Climate Change Effects on Economic Growth: Mixed Evidence from Anglophone West African Countries

Abstract

West Africa is vulnerable to the effects of climate change. This paper analyzed the impacts of climate change on economic growth in Anglophone West Africa with similar background, during the periods 1969-2016. Five growth model equations have been developed to incorporate climate change variables into the model. Panel data estimations such as Fixed Effect model, Random Effect model and Hausman test was used. The results generated, show that four equations required the use of fixed effect, the agriculture equation model required the use of the random effect model. In the fixed effect models, the results show that growth of human capital has a negative and significant impact on the growth rate of the Services and Manufacturing sectors. In Anglophone West African countries, the growth rate of the Agriculture sector, Manufacturing sector and temperature are all statistically significant and has negative impact on the growth rate of GDP. In the random effect model for Agriculture, the growth rate of rainfall has the highest impact on the growth of Agriculture in Anglophone West Africa than the impact of temperature on the region. Lack of sufficient rainfall reduces growth of the Agriculture sector. In relative terms, change in rainfall pattern is more harmful to Agriculture in comparison to the change in temperature in this region. Keywords: Climate Change, Economics Growth, Fixed Effect Model, Random Effect Model, Hausman Test, Anglophone West Africa