
Speaker 1 (12:08):
I also have this image in my mind when I think of
, like the US, you have thesegiant agricultural farms with
these giant machines working onit like super mechanized, versus
then the more substance farmslike I've got my own garden, I
need to do the vegetablesexplaining some of that 45 times
more productive, because youknow.
Speaker 2 (12:27):
Exactly, and there's a whole literature in economics
that's trying to understand thetechnologies and policies and
institutions that lead toagriculture being so much more
productive in rich countries.
But in this paper I'm justtaking that as a given.
I'm not trying to figure outwhy that's true.
I'm just trying to figure outwhat we can make of that.
Speaker 1 (12:43):
So the story that was told before?
Well, climate change willhappen and they'll shift away
from agriculture, but that's notthe case.
Speaker 2 (13:01):
So, to continue down that path a little, you might
expect this hopeful reallocationwhere people who work on farms
in these places where it'sgetting really unproductive for
agriculture as the world warms,could be able to leave their
farms If you thought there was areally strong role for
international trade in theseplaces.
Because if trade is playing areally strong role in these
economies, then you would expectthat when you get worse at
(13:21):
producing in a certain sector,you'll tend to import more in
that sector and you'll tend toexport more in other sectors of
the economy.
That's kind of how we expectproductivity to drive patterns
of international trade.
However, it turns out thatthere's basically two reasons
why we think in this literaturethat low-income economies
(13:42):
specialize so much inagriculture despite being
relatively unproductive atfarming no-transcript.
(14:06):
And so you end up the price offood ends up being high, such
that it encourages people towork in that sector, even if
it's low productivity.
And in places that are going tohave unproductive farms, you'll
have a lot of land and laborand capital devoted to
agriculture just to meet thepopulation's subsistence demands
that they have to eat, and so,in the absence of trade, you
(14:28):
would expect a lot of people towork on farms if agricultural
productivity is low.
Now it turns out that in theabsence of trade is actually a
pretty good summary of how mostlow-income economies work in
agriculture.
And so in these places, forwhatever reason, which I think
we don't totally understand,they trade very, very little
(14:48):
food and especially it turns outto be difficult to import food
into low-income economies.
In the data, so the fact aboutthat that I show in the paper is
that in a rich country you canexpect about 45% of people
spending on food to be onimports.
So in the richest quartile ofthe world nearly half of our
(15:10):
agricultural consumption isimported from some other country
in the world, but in thepoorest quartile of the world
the corresponding figure is 9%.
So about 90% of agriculturalconsumption in low-income
economies is produceddomestically and it's because of
that.
In my analysis, that's kind ofthe fact that drives the
(15:32):
patterns of specialization wecan see in the world, which is
that in the absence of trade,you need food.
So a lot of your economy has tobe in farming if you're not
very good at farming just toproduce enough food.
And then it turns out that inthe absence of trade is actually
a pretty good summary of what'sgoing on in the poorest
quartile of the world?
Speaker 1 (15:52):
Yeah, and it's almost like you say.
I hadn't quite thought aboutthat way, but, like you, would
expect them to import more foodbecause food's relatively
expensive.
Speaker 2 (16:01):
Exactly, and so it's a bit of a mystery or a bit of a
puzzle in my paper.
Why is it the case that lowincome countries import so
little food?
In the paper I basically inferthat it must be really difficult
for them to import food, sincethey're not doing it.
But I don't have a goodexplanation for exactly why, and
I think there's some potentialreasons for that, like road
(16:22):
quality, infrastructure,regulatory barriers to importing
I think it can't all beexplained by tariffs and trade
policy, but that also probablyplays a role but to explain a
little more about what thatmeans for the implications of
climate change.
So now you have this storywhere we can talk a little bit
more, perhaps later about wherethis information comes from, but
(16:44):
you have a story where theworld's getting hotter is making
it especially difficult to farmin these places.
Agricultural productivity isfalling much more than
productivity in factories andoffices in low-income countries.
As the world gets hotter is whatthe evidence would suggest,
because there's so little trade,making it harder to farm is
(17:09):
actually going to, in myanalysis, increase the share of
these economies and the share ofworkers in the economies that
work on farms, because food hasthese special properties where
you really, really need it tosurvive.
So if you get worse at producingfood, you need more people to
work on producing food.
The alternative is, you couldimagine a situation where people
(17:31):
in low-income economies wouldimport more of their food as it
got harder to produce fooddomestically because it's
getting too hot.
But it turns out that what wecan infer from the existing data
on trade flows suggests,through the economic model, it's
very unlikely that trade flowswould respond very much, because
there's so little trade tobegin with In these places that
(17:51):
we infer it must be the casethat it's quite difficult to
trade in these places.
And so, in light of that, youkind of end up with a situation,
(18:17):
in my analysis, where globalwarming actually leads to a
greater share of workers quoteunquote where then you might see
, in response to warming, butalso in response to just
existing low productivity, thatthere might be greater food
imports in low income economiesand they might reallocate
production away from farmingtowards places that are less
vulnerable, as it turns out, toextreme temperatures places that
(18:40):
are less vulnerable, as itturns out, to extreme
temperatures.
Speaker 1 (18:43):
Got it To summarize the classic is you would expect
them to import more food intofarms to move away, but because
they're getting worse at food,which is essential, they
essentially now have to workmore in the sector, which
they're going to becoming evenmore unproductive in, which is
not a great dynamic, becauseyou're already 45 times less
(19:03):
productive, now you've got towork even more in that sector.
Speaker 2 (19:07):
That's right and I think the way to think about it
is productivity fortunately tosome degree in agriculture has
improved over the last severaldecades in low-income countries
and the share of people workingon farms has been falling.
But I think the way to thinkabout it is that we can expect
global warming to potentiallyslow each of these positive
(19:27):
developments.
We can expect it to slow therate of productivity growth and
slow the rate of people leavingfarms and low-income economies
and kind of keep them poorer forlonger.
But the way out of the paper,of course, is suppose low-income
economies were as integrated totrade as richer economies or
suppose they were able toimplement some reforms which we
don't quite know because it's amacro paper.
(19:48):
We don't quite know exactlywhat these reforms would look
like on the ground in this paper, but something like reduced
customs duties or regulatorydelays to import food or lower
tariffs or things like that, andthey were more integrated into
the world economy as richercountries are.
Then you might see more ofthese beneficial movements in
(20:11):
global agricultural markets thatreduce their exposure to this
falling productivity or thisharmful productivity effects in
agriculture.
Speaker 1 (20:20):
Because in the paper you run there's one simulation
you've got several, but one iswhere you kind of just reduce
trade barriers like tariffs,trade agreements and regulatory
frictions, to just demonstrateokay, what if we take those
constraints away and make itessentially easier for them to
trade, like you know, becausethe import share is so low?
