Geography, Energy, and Climate:
the “Real” Real Shocks
Jesús Fernández-Villaverde
University of Pennsylvania
February 12, 2016
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Geography, Energy, and Climate
3 tightly connected aspects (GEC).
How do they relate with history and economic growth?
How do GEC affect humans?
More interestingly even, how do humans affect GEC?
Not your traditional geography or social studies class back in high
school.
Modern study in economics and in history:
1
New growth theory.
2
Environmental history.
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A World Map
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Latitude vs. Income per capita
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Latitude vs. Agricultural GDP per worker
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Natural Capital vs. Income per capita
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Access to Sea vs. Income per capita
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Geography
Examples:
1
Europe is 1/8th of the size of Africa but coastline is 50 percent longer.
2
Plants of Civilization: Wheat, Rice, and Maize⇒Fernand Braudel, Les
Structures du quotidien: le possible et l’impossible (1979).
3
De Gaulle’s memoirs: the interests and policies of the United States,
Britain, and France will never completely coincide; the United States, as a
continent, always tending to think in terms of air power; Britain, as an
island, in terms of naval power; and France, in terms of land power.
What are the consequences?
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Fernand Braudel
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ruled over the wheat and rice cores for most of
south because pathogens rise gradually along with
Rice vs. Wheat I
not
stat
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our
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British Columbia, Vancouver, Canada V6T 1N5. E-mail:
henrich@psych.ubc.ca
Rice vs. Wheat II
to be cyclical.
Measuring analytic thinking with triads
Measuring ind
Relationship betwe
Does the rabbit go with the dog or the carrot?
Individualistic answ
Analytical answer
A
Holistic answer
CREDIT: P. HUEY/SCIENCE
Collectivistic answe
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A
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Traditional Geographical Explanations
Climate. Montesquieu, The Spirit of the Laws (1748).(he was a wine
grower). Cold climate are good for growth, warm climates are bad:
North Europe was a backwater region until the late middle ages.
Comparison with Fertile Crescent and Nile valley.
Low land river valleys in dry climates:
1
Problems with Fertile Crescent: food production appears in hills. States
and bureaucracy only follow agriculture by some time.
2
Relation with “hydraulic-bureaucratic official-state,” Karl Wittfogel,
Oriental Despotism: A Comparative Study of Total Power (1957).
Geopolitics: Mackinder, Tahan, Kjellén, Haushofer.
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Possibility I: Political Division is Good
Eric Jones, The European Miracle (2003)⇒ geography again, hypothesis 1.
We already argued that China versus Europe.
Why is political division good?
1
Competition.
2
Robustness.
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Empirical Evidence I: China
Emperor Qiánlóng (1736-1799) ordered the compilation of the most
famous works of the Chinese past: Four Treasuries (classics, history,
philosophy, literary works).
Enormous work: 36,000 manuscript volumes.
To do so, private libraries were searched.
Taking advantage of the opportunity, several types of books were
destroyed:
1
2
3
Books that implied resistance against the Manchu rule of China.
Books on geography or travel that could give inside information on
China’s defenses.
Books that exposed philosophical interpretations of the classics that were
different from ones preferred by the scholars at the court.
We know of over 2000 titles that were destroyed and that now are likely
lost forever.
This is actually not the only time in China’s history: First Emperor’s
Burning of the Books and Burying of the Intellectuals.
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Empirical Evidence II: Florence
Arrival of Arab numbers (that are actually Indian numbers) to Europe in
the 13-th century.
Fantastic new technology.
Florence opposed it. Arte del Cambio code in 1299 explicitly prohibited
Arab numbers. Why?
However, soon Florence bankers were dominated by bankers in other
cities.
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Possibility II: China’s Endowments are Bad
Kenneth Pomeranz,The Great Divergence: China, Europe, and the Making
of the Modern World Economy⇒ geography again, hypothesis 2.
Coal:
1
Far away from production centers.
2
Steam engine versus ventilations.
Environmental limits.
Pacific is bigger than Atlantic.
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An Empirical Application
How is the evolution of population growth and technological Change
since 1 Million BCE?
Basic lesson so far: growth depends on technology progress.
Intuition: more people probably must imply higher knowledge
accumulation.
Growth and population may be closely link.
Empirical evidence.
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A Simple Model
Production function: we produce output with land, labor, and
technology
Technology progress depends on how many people we have.
