Climate Change and Economic Sustainability: Empirical Evidence on the Dynamics of Adjusted Net Savings in Benin's Regions

Abstract

The economic sustainability of territories is a key issue in ensuring the well-being of future generations. In accordance with the neoclassical theoretical approach, this article analyzes the dynamics of adjusted net savings (ANSs) in Benin's regions in the face of the effects of climate change. On the basis of data from the National Local Finance Commission covering the period 2010–2019, the estimates are based on a GMM-system model and a quantile regression using the method of moments. The results reveal that a moderate positive variation in precipitation differences improves ANSs. However, this effect diminishes beyond a critical threshold of 110 mm for precipitation variations and 1290.867 mm for average precipitation, leading to a deterioration in ANSs of 10.80 points on average. On the other hand, global warming has no significant effect on this dynamic. These results show that extreme precipitation compromises the economic sustainability of Benin's regions. They highlight the need to set up a local hydrometeorological warning system based on critical intervention thresholds, as well as awareness campaigns for the preservation and rational use of natural resources.