(20:40):
Like, let's make it easier forthem to trade, what did that
then give in terms of results of, like mitigating these impacts
of climate change?
Speaker 2 (20:48):
Yeah.
So I guess there's like acouple layers of how you could
think about this.
You could think about the sortof pie in the sky.
What if four countries werejust as integrated to trade as
rich countries?
It's not clear that's possiblebecause there might be some
things that are sort of beyondthe reach of policy that make it
harder to trade food inlow-income countries.
It could be that theproductivity of how well you can
(21:11):
produce high-quality roads andhave good shipping logistics and
things like that, that could bethings that are difficult for
policy to directly affect.
So we might not want to go allthe way to the situation in
which poor countries are tradingjust as much as rich countries.
We might instead want to thinkabout an intermediate
(21:31):
hypothetical where what if theyjust control the things we know
they can control?
They make regulations a littlebit simpler, they reduce tariffs
, they make it a little biteasier to trade.
Just in terms of the directcosts that people face when
they're become as integrated totrade as rich countries, their
exposure in terms of welfarecosts or the amount of money
(22:06):
equivalent money that people arelosing from the impacts of
warming is about half as high ifthey're as open to trade as
rich countries are.
Speaker 1 (22:15):
And then in the scenario, where Half a second,
so half as high, as if therewould be no adjustment.
Speaker 2 (22:24):
As if trade policy and trade integration were as it
presently is, and so, basically, if four countries were able to
have the trade integration ofrich countries, my analysis
suggests they could cut the costof climate change in half, or
at least the productivity costsof climate change.
And then when we look at thethings that we know they can
(22:47):
control directly, like tariffsand regulatory barriers, then it
goes down to cutting the costsby only about 15%, and so we
think there's a lot of thingsthat we can't quite explain
about why low-income countriesare not very closed off to trade
or are not very open to trade,and the best guess of that is
kind of this transportationinfrastructure and logistics,
(23:08):
where a lot of countries arelandlocked.
Port quality, road quality,things like that could be
barriers that are harder toobserve in the macro data.
Speaker 1 (23:17):
Would you like mind giving some estimates of like
what the impacts are like in theagriculture and
non-agricultural sector?
Speaker 2 (23:24):
Yeah.
So I think my paper is notreally designed to answer that
question very well.
I think there's some otherpapers that answer that better.
So in this paper, the totaleffects on productivity in the
economy so you can think of itas like roughly the effect on
GDP in the worst hit countriesin the world is something like
10 percent, which you know theCOVID recession was about a 6
(23:47):
percent drop in GDP in richcountries.
So you can think of like losing10 percent of GDP every year
due to being hotter as a prettybig effect.
But I think actually that thatlikely understates the effect
relative to some estimates inother papers that are more about
estimating the aggregate effectrather than thinking about
these dynamics of which sectorspeople are working in and how
(24:10):
policy can reduce the effects,which is more the strength of
the current paper that we'retalking about.
So in some other work I've donewith co-authors Pete Cleno and
Valerie Ramey from Stanford,there we're trying more to
estimate the aggregate damagesand a critical thing that you
have to account for there isthat economies grow over time
(24:32):
and evolve over time, and so theeffects of climate change.
If you just imagined globalwarming happening in one future
year, you go from a not hotworld to a hot world, that might
be a lot less bad than if theworld is hot every year and the
effects can accumulate througheconomic growth over time, which
it turns out that a number ofpapers have found could be an
(24:54):
important part of the climatechange story.
So when you account for thissort of dynamic accumulation of
effects over time as the economygrows more slowly, rather than
just being hit by a shock in oneperiod, then we actually
estimate in that paper that someof the worst hit countries are
likely to suffer declines of GDPrelative to a no climate change
(25:15):
scenario of about 25 to 30%.
And so in that paper weestimate what I consider to be
potentially like really extremedamages on the hotter, poorer
parts of the world.
When you account for these sortof dynamic growth effects in
this paper, it's not reallydesigned to estimate the
headline number.
It's more designed to thinkabout how can trade policy
(25:36):
affect the headline numbers.
So those are the estimates Iwould emphasize more.
Speaker 1 (25:40):
Because the one thing you did say is like those
numbers are for, like the lowincome hot countries.
Because I think one thing yourpaper also like mentions is
there's a very strongheterogeneity in impacts.
Could you like speak to that?
Speaker 2 (25:53):
Yeah, that's right, and so you know I don't have the
numbers off the top of my headfrom the other paper, but it's
something like 8, 10, 12, 14percent for the world on average
, but it's about three timesbigger than that for the world's
hardest hit countries is what Ifind in this paper with Pete
and Valerie.
Yeah, of course that paper isnot published yet so the results
(26:14):
could still change.
It's subject to referees.
But the part aboutheterogeneity you make is really
important.
We do find in that paper that'sconsistent with a wide variety
of literature that you know.
Minnesota is kind of intuitiveto you.
It's actually nice for it toget a little bit warmer in like
Finland or Toronto.
And that's not to say thatwe've understood and estimated
(26:44):
every potential effect ofclimate change, but at least the
things that are best understoodand best represented in the
climate models, like changes intemperature and precipitation
that's what the scientists aregiving us for the most
well-understood effects and theimpact of those on the economy
turns out to be neutral ormildly positive in some of these
(27:05):
colder parts of the world.
And I want to talk a little bitmore about what drives this
global heterogeneity in who isaffected by climate change.
What we have is kind of thisreally unfortunate coincidence
where all of the things thatmake a country vulnerable to the
world getting hotter andtemperatures and weather
becoming more extreme turn outto coincide in the same
(27:28):
countries in the world, and sothere's basically three
determinants of vulnerability,and it turns out that all three
of those vulnerabilities arepresent in the same places.
So the first of thesevulnerabilities that we talked
about is how hot you already are.
It's extreme heat and extremeexposure to weather that really
matters.
And so if you're India, ifyou're New Delhi, where you have
(27:51):
a lot of 100 degree days, andyou're making those 100 degree
days 110 degree days, that'sreally a problem relative to if
you're a temperate or a colderplace and you're not approaching
these extreme temperature zones, then the second determinant of
vulnerability that we'vediscussed a lot on this podcast
is whether or not you work on afarm.
The empirical estimates in thispaper that we're talking about
(28:13):
today suggests that agricultureis about 10 times more
vulnerable to temperature thanwork in factories or offices,
and so we project something likea 2% global decline in
non-agricultural productivityfrom global warming on average
across the world, but inagriculture we project something
like a 20% decline across avariety of different published
(28:36):
papers in economics.
