Publication:
Droughts and Deficits: The Global Impact of Droughts on Economic Growth

Simple item page
dc.contributor.authorZaveri, Esha
dc.contributor.authorDamania, RIchard
dc.contributor.authorEngle, Nathan
dc.date.accessioned2023-05-24T18:27:49Z
dc.date.available2023-05-24T18:27:49Z
dc.date.issued2023-05-24
dc.description.abstractAs climate change intensifies, dry rainfall shocks and droughts are a growing concern. At the same time, scientific evidence suggests that the world has surpassed the safe planetary boundary for green water, which is water stored in biomass and soil that is crucial for maintaining climate resilience. Yet, evidence at the global scale of these combined forces on economic growth is poorly understood. This paper attempts to fill this gap by using data on annual subnational gross domestic product for 82 countries from 1990–2014. Using rainfall shocks as plausibly exogenous variations in a spatially specific panel at the grid level, the analysis finds that the global effects of droughts on economic activity are substantial. Moderate to extreme droughts reduce gross domestic product per capita growth between 0.39 and 0.85 percentage point, on average, depending on the level of development and baseline climatic conditions, with low- and middle-income countries in arid areas sustaining the highest relative losses. In high-income countries, moderate droughts have no impact, and only extreme droughts have adverse effects, reducing growth by about 0.3 percentage point, a little less than half the impact felt in the low- and middle-income country sample for the same intensity of drought. Crucially, the impact of a dry shock of a given magnitude also depends on antecedent green water availability. The results show that increases in soil moisture in previous years can neutralize the harmful impacts from a dry shock, with suggestive evidence that local and upstream forest cover are key channels through which these impacts manifest. These findings have important implications for measuring the economic impact of droughts and can inform adaptation investments.en
dc.identifierhttp://documents.worldbank.org/curated/en/099520405232341146/IDU0632cb14400e73047a8085e00ed605cb82b53
dc.identifier.doi10.1596/1813-9450-10453
dc.identifier.urihttps://openknowledge.worldbank.org/handle/10986/39840
dc.languageEnglish
dc.language.isoen
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Papers; 10463
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttps://creativecommons.org/licenses/by/3.0/igo/
dc.subjectRAINFALL
dc.subjectDROUGHT
dc.subjectGDP GROWTH AND DROUGHT
dc.subjectSOIL MOISTURE
dc.subjectLAND USE
dc.subjectRAINFALL SHOCKS
dc.subjectCLIMATE RESILIENCE
dc.subjectGREEN WATER
dc.titleDroughts and Deficitsen
dc.title.subtitleThe Global Impact of Droughts on Economic Growthen
dc.typeWorking Paper
dspace.entity.typePublication
okr.crossref.titleDroughts and Deficits: The Global Impact of Droughts on Economic Growth
okr.date.disclosure2023-05-23
okr.date.doiregistration2025-04-07T08:18:19.382931Z
okr.date.doiregistration2025-04-08T16:08:20.969867Z
okr.date.doiregistration2025-04-09T02:52:58.118577Z
okr.date.lastmodified2023-05-23T00:00:00Zen
okr.doctypePolicy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/099520405232341146/IDU0632cb14400e73047a8085e00ed605cb82b53
okr.guid099520405232341146
okr.identifier.docmidIDU-632cb144-0e73-47a8-85e0-ed605cb82b53
okr.identifier.doi10.1596/1813-9450-10453
okr.identifier.doihttp://dx.doi.org/10.1596/1813-9450-10453
okr.identifier.externaldocumentum34067050
okr.identifier.internaldocumentum34067050
okr.identifier.reportWPS10453
okr.import.id754
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/099520405232341146/pdf/IDU0632cb14400e73047a8085e00ed605cb82b53.pdfen
okr.topicRural Development::Agricultural Growth and Rural Development
okr.topicPoverty Reduction::Achieving Shared Growth
okr.topicMacroeconomics and Economic Growth::Climate Change Economics
okr.unitGlobal Solutions Water (SWAGL)
relation.isAuthorOfPublication2363a65c-510b-5157-ac5a-d99b47f34e19
relation.isAuthorOfPublication.latestForDiscovery2363a65c-510b-5157-ac5a-d99b47f34e19
Files
Original bundle
Now showing 1 - 2 of 2
Thumbnail Image
Name:
IDU0632cb14400e73047a8085e00ed605cb82b53.pdf
Size:
1.13 MB
Format:
Adobe Portable Document Format
Download
No Thumbnail Available
Name:
IDU0632cb14400e73047a8085e00ed605cb82b53.txt
Size:
102.34 KB
Format:
Plain Text
Download
License bundle
Now showing 1 - 1 of 1
No Thumbnail Available
Name:
license.txt
Size:
1.71 KB
Format:
Plain Text
Description:
Download
Collections
Policy Research Working Papers