Forecasting the Economic Growth Impacts of Climate Change in South Africa in the 2030 and 2050 Horizons

Abstract

In this paper, we estimate the effects of climate change by means of the systems generalised method of moments (System GMM) using panel data across South African municipalities from 1993 to 2016. We adapt the estimates to the municipal economic structures to forecast losses at the municipal level for the 2030 and 2050 horizons. The projections show that, relative to the 1995–2000 levels, South Africa’s economy would lose about 1.82 billion United States dollars (USD) on average due to climate change following the Representative Concentration Pathway (RCP) of 4.5 Wm−2 radiative forcing scenario, and USD 2.306 billion following the business-as-usual (BAU) scenario by 2030. By 2050, the losses will be USD 1.9 billion and USD 2.48 billion, respectively. The results vary across municipalities depending on geographic location and sectors. Natural resources and primary sectors are the most impacted, while the economic losses are more than the gains in almost all municipalities in South Africa. This has a significant bearing on sustainable poverty reduction in South Africa through pro-poor industrialisation. The implication of the findings is discussed in the paper’s conclusion.