And so that's the seconddeterminant.
The second determinant iswhether you're in a temperate
place or a hotter place or acolder place.
Farming is just a lot moresensitive to temperature, for
very intuitive reasons, thannon-farming activities.
And now the third determinantof vulnerability is whether you
work in an office or a factoryor a farm, and whether you live
(28:59):
in a hot or a cold country.
If you live in a place that'sricher and more productive, your
productivity is a lot lesssensitive to weather.
And so it turns out that, dueto obvious technologies like air
conditioning, we can really seein the data that when you
experience an extreme weathershock whether it's a storm,
whether it's an extremely hotday, whether it's a drought, and
(29:19):
you're a farmer in a richcountry that can irrigate, if
you're in a richer part of theworld, you're really much more
insulated from any type ofextreme weather.
So we have these threedeterminants of vulnerability to
global warming we have are youalready hot?
Are you a farmer or not a farmer, and are you in a richer or
poorer country?
And then we have this reallyunfortunate coincidence where
(29:41):
the hot places are also whereall the farmers work, and it's
also the low-income countries,so all three determinants of
what makes you vulnerable toglobal warming are present in
the same countries.
So that's why you end up with,in a lot of the economics
literature on this, this reallyreally concentrated impact on
basically the hot, poorcountries where a lot of people
(30:02):
are farming, because all threeof those things make you more
vulnerable to global warming.
And so that's kind of thechallenge that we have to
confront if we're going to thinkabout how to make the effects
of global warming less painfulfor the world's populations.
I think it's really fair tothink about a lot of the issue
(30:23):
with global warming is it thateven without global warming, we
want people to become better offand to have higher incomes and
(30:44):
more comfortable lives in manyways, and the greatest challenge
, in my view, for global warmingis interfering with that
process of development and kindof keeping these parts of the
world from getting richer faster.
Speaker 1 (30:56):
I think that was a great summary.
I think like exactly with thethree vulnerabilities, the
concentration to bridge that Ithink that's what your paper
shows is that one of the ways wecan at least help or like
mitigate the impacts is throughhaving less trade barriers for
them, which, you know, thecurrent climate is a little bit
(31:17):
tricky, but I think it's alsogood for people working in the
sector to realize that making iteasier for these countries to
trade is one of the primary waysthat you can help them deal
with the impacts of climatechange.
So, instead of just likemitigating climate change
directly through less emissions,you can help them deal with the
impacts through making iteasier for them to trade with
(31:38):
the rest of the world.
Speaker 2 (31:40):
I think that's very much a correct reading of the
bottom line of this paper, and Ithink you know you're also
getting at a broader point,which is there's sort of two
things we need to try to figureout about climate change.
How can we efficiently and lesspainfully reduce emissions
without causing too muchdisruption and costs to people
(32:00):
in the economy throughout theworld?
That's something thateconomists have been studying
for decades and there'sthousands of papers about.
But then there's a second thing, which is that we know at this
point that there's going to be asubstantial amount of climate
change.
There's already a good amountof climate change.
We're continuing to emit atvery high levels.
Global emissions last year werethe highest they've ever been.
(32:22):
For all of the optimisticstories about emissions and all
the hopeful paths to reducingthem and developments in clean
energy, we're still emitting alot, and so in the best case
scenario, we're going to have asubstantial amount of climate
change.
So the other thing we need tofigure out is, like you were
saying, how do we make that lesspainful for people who are the
most vulnerable to it?
And I think that's the part ofthe economics literature that's
(32:42):
still emerging.
It's really only the last 10 or15 years where economists have
started to think about how doeseconomic policy affect people's
ability to adapt to climatechange, and I think that's where
my own research agenda focuses,and so naturally, I'm biased
towards thinking that's where,hopefully, a lot of future work
on this topic is still to come.
Speaker 1 (33:02):
But, like you said, I think it's a very good
distinction.
Exactly how can we reduceemissions most cost effective
and then how can we adapt themost cost effective to the
changes that are going to takeplace, because there are going
to be some changes.
Speaker 2 (33:14):
Yeah, for sure.
That's a lot of what motivatesme to do the work that I'm
trying to work on.
Speaker 1 (33:20):
So what's next for you in research?
Speaker 2 (33:23):
Well, so you know, as a researcher, I think the dream
is you always want to have lotsand lots of projects and not
enough time to work on them, andI feel very excited to be in
that position, kind of at thebeginning of my research career
and my research journey.
I think one thing I'mespecially excited to work on
that I'll talk about is thispaper, and some of the
conclusions from this paper ledto a lot of other natural
(33:45):
questions.
So this paper suggests if wehad a lot more trade integration
in agriculture, especially inlow-income economies, that maybe
we could adapt better to globalwarming in some of the most
vulnerable places.
But that led people to ask me alot of questions that I thought
were good questions that I'mnow trying to work on in new
projects.
So I have a newer projecttrying to look at what are the
(34:06):
implications of integration intrade and agriculture for food
security.
What you're really worried aboutis volatility in food prices
and your ability of theconsumers in your country to
access food in crises like whenthere are wars, when there are
trade embargoes, also when thereare weather shocks that can
occur in your countries or yourtrade partners' countries.
(34:28):
How do you think about how tradepolicy affects that and how
agricultural trade integrationaffects that.
So I have a new project aboutthat that I'm working on with
some of my friends andco-authors that hopefully we can
do another podcast aboutsomeday.
Another related project I'mworking on is you might think,
with a lot of trade integrationin agriculture, that could have
implications for emissions,because now if you're shipping
(34:49):
food all around the world, ofcourse there's emissions
associated with transportation,and so we want to try to look
into that and we actually thinkpotentially there are some
counterintuitive results in aproject that we have there, but
we're too early to really tosell results.
So those are some of the followup questions that I'm thinking
about in new projects related tothis much about.
(35:12):
We know that the world isgetting hotter and more
disruptive in ways that reallymatter to the world's poorest
people, and how can we make thatless disruptive to the journey
of development and try to helpcountries grow richer that are
not currently, I think, meetingbasic standards of human comfort
(35:34):
?
Speaker 1 (35:35):
I think that was great.
I maybe have one personalquestion for you.
I've been in research myself.
Was there something thatsurprised you during the
research where you hadn'texpected it, like the magnitude,
or something that caught youoff guard, because research has
its own way of growing on you.
Is there something thatsurprised you during this paper
where you had to reconfigureyour own?
Speaker 2 (35:57):
thinking, oh, totally .
I mean, the headline resultssurprised me.
I thought it was a paper when Istarted, about how we were
going to move a lot of farms toCanada and that would make
climate change less bad.
