Social Impacts of Climate Change in Peru : A District Level Analysis of the Effects of Recent and Future Climate Change on Human Development and Inequality

This paper uses district level data to estimate the general relationship between climate, income and life expectancy in Peru. The analysis finds that both incomes and life expectancy show hump-shaped relationships, with optimal average annual temperatures around 18-20ºC. These estimated relationships were used to simulate the likely effects of both past (1958-2008) and future (2008-2058) climate change. At the aggregate level, future climate change in Peru is estimated to cause a small reduction in average life expectancy of about 0.2 years. This average, however, hides much larger losses in the already hot areas as well as substantial gains in currently cold areas. Similarly, the average impact on incomes is a modest reduction of 2.3 percent, but with some districts experiencing losses of up to 20 percent and others gains of up to 13 percent. Future climate change is estimated to cause an increase in poverty (all other things equal), but to have no significant effect on the distribution of incomes.