Inequality and growth impacts of climate change – insights from South Africa

Scientific evidence shows that climate change is already negatively affecting inequality and poverty, but the extent to which this occurs at the micro level remains relatively unexplored. Investigating the distributional effects of climate change at the micro level is particularly relevant in low- or middle-income countries, where vulnerable populations are more susceptible to its impacts.

Co-authored by SPARCCLE researcher Johannes Emmerling (CMCC), a study published in Environmental Research Letters investigates the relationship between temperature and inequality, poverty and welfare in South Africa at national and sub-national levels and highlights – in addition to the need for climate change adaptation – the co-benefits of decarbonisation in reducing socioeconomic disparities among affected communities.

The authors find that the relationship between temperature and inequality and poverty is non-linear, with inequality lowest at moderate temperatures. However, once temperatures rise beyond a certain threshold (15-17°C), the inequality gap between different income groups widens, threatening the livelihoods of the most vulnerable communities.

This effect is particularly noticeable for the poorer segments of the population, whose productivity and wages decline as temperatures increase, while the impact on richer segments is less significant due to their greater adaptive capacity. Agricultural households, in particular, are more likely to experience an increase in inequality due to warming.

Using projections under multiple warming scenarios, the authors find that climate change is expected to reduce average growth and exacerbate inequalities in the future. Comparing the outcomes of the moderate Representative Concentration Pathway scenario (RCP6.0) to a reference scenario without warming, they find that by the end of the century the Gini coefficient (a measure of inequality within a population) in South Africa is expected to increase by 3 to 6 points. This would result in a potential welfare loss of approximately 50% when combined with the impact of warming on GDP (which alone can reach up to 43% by 2100 in South Africa).

The authors conclude that unless climate policies incorporate inequality into their design, they may have unintended consequences and increase the burden on disadvantaged groups.

“That climate change is likely to affect not only biophysical systems, but also the economy is now widely accepted. However, less is known on how this economic impact is distributed across different households. We find here for the case of South Africa that global warming will hit poorer households harder, thus leading to an increase in inequality. Climate mitigation is therefore crucial not only from an ecological, economic, but also inequality perspective,” says Johannes Emmerling, SPARCCLE researcher.

Adapted from a press release by CMCC. Read the original article here.

For more information:

Dasgupta, S., Emmerling, J., & Shayegh, S. (2023). Inequality and growth impacts of climate change – insights from South Africa. Environmental Research Letters, 18(12). https://doi.org/10.1088/1748-9326/ad0448