And then I started looking atthe data and realized, well, you
kind of have to face thisfundamental issue of why aren't
the farms already all in Canadaif the places that are farming
(36:19):
are.
And so basically, it's like thefirst month or two I was
working on this project, whichnow is many, many years ago at
the beginning of my PhD, where Iwent in thinking it was a
project that would be prettyoptimistic about adaptation and
then when I started looking atthe patterns in the world, it
was like, well, now I have todeal with the fact that you know
(36:40):
there's some real problems forthat story.
So right at the beginning itchanged my own mind.
Speaker 1 (36:46):
Great, those are the best.
Yeah, Awesome man.
Then I would say thank you somuch for joining me.
This has been reallyeducational for me and I think
it's awesome the work thatyou're doing.
So thanks so much for coming on.
Speaker 2 (37:00):
Awesome.
Yeah, thanks so much.
It's been a lot of fun to talkabout the paper and thanks so
much for having me.
Speaker 1 (37:12):
That's it for this episode.
Thank you very much forlistening and if you enjoyed the
conversation, feel free tosubscribe, share it with a
friend or check the show notesfor more information.
You can contact me onarvidviannace at gmailcom.
That is also in the show notesand I will see you in another
episode.
Have a great day.
When we talk about climate policy, the focus is
often on reducing emissions, buttoday's guest, ishan Nath,
highlights another crucialdimension how we adapt to
climate change, particularly inthe global south.
Ishan is an assistant professorat the Harvard Kennedy School
and an affiliate of the SalataInstitute for Climate and
Sustainability.
His latest research examineshow climate change could
(00:27):
reinforce existing patterns ofagricultural labor and limit
development, and what's strikingis that, instead of moving
people away from vulnerablefarming regions, climate change
might actually push more peopleinto them, especially in poorer
countries where trade is limited, and we'll talk about how trade
policy could play a centralrole in helping vulnerable
countries adapt moresuccessfully to climate change.
(00:50):
Ishan, welcome to the podcast.
Speaker 2 (00:53):
Yeah, thanks so much for having me.
It's great to be here.
Speaker 1 (00:55):
I am very excited to have you on because I think you
wrote one of the best papers onestimating the impacts of
climate change on economicoutcomes and I learned a lot
from your paper, so I was veryexcited that you're willing to
join.
Would you mind maybe justdescribing what your paper is
about?
Speaker 2 (01:13):
Sure Well, first I guess I'll say thanks for the
kind words about the paper.
You know, in economics youwrite like a few papers and each
one takes years and years towrite and there's so much time
spent alone in a dark room doinganalysis and writing that it's
really cool when you get to thispoint and someone asks you
about your paper and you get totalk about it to the world.
So I appreciate that.
What's the paper about?
(01:33):
I think maybe the way to thinkabout the research question is
where will the world's farms bein the future as our climate
changes, and how does thataffect how bad the consequences
of climate change are likely tobe for economies throughout the
world?
I think there's this intuitiona lot of people have that has
been represented somewhat inother economics research, that
(01:55):
perhaps if some colder placesthat are getting warmer are
getting more suitable foragriculture, while other places
that are already hot are gettingtoo hot and much more
unsuitable for agriculture,perhaps we could really benefit
if the world's farms couldmigrate away from the hotter
parts of the world towards thecolder parts of the world and we
could grow more food in Canada,for example, and more food in
(02:19):
Europe, in Northern Europe andship more food to hotter parts
of the world, and that couldreally help us adapt to climate
change.
So that's kind of where Istarted with the research
question and that led me in allsorts of directions as I tried
to go about answering it, which,of course, we'll talk about.
Speaker 1 (02:34):
Yeah, and I think it's worth mentioning, because I
actually did my PhD too on thistopic, but not as extensive as
you did.
I was just looking at theUnited States and I think a key
feature to keep in mind is that,as you also do in the papers,
these extreme hot days oftemperatures above 30 degrees or
like 80 Fahrenheit are reallydamaging for crops, and I think
(02:54):
that's what you're saying, like,northern Europe is colder, so
we can move it there as a way ofadapting, which I think some of
the papers were showing is hey,there's this way to adapt to
climate change in this way.
Speaker 2 (03:09):
That's right.
That's true in agriculture andit turns out to be true for a
number of different outcomesthat affect humans, both
economic and non-economicoutcomes.
What's really bad it turns outwhen it comes to temperature and
the same is also going to betrue of precipitation is the
extremes.
If you have a day where it's 65degrees Fahrenheit I don't
actually know off the top of myhead what that is in Celsius If
you go from 65 to 75 degreesFahrenheit, sort of in the nice
(03:30):
range of temperatures, it turnsout that in the data that
doesn't really seem to affectpeople, whether it's
productivity in a factory,productivity on a farm, people's
health effects that they sufferfrom exposure to temperature.
Those things really tend toscale up when you go into the
extremes.
Speaker 1 (03:47):
A quick note for listeners outside the United
States.
Ishan is using Fahrenheit whentalking about temperatures.
For reference, 68 degreesFahrenheit is about 20 degrees
Celsius.
So the range he just mentionedroughly falls between 18 and 24
degrees Celsius.
And in his paper extremetemperatures are defined as
anything above 29 degreesCelsius, which is about 84
(04:09):
degrees Fahrenheit.
So that's the threshold abovewhich temperatures begin to
negatively affect agriculturalproductivity.
Back to Ishan.
Speaker 2 (04:18):
Yeah, exactly, and so that's why it really matters
how hot a place is in thebaseline.
If you're in a colder placethat's experiencing climate
change, then you don't have alot of days of the year that are
close to these thresholds whereit starts to get too hot, so
you have a lot of days whereit's cold and you're getting to
be less cold, which turns out tobe beneficial for productivity
(04:38):
and beneficial for people'shealth and things like that.
I grew up in Chicago.
The winters were really cold,it turns out they're really cold
.
Yeah, exactly, it turns out.
It's actually really good forpeople in many ways when winters
get less cold, but the flipside of that is when summers
that are already hot in placeslike New Delhi, where I was born
, if it's 110 degrees andclimate change is going to make
(05:01):
those 110 degree days 116degrees, that turns out to be
really, really harmful foreverything from crops to human
health to a wide variety ofother things.
Speaker 1 (05:12):
Exactly and then.
But then the way you show itkind of in your paper is like
people were saying there'ssubstantial adaptation that can
happen because of trade, whichis like this 2016 paper, but
then you were like building ontop of it to show it's not as
easily adaptable as people think.
Speaker 2 (05:29):
Right.
So yeah, that's kind ofdefinitely, I think, to sort of
skip ahead to the bottom line ofthe paper.
I think that you've sort ofnailed it there.
