Matthew E. Kahn


Will poor nations suffer greatly from climate change?

Cover Interview of November 17, 2011

My critics have “granted me” the point that developed free market cities have the ability and the capacity to cope with many aspects of climate change.  But they have countered that poor nations such as Bangladesh could suffer greatly from climate change.

Of course this is true.  As a free market optimist, however, I want to make several points.

First, do not forget the “Law of 72.”  In a world with compounding, a nation whose income grows by 3% per year enjoys a doubling of per-capita income in 24 years (3*24=72).  If a nation’s economy could grow by 8% per year, then it will enjoy a doubling in just 9 years.

Japan and South Korea have grown by these rates in the past; India and China are growing by these rates today.  Each of these nations grew when embracing free market reforms and joining international free trade agreements.

As a nation’s per-capita income increases, poverty rates decline and individuals have more resources to purchase better food, housing, and access to electricity.  Each of these necessities will help individuals in the developing world to adapt to climate change.

From the perspective of this year, 2011, if climate change’s major impacts will start to unfold in the middle of this century, then today’s poor nations will still have time to “catch up.”