Malthusian assumption: we will reproduce (or die) until we reach certain
level of income.
Therefore, bigger land surfaces should sustain more people⇒more
technology⇒more people.
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Time Series Evidence
A first look at the data.
Regression:
nt
= −0.0026 + 0.524 Lt
(0.0355)
R
2
(0.0258)
= 0.92, D.W = 1.10
Robust to different data sets and specifications.
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Cross-Section Evidence
World population was separated from 10,000 BCE to circa 1500.
Population and Population Density circa 1500:
“Old World”
Americas
Australia
Tasmania
Flinders Islands
Land Area
83.98
38.43
7.69
0.068
0.0068
Population
407
14
0.2
0.0012-0.005
0.0
Pop/km2
4.85
0.36
0.026
0.018-0.074
0.0
England versus Europe and Japan versus Asia.
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Population and Population Growth
0,025
0,02
Population Growth Rate
0,015
0,01
0,005
0
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
-0,005
Population
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Changing the Environment: the Columbian Exchange
Environment can be modified: the Columbian Exchange.
Transfers of plants, animals, and microbes among the Americas, Europe,
Asia, and Africa.
Some of it was voluntary, some involuntary.
Alfred Crosby, The Columbian Exchange and Ecological Imperialism.
Breaks hundreds of thousands of years of separate evolutionary changes.
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Alfred W. Crosby
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Euroasia to America
1
Cereals: wheat, rice, barley, rye, millet, oat.
2
Fruits: banana, watermelon, coconut, mango, apple, pear, apricot,
peach, plum, cherry, citrus, olive.
3
Vegetables: turnip, radish, soybean, garlic, eggplant, artichoke,
asparagus, beet, cabbage, cucumber, carrot, pea.
4
Work animals: Horse, camel, water buffalo.
5
Farm animals: cow, pig, chicken, goat, sheep, goose.
6
Bee.
7
Coffee, tea, and sugar (white gold, Canada versus Guadeloupe in 1763).
8
Microbes: bubonic plague, chicken pox, cholera, influenza, leprosy,
malaria, measles, scarlet fever, smallpox, typhoid, typhus, yellow fever.
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An “American” Breakfast
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Sugar
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America to Euroasia
1
Maize (first for livestock feeding, later human consumption).
2
Other staples: sweet potatoes, potatoes, manioc (remember Malthusian
model?).
3
Vegetables: tomatoes, chili pepper, bell pepper, bean, squash.
4
Peanut, sunflower, cashew, pecan.
5
Fruits: blueberry, huckleberry, pineapple, pumpkin, avocado.
6
Vanilla.
7
Rubber.
8
Animals: turkey, llama, guinea pig.
9
Tobacco and cocoa.
10
Syphilis.
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Byrd Plantation
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impact on living standards.
Consumption
Luxuries
inearly
Europe,
lbs.(lbsper
Table 1: ConsumptionColonial
of colonial luxuries
in Europe,
modern period
per head and
year)
head/year
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15
Sugar
1600
0
0
5
Consumption (lbs/capita)
10
20
30
Real Price (pence/lb)
10
15
20
25
30
Sugar, Clark
Sugar, Allen
40
Sugar Prices and Consumption per capita in England,
1600-1850
1650
1700 1750
Year
1800
1850
1600
1650
1700 1750
Year
1800
1850
Figure 2: Real Sugar Prices and Sugar Consumption Per Capita in England, 1600-1850
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Real Price (pence/lb)
200
400
Tea
0
0
1650
16
Consumption (lbs/capita)
.5
1
1.5
2
600
Tea, Clark
Tea, Allen
2.5
Tea Prices and Consumption per capita in England,
1600-1850
1700
1750
1800
1850
1650
1700
1750
Year
Year
Figure 3: Real Tea Prices and Consumption Per Capita in England, 1600-1850
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150
Coffee Prices and Consumption per capita in England,
1600-1850
Real Price (pence/lb)
50
100
0
0
1650
Coffee
Consumption (lbs/capita)
.5
1
1.5
Coffee, Clark
17
1700
1750
Year
1800
1850
1650
1700
1750
Year
1800
1850
Figure 4: Real Coffee Price and Consumption Per Capita in England, 1600-1850
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for each good. The CV and EV for tea and coffee rise, while the ones for sugar
Welfare
fromgains
sugar,
tea,
decline.