You have this potentialintuition where perhaps, since
colder places getting warmer awide variety of evidence has
shown is better for agriculture.
It's going to be better forparts of Canada, parts of
(05:52):
Northern Europe as they getwarmer, because they're colder
than kind of the optimal rangeof temperature for agriculture
right now.
So perhaps we can have a lotmore agricultural activity in
those places and reduce theamount of people working on
farms in hotter parts of theworld.
So that's like really niceintuition.
But it turns out that if youjust kind of look at the pattern
(06:13):
of where the world's farms areright now and how productive
they are, then you run into someproblematic facts for that
narrative and it turns out thatthose problematic facts are
going to be the core of why,unfortunately, in my paper I
find it's unlikely that theworld's farms are going to move
away from these hotter, morevulnerable parts of the world
(06:33):
and instead that climate changecould actually perversely
intensify agriculturalspecialization and the share of
workers working on farms,especially in those places that
are too hot, which are gettinghotter and really harmed, and
that's kind of why the paper'sentitled the Food Problem, which
we can talk more about.
But it turns out there's specialdynamics about food in the
(06:56):
world and the way theagricultural trade currently
works in the world.
That suggests that actuallyit's really hard to achieve this
story that some other researchhas suggested might be
achievable of moving the world.
That suggests that actuallyit's really hard to achieve this
story that some other researchhas suggested might be
achievable of moving the world'sfarms away from the most
vulnerable locations.
Speaker 1 (07:11):
Exactly, you already brought up this additional food
problem that's preventing someof this reallocation from
happening, and what are thensome of the contributions you
did in your paper?
So it's like this food problemshowing that this is like a big
impact.
Speaker 2 (07:25):
So yeah, so let's talk about what this food
problem is and what it means forthe economy working in
different sectors.
So first of all, I should say Idid not come up with this
phrase.
It's something that's beenaround in the literature and
economics.
There's paper by Doug Gollin,stephen Parenti and Richard
Rogerson in 2007.
That is the first one I know ofthat kind of frames this
(07:47):
development story as the foodproblem, and the story here is
really trying to figure out why,as economies develop and grow
richer, the share of people inagriculture declines
dramatically over time.
A fascinating fact is that in1850 in the US, 60% of Americans
worked on farms.
In the early 1900s, it wasstill over 40% of Americans who
(08:11):
worked on farms.
Today it's about 1.2% ofAmericans who work on farms, and
you see a similar patternthroughout many parts of the
world.
Whereas economies grow moreproductive and grow richer,
people tend to leave farms, andso economists have been trying
to figure out for a while whytend to leave farms?
And so economists have beentrying to figure out for a while
why is that the case?
And it turns out thatinterestingly, unlike some other
(08:31):
things in the economy, when youget more productive at farming,
that's when you have fewerfarmers, because you can only
eat so much food in the economy.
You can have like better foodand higher quality food to some
degree, but you only need somuch food.
So when you get better atproducing food, the share of
people's incomes that they spendon food tends to decline, which
(08:52):
means the share of economicactivity and the share of
workers in agriculture alsotends to decline phenomenon in
economics, where the way to havefewer farmers is to get better
at farming.
But now the flip side of thatis if you're not very good at
(09:12):
farming which it turns out thatthe low-income countries in the
world are especially bad atfarming then you have a lot of
farmers and you have a lot ofpeople working in the sector
that you're really, reallyunproductive in.
But that's because you needfood, and so if you're
unproductive at producing it, itjust takes more of your labor,
more of your land, more of yourcapital in the agricultural
sector in order to meet thepopulation's demand to eat.
And so what you have right nowin the world just to extend this
(09:36):
explanation a bit what you haveright now in the world is this
situation where the countriesthat specialize really heavily
in agriculture are actuallyrelatively really unproductive
at farming.
And so the fact that I point toin my paper, which has been well
established by other economistsand literature, is that the
richest countries in the world,of course they're richer because
(09:59):
they're more productive.
We think that productivity iswhat drives economic growth and
drives income levels acrosscountries.
But the rich countries, inmanufacturing, the 90th
percentile richest countries inthe world are about four times
more productive than the 10thpercentile poorest countries in
the world.
So the rich countries factoriesare four times better at
(10:21):
producing output from a givenlevel of labor input and capital
input than the poorestcountries' factories.
But in agriculture the richcountries are 45 times more
productive per worker 45.
45.
So the gap between rich andpoor countries is 10 times
greater in agriculture than inmanufacturing.
(10:44):
So if the world followed kind ofthe simplest econ 101
international trade equilibriumis what economists would call it
where you specialize in thething you're relatively good at,
then we would expect to seeeverybody in rich countries as a
farmer and everybody in poorcountries works in a factory.
Because in a relative sense therich countries are like even
(11:06):
more awesome at farming thanthey are at producing things in
factories, or in offices, forthat matter.
But the actual pattern we seein the world is the opposite.
In India, something like 60% ofthe population works on farms,
in the US it's 1%, and so wehave the countries in the world
that are really reallyunproductive at farming, are the
(11:28):
ones where all the farmers are,and so that's kind of the fact
we have to confront.
If we have this hope thatperhaps climate change, which is
likely to make poor countriesmuch less productive in
agriculture, if we hope thatit'll drive people out of
farming, we have to confrontthis fact that they're already
really really unproductive inagriculture without much global
(11:50):
warming having happened yet, andyet the population is highly
concentrated in agriculture.
So that's kind of where thisfood problem story that I'll
explain the economics of morecomes in, to try to explain that
existing pattern and help usthink about how climate change
might alter these patterns ofspecialization.
Speaker 1 (12:08):
I also have this image in my mind when I think of
, like the US, you have thesegiant agricultural farms with
these giant machines working onit like super mechanized, versus
then the more substance farmslike I've got my own garden, I
need to do the vegetablesexplaining some of that 45 times
more productive, because youknow.
Speaker 2 (12:27):
Exactly, and there's a whole literature in economics
that's trying to understand thetechnologies and policies and
institutions that lead toagriculture being so much more
productive in rich countries.
But in this paper I'm justtaking that as a given.
I'm not trying to figure outwhy that's true.
I'm just trying to figure outwhat we can make of that.
Speaker 1 (12:43):
So the story that was told before?
Well, climate change willhappen and they'll shift away
from agriculture, but that's notthe case.
Speaker 2 (13:01):
So, to continue down that path a little, you might
expect this hopeful reallocationwhere people who work on farms
in these places where it'sgetting really unproductive for
agriculture as the world warms,could be able to leave their
farms If you thought there was areally strong role for
international trade in theseplaces.
Because if trade is playing areally strong role in these
economies, then you would expectthat when you get worse at
(13:21):
producing in a certain sector,you'll tend to import more in
that sector and you'll tend toexport more in other sectors of
the economy.
