Effects of climate change on the South African economy

Climate change could reduce the availability of labour and productivity, costing South Africa up to 11% of GDP per capita by the end of the century. But with the right set of policies, changes in the job market related to rising temperatures might contribute to reducing the gender pay gap in rural communities. The effects of climate change on the South African economy and on gender inequality have been presented in a study conducted by Fondazione CMCC, Ca’ Foscari University of Venice and RFF-CMCC European Institute on Economics and the Environment (EIEE).

Rising temperatures caused by climate change will have an impact on the world of work. In sectors that are sensitive to the heat, in particular, high temperatures can result in a reduction of job availability — i.e., the number of hours that an individual is willing to work for a salary. This can have an impact on the general productivity of labour-intensive sectors.

In order to explain how climate change can influence the availability of workforce, and how it can influence the gender pay gap, a recent study conducted by researchers at CMCC@Ca'Foscari and RFF-CMCC European Institute on Economics and the Environment (EIEE) has examined the impact of climate change on female work in South Africa. The study, which was published in the Climate and Development journal, analyses the impact of climate change on the availability of women in the workforce, especially in sectors that are exposed to heat such as agriculture and building in developing countries. It also focuses on the pay gap between male and female workers in indoor and outdoor jobs.

By using longitudinal data that involved conducting five interviews with the same South African families between 2008 and 2017, the researchers explored socio-economic and demographic changes and found that rising temperatures are having a negative impact on the availability of low-skilled labour, especially among women.

“Climate change is already having an impact on workers, especially on those who work outside. Moreover, female workers are more vulnerable to thermal stress,” says Shouro Dasgupta, author of the study, researcher at Fondazione CMCC and EIEE, and professor at Ca’ Foscari University of Venice.

The authors of the study have used these results to forecast the future impact of climate change and of socioeconomic factors on the gender pay gap, using an overlapping generations model. The data shows that climate change will cause the availability of low-skilled female labourers to decrease. This could result in a relative rise of salaries for such workers. This, in turn, would reduce the pay gap between male and female low-skilled labourers, as well as the one between low-skilled and high-skilled female labourers.
However, the authors highlight that even though the gender pay gap can be reduced because of the impact of climate change on the world of work, overall this impact on the economy will be negative, considering the damage caused on the availability of labourers and on productivity. In fact, the study suggests that in South Africa GDP per capita might decrease by 11% by the end of the century, if no climate change mitigation strategies are adopted.

In addition to the negative impact of climate change on the South African economy, the results indicate the importance of adaptation policies that can exploit the positive impact of the reduction of the gender pay gap in rural areas. According to the study, these policies should use these opportunities to make investments in women’s education, in order to equip them with tools to take more active roles in the sphere of politics.

“Climate change creates new threats and opportunities for our societies. It is up to policy-makers and community administrators to gather the necessary resources and reap the potential benefits to contain the damage of climate change,” says Soheil Shayegh, main author of the study and researchers at Fondazione CMCC and EIEE.