That's kind of how we expectproductivity to drive patterns
of international trade.
However, it turns out thatthere's basically two reasons
why we think in this literaturethat low-income economies
(13:42):
specialize so much inagriculture despite being
relatively unproductive atfarming no-transcript.
(14:06):
And so you end up the price offood ends up being high, such
that it encourages people towork in that sector, even if
it's low productivity.
And in places that are going tohave unproductive farms, you'll
have a lot of land and laborand capital devoted to
agriculture just to meet thepopulation's subsistence demands
that they have to eat, and so,in the absence of trade, you
(14:28):
would expect a lot of people towork on farms if agricultural
productivity is low.
Now it turns out that in theabsence of trade is actually a
pretty good summary of how mostlow-income economies work in
agriculture.
And so in these places, forwhatever reason, which I think
we don't totally understand,they trade very, very little
(14:48):
food and especially it turns outto be difficult to import food
into low-income economies.
In the data, so the fact aboutthat that I show in the paper is
that in a rich country you canexpect about 45% of people
spending on food to be onimports.
So in the richest quartile ofthe world nearly half of our
(15:10):
agricultural consumption isimported from some other country
in the world, but in thepoorest quartile of the world
the corresponding figure is 9%.
So about 90% of agriculturalconsumption in low-income
economies is produceddomestically and it's because of
that.
In my analysis, that's kind ofthe fact that drives the
(15:32):
patterns of specialization wecan see in the world, which is
that in the absence of trade,you need food.
So a lot of your economy has tobe in farming if you're not
very good at farming just toproduce enough food.
And then it turns out that inthe absence of trade is actually
a pretty good summary of what'sgoing on in the poorest
quartile of the world?
Speaker 1 (15:52):
Yeah, and it's almost like you say.
I hadn't quite thought aboutthat way, but, like you, would
expect them to import more foodbecause food's relatively
expensive.
Speaker 2 (16:01):
Exactly, and so it's a bit of a mystery or a bit of a
puzzle in my paper.
Why is it the case that lowincome countries import so
little food?
In the paper I basically inferthat it must be really difficult
for them to import food, sincethey're not doing it.
But I don't have a goodexplanation for exactly why, and
I think there's some potentialreasons for that, like road
(16:22):
quality, infrastructure,regulatory barriers to importing
I think it can't all beexplained by tariffs and trade
policy, but that also probablyplays a role but to explain a
little more about what thatmeans for the implications of
climate change.
So now you have this storywhere we can talk a little bit
more, perhaps later about wherethis information comes from, but
(16:44):
you have a story where theworld's getting hotter is making
it especially difficult to farmin these places.
Agricultural productivity isfalling much more than
productivity in factories andoffices in low-income countries.
As the world gets hotter is whatthe evidence would suggest,
because there's so little trade,making it harder to farm is
(17:09):
actually going to, in myanalysis, increase the share of
these economies and the share ofworkers in the economies that
work on farms, because food hasthese special properties where
you really, really need it tosurvive.
So if you get worse at producingfood, you need more people to
work on producing food.
The alternative is, you couldimagine a situation where people
(17:31):
in low-income economies wouldimport more of their food as it
got harder to produce fooddomestically because it's
getting too hot.
But it turns out that what wecan infer from the existing data
on trade flows suggests,through the economic model, it's
very unlikely that trade flowswould respond very much, because
there's so little trade tobegin with In these places that
(17:51):
we infer it must be the casethat it's quite difficult to
trade in these places.
And so, in light of that, youkind of end up with a situation,
(18:17):
in my analysis, where globalwarming actually leads to a
greater share of workers quoteunquote where then you might see
, in response to warming, butalso in response to just
existing low productivity, thatthere might be greater food
imports in low income economiesand they might reallocate
production away from farmingtowards places that are less
vulnerable, as it turns out, toextreme temperatures places that
(18:40):
are less vulnerable, as itturns out, to extreme
temperatures.
Speaker 1 (18:43):
Got it To summarize the classic is you would expect
them to import more food intofarms to move away, but because
they're getting worse at food,which is essential, they
essentially now have to workmore in the sector, which
they're going to becoming evenmore unproductive in, which is
not a great dynamic, becauseyou're already 45 times less
(19:03):
productive, now you've got towork even more in that sector.
Speaker 2 (19:07):
That's right and I think the way to think about it
is productivity fortunately tosome degree in agriculture has
improved over the last severaldecades in low-income countries
and the share of people workingon farms has been falling.
But I think the way to thinkabout it is that we can expect
global warming to potentiallyslow each of these positive
(19:27):
developments.
We can expect it to slow therate of productivity growth and
slow the rate of people leavingfarms and low-income economies
and kind of keep them poorer forlonger.
But the way out of the paper,of course, is suppose low-income
economies were as integrated totrade as richer economies or
suppose they were able toimplement some reforms which we
don't quite know because it's amacro paper.
(19:48):
We don't quite know exactlywhat these reforms would look
like on the ground in this paper, but something like reduced
customs duties or regulatorydelays to import food or lower
tariffs or things like that, andthey were more integrated into
the world economy as richercountries are.
Then you might see more ofthese beneficial movements in
(20:11):
global agricultural markets thatreduce their exposure to this
falling productivity or thisharmful productivity effects in
agriculture.
Speaker 1 (20:20):
Because in the paper you run there's one simulation
you've got several, but one iswhere you kind of just reduce
trade barriers like tariffs,trade agreements and regulatory
frictions, to just demonstrateokay, what if we take those
constraints away and make itessentially easier for them to
trade, like you know, becausethe import share is so low?
(20:40):
Like, let's make it easier forthem to trade, what did that
then give in terms of results of, like mitigating these impacts
of climate change?
Speaker 2 (20:48):
Yeah.
So I guess there's like acouple layers of how you could
think about this.
You could think about the sortof pie in the sky.
What if four countries werejust as integrated to trade as
rich countries?
It's not clear that's possiblebecause there might be some
things that are sort of beyondthe reach of policy that make it
harder to trade food inlow-income countries.
It could be that theproductivity of how well you can
(21:11):
produce high-quality roads andhave good shipping logistics and
things like that, that could bethings that are difficult for
policy to directly affect.
So we might not want to go allthe way to the situation in
which poor countries are tradingjust as much as rich countries.
We might instead want to thinkabout an intermediate
(21:31):
hypothetical where what if theyjust control the things we know
they can control?
They make regulations a littlebit simpler, they reduce tariffs
, they make it a little biteasier to trade.
Just in terms of the directcosts that people face when
they're become as integrated totrade as rich countries, their
exposure in terms of welfarecosts or the amount of money
(22:06):
equivalent money that people arelosing from the impacts of
warming is about half as high ifthey're as open to trade as
rich countries are.
Speaker 1 (22:15):
And then in the scenario, where Half a second,
so half as high, as if therewould be no adjustment.
Speaker 2 (22:24):
As if trade policy and trade integration were as it
presently is, and so, basically, if four countries were able to
have the trade integration ofrich countries, my analysis
suggests they could cut the costof climate change in half, or
at least the productivity costsof climate change.
And then when we look at thethings that we know they can
(22:47):
control directly, like tariffsand regulatory barriers, then it
goes down to cutting the costsby only about 15%, and so we
think there's a lot of thingsthat we can't quite explain
about why low-income countriesare not very closed off to trade
or are not very open to trade,and the best guess of that is
kind of this transportationinfrastructure and logistics,
(23:08):
where a lot of countries arelandlocked.
Port quality, road quality,things like that could be
barriers that are harder toobserve in the macro data.
Speaker 1 (23:17):
Would you like mind giving some estimates of like
what the impacts are like in theagriculture and
non-agricultural sector?
Speaker 2 (23:24):
Yeah.
So I think my paper is notreally designed to answer that
question very well.
I think there's some otherpapers that answer that better.
So in this paper, the totaleffects on productivity in the
economy so you can think of itas like roughly the effect on
GDP in the worst hit countriesin the world is something like
10 percent, which you know theCOVID recession was about a 6
(23:47):
percent drop in GDP in richcountries.
So you can think of like losing10 percent of GDP every year
due to being hotter as a prettybig effect.
But I think actually that thatlikely understates the effect
relative to some estimates inother papers that are more about
estimating the aggregate effectrather than thinking about
these dynamics of which sectorspeople are working in and how
(24:10):
policy can reduce the effects,which is more the strength of
the current paper that we'retalking about.
So in some other work I've donewith co-authors Pete Cleno and
Valerie Ramey from Stanford,there we're trying more to
estimate the aggregate damagesand a critical thing that you
have to account for there isthat economies grow over time
(24:32):
and evolve over time, and so theeffects of climate change.
If you just imagined globalwarming happening in one future
year, you go from a not hotworld to a hot world, that might
be a lot less bad than if theworld is hot every year and the
effects can accumulate througheconomic growth over time, which
it turns out that a number ofpapers have found could be an
(24:54):
important part of the climatechange story.
So when you account for thissort of dynamic accumulation of
effects over time as the economygrows more slowly, rather than
just being hit by a shock in oneperiod, then we actually
estimate in that paper that someof the worst hit countries are
likely to suffer declines of GDPrelative to a no climate change
(25:15):
scenario of about 25 to 30%.
And so in that paper weestimate what I consider to be
potentially like really extremedamages on the hotter, poorer
parts of the world.
When you account for these sortof dynamic growth effects in
this paper, it's not reallydesigned to estimate the
headline number.
It's more designed to thinkabout how can trade policy
(25:36):
affect the headline numbers.
So those are the estimates Iwould emphasize more.
Speaker 1 (25:40):
Because the one thing you did say is like those
numbers are for, like the lowincome hot countries.
Because I think one thing yourpaper also like mentions is
there's a very strongheterogeneity in impacts.
Could you like speak to that?
Speaker 2 (25:53):
Yeah, that's right, and so you know I don't have the
numbers off the top of my headfrom the other paper, but it's
something like 8, 10, 12, 14percent for the world on average
, but it's about three timesbigger than that for the world's
hardest hit countries is what Ifind in this paper with Pete
and Valerie.
Yeah, of course that paper isnot published yet so the results
(26:14):
could still change.
It's subject to referees.
But the part aboutheterogeneity you make is really
important.
We do find in that paper that'sconsistent with a wide variety
of literature that you know.
Minnesota is kind of intuitiveto you.
It's actually nice for it toget a little bit warmer in like
Finland or Toronto.
And that's not to say thatwe've understood and estimated
(26:44):
every potential effect ofclimate change, but at least the
things that are best understoodand best represented in the
climate models, like changes intemperature and precipitation
that's what the scientists aregiving us for the most
well-understood effects and theimpact of those on the economy
turns out to be neutral ormildly positive in some of these
(27:05):
colder parts of the world.
And I want to talk a little bitmore about what drives this
global heterogeneity in who isaffected by climate change.
What we have is kind of thisreally unfortunate coincidence
where all of the things thatmake a country vulnerable to the
world getting hotter andtemperatures and weather
becoming more extreme turn outto coincide in the same
(27:28):
countries in the world, and sothere's basically three
determinants of vulnerability,and it turns out that all three
of those vulnerabilities arepresent in the same places.
So the first of thesevulnerabilities that we talked
about is how hot you already are.
It's extreme heat and extremeexposure to weather that really
matters.
And so if you're India, ifyou're New Delhi, where you have
(27:51):
a lot of 100 degree days, andyou're making those 100 degree
days 110 degree days, that'sreally a problem relative to if
you're a temperate or a colderplace and you're not approaching
these extreme temperature zones, then the second determinant of
vulnerability that we'vediscussed a lot on this podcast
is whether or not you work on afarm.
The empirical estimates in thispaper that we're talking about
(28:13):
today suggests that agricultureis about 10 times more
vulnerable to temperature thanwork in factories or offices,
and so we project something likea 2% global decline in
non-agricultural productivityfrom global warming on average
across the world, but inagriculture we project something
like a 20% decline across avariety of different published
(28:36):
papers in economics.
And so that's the seconddeterminant.
The second determinant iswhether you're in a temperate
place or a hotter place or acolder place.
Farming is just a lot moresensitive to temperature, for
very intuitive reasons, thannon-farming activities.
And now the third determinantof vulnerability is whether you
work in an office or a factoryor a farm, and whether you live
(28:59):
in a hot or a cold country.
If you live in a place that'sricher and more productive, your
productivity is a lot lesssensitive to weather.
And so it turns out that, dueto obvious technologies like air
conditioning, we can really seein the data that when you
experience an extreme weathershock whether it's a storm,
whether it's an extremely hotday, whether it's a drought, and
(29:19):
you're a farmer in a richcountry that can irrigate, if
you're in a richer part of theworld, you're really much more
insulated from any type ofextreme weather.
So we have these threedeterminants of vulnerability to
global warming we have are youalready hot?
Are you a farmer or not a farmer, and are you in a richer or
poorer country?
And then we have this reallyunfortunate coincidence where
(29:41):
the hot places are also whereall the farmers work, and it's
also the low-income countries,so all three determinants of
what makes you vulnerable toglobal warming are present in
the same countries.
So that's why you end up with,in a lot of the economics
literature on this, this reallyreally concentrated impact on
basically the hot, poorcountries where a lot of people
(30:02):
are farming, because all threeof those things make you more
vulnerable to global warming.
And so that's kind of thechallenge that we have to
confront if we're going to thinkabout how to make the effects
of global warming less painfulfor the world's populations.
I think it's really fair tothink about a lot of the issue
(30:23):
with global warming is it thateven without global warming, we
want people to become better offand to have higher incomes and
(30:44):
more comfortable lives in manyways, and the greatest challenge
, in my view, for global warmingis interfering with that
process of development and kindof keeping these parts of the
world from getting richer faster.
Speaker 1 (30:56):
I think that was a great summary.
I think like exactly with thethree vulnerabilities, the
concentration to bridge that Ithink that's what your paper
shows is that one of the ways wecan at least help or like
mitigate the impacts is throughhaving less trade barriers for
them, which, you know, thecurrent climate is a little bit
(31:17):
tricky, but I think it's alsogood for people working in the
sector to realize that making iteasier for these countries to
trade is one of the primary waysthat you can help them deal
with the impacts of climatechange.
So, instead of just likemitigating climate change
directly through less emissions,you can help them deal with the
impacts through making iteasier for them to trade with
(31:38):
the rest of the world.
Speaker 2 (31:40):
I think that's very much a correct reading of the
bottom line of this paper, and Ithink you know you're also
getting at a broader point,which is there's sort of two
things we need to try to figureout about climate change.
How can we efficiently and lesspainfully reduce emissions
without causing too muchdisruption and costs to people
(32:00):
in the economy throughout theworld?
That's something thateconomists have been studying
for decades and there'sthousands of papers about.
But then there's a second thing, which is that we know at this
point that there's going to be asubstantial amount of climate
change.
There's already a good amountof climate change.
We're continuing to emit atvery high levels.
Global emissions last year werethe highest they've ever been.
(32:22):
For all of the optimisticstories about emissions and all
the hopeful paths to reducingthem and developments in clean
energy, we're still emitting alot, and so in the best case
scenario, we're going to have asubstantial amount of climate
change.
So the other thing we need tofigure out is, like you were
saying, how do we make that lesspainful for people who are the
most vulnerable to it?
And I think that's the part ofthe economics literature that's
(32:42):
still emerging.
It's really only the last 10 or15 years where economists have
started to think about how doeseconomic policy affect people's
ability to adapt to climatechange, and I think that's where
my own research agenda focuses,and so naturally, I'm biased
towards thinking that's where,hopefully, a lot of future work
on this topic is still to come.
Speaker 1 (33:02):
But, like you said, I think it's a very good
distinction.
Exactly how can we reduceemissions most cost effective
and then how can we adapt themost cost effective to the
changes that are going to takeplace, because there are going
to be some changes.
Speaker 2 (33:14):
Yeah, for sure.
That's a lot of what motivatesme to do the work that I'm
trying to work on.
Speaker 1 (33:20):
So what's next for you in research?
Speaker 2 (33:23):
Well, so you know, as a researcher, I think the dream
is you always want to have lotsand lots of projects and not
enough time to work on them, andI feel very excited to be in
that position, kind of at thebeginning of my research career
and my research journey.
I think one thing I'mespecially excited to work on
that I'll talk about is thispaper, and some of the
conclusions from this paper ledto a lot of other natural
(33:45):
questions.
So this paper suggests if wehad a lot more trade integration
in agriculture, especially inlow-income economies, that maybe
we could adapt better to globalwarming in some of the most
vulnerable places.
But that led people to ask me alot of questions that I thought
were good questions that I'mnow trying to work on in new
projects.
So I have a newer projecttrying to look at what are the
(34:06):
implications of integration intrade and agriculture for food
security.
What you're really worried aboutis volatility in food prices
and your ability of theconsumers in your country to
access food in crises like whenthere are wars, when there are
trade embargoes, also when thereare weather shocks that can
occur in your countries or yourtrade partners' countries.
(34:28):
How do you think about how tradepolicy affects that and how
agricultural trade integrationaffects that.
So I have a new project aboutthat that I'm working on with
some of my friends andco-authors that hopefully we can
do another podcast aboutsomeday.
Another related project I'mworking on is you might think,
with a lot of trade integrationin agriculture, that could have
implications for emissions,because now if you're shipping
(34:49):
food all around the world, ofcourse there's emissions
associated with transportation,and so we want to try to look
into that and we actually thinkpotentially there are some
counterintuitive results in aproject that we have there, but
we're too early to really tosell results.
So those are some of the followup questions that I'm thinking
about in new projects related tothis much about.
(35:12):
We know that the world isgetting hotter and more
disruptive in ways that reallymatter to the world's poorest
people, and how can we make thatless disruptive to the journey
of development and try to helpcountries grow richer that are
not currently, I think, meetingbasic standards of human comfort
(35:34):
?
Speaker 1 (35:35):
I think that was great.
I maybe have one personalquestion for you.
I've been in research myself.
Was there something thatsurprised you during the
research where you hadn'texpected it, like the magnitude,
or something that caught youoff guard, because research has
its own way of growing on you.
Is there something thatsurprised you during this paper
where you had to reconfigureyour own?
Speaker 2 (35:57):
thinking, oh, totally .
I mean, the headline resultssurprised me.
I thought it was a paper when Istarted, about how we were
going to move a lot of farms toCanada and that would make
climate change less bad.
And then I started looking atthe data and realized, well, you
kind of have to face thisfundamental issue of why aren't
the farms already all in Canadaif the places that are farming
(36:19):
are.
And so basically, it's like thefirst month or two I was
working on this project, whichnow is many, many years ago at
the beginning of my PhD, where Iwent in thinking it was a
project that would be prettyoptimistic about adaptation and
then when I started looking atthe patterns in the world, it
was like, well, now I have todeal with the fact that you know
(36:40):
there's some real problems forthat story.
So right at the beginning itchanged my own mind.
Speaker 1 (36:46):
Great, those are the best.
Yeah, Awesome man.
Then I would say thank you somuch for joining me.
This has been reallyeducational for me and I think
it's awesome the work thatyou're doing.
So thanks so much for coming on.
Speaker 2 (37:00):
Awesome.
Yeah, thanks so much.
It's been a lot of fun to talkabout the paper and thanks so
much for having me.
Speaker 1 (37:12):
That's it for this episode.
Thank you very much forlistening and if you enjoyed the
conversation, feel free tosubscribe, share it with a
friend or check the show notesfor more information.
You can contact me onarvidviannace at gmailcom.
That is also in the show notesand I will see you in another
episode.
Have a great day.
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