The gains
total welfare
are now
evenand
largercoffee,
(20-23%).England,
1600-1850
Table 3: Welfare gains from sugar, tea, and coffee, England (1600-1850)
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Impact of New Goods on Welfare
34
Table 9: Impact of new goods on welfare
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Compared
to the introduction
of new goods
today, the welfare gainsFebruary
from introducing
Climate in History
Three basic observations:
1
Climate changes across different areas.
2
Climate changes over time.
3
Widespread consensus that part of this change is due to human agency.
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Climate
Zone
Description
Af
Tropical Rain Forest
Am
Tropical Rain Forest with
Seasonal Monsoon
Aw
Tropical Savannah
Cw
Subtropical: MildHumid
with Dry Winter
Cf
Mild Humid Climate with
No Dry Season
Cs
Df
Mediterranean Climate:
Mild, Humid with Dry
Summer
Snowy-Forest Climate with
No Dry Season
Dw
Snowy-Forest Climate with
Dry Winter
BS
Semi-arid Steppe
BW
Desert: Annual
Precipitation Less than 15
in. (38 cm)
H
E
Representative Cities
Jakarta, Indonesia
Manaus, Brazil
Manila, Philippines
Cochin, India Belém,
Brazil
Dhaka, Bangladesh
Kinshasa, Congo Havana,
Cuba
Hanoi, Vietnam Kanpur,
India Lilongwe, Malawi
New York, USA Paris,
France Shanghai, China
Sydney, Australia
San Francisco, USA
Rome, Italy Santiago,
Chile
Chicago, USA Moscow,
Russia
Seoul, South Korea
Vladivostok, Russia
San Diego, USA Odessa,
Ukraine
Percentage of
World
Landmass
Percentage of
World
Population
GDP per Capita
Relative to
World Average
4.0
4.4
0.64
0.8
2.4
0.41
10.8
17.5
0.38
4.3
16.0
0.44
7.7
19.5
2.24
2.2
4.3
2.10
23.0
5.8
1.90
6.2
5.3
0.64
12.3
11.8
0.55
Cairo, Egypt Karachi,
Pakistan
17.3
6.2
0.58
Highlands
Mexico City, Mexico
7.3
6.8
0.78
Ice Climates: Average
Temperature in Warmest
Month Less Than 50°F
(10°C)
Nuuk, Greenland
4.0
<0.1
—
Source: Data on landmass, population, and GDP per capita are from Mellinger, Sachs, and Gallup (1999).
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Climate in Europe
Winters cold enough to wipe out germs, but not too cold. High
humidity. Constant rain.
Dry summers.
Gulf Stream: the presence of Brazil forces the hot water up in the ocean
and Greenland’s waters stops it in the north.
However:
1
Too many forests (Grimm Brothers), difficult to cultivate until iron ax.
2
Hard soils, not enough rain in summer: fallow.
3
Need animals for plowing and manure.
Consequences: diet rich in wheat and animal protein (meat and dairy
products).
Mediterranean sea.
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Mediterranean Winds
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Climate in Asia
Interior⇒ grasslands that supported Nomads.
Exterior⇒ monsoon:
1
Much less need to fallow.
2
Possible to cultivate rice in large parts of Asia.
Consequences:
1
Much higher density.
2
Less cows, more pigs and chicken.
3
Constant struggle between nomads and settled peoples.
Lev Nikolaevich Gumilev, Searches for an Imaginary Kingdom: The
Legend of the Kingdom of Prester John.
4
Seasonal patterns of trade. Example: Portuguese in Goa.
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Climate
One fundamental observation: it is much easier to warm up than to cool
down.
Warm up:
1
2
Evidence of human ancestors control of fire between 1.8 to 1 million years
ago.
Clothing probably existed around 250,000 years ago, when H.
Neanderthalensis had to survive winters in Europe.
Cool down:
1
2
3
Romans circulated aqueduct water through their walls to reduce heat.
Use of water imitated by other times: Persians, Arabs, etc.
Modern electrical air conditioning was invented in 1902 by Willis Haviland
Carrier (his company, Carrier, is still a leading producer worldwide)
1
2
First industrial application: 1906, Chronicle Cotton Mills of Belmont, NC.
First house with A/C: 1914, Charles Gates’ mansion in Minneapolis ($1
million).
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Consequences I
Much easier to populate and work on very cold areas than in very hot
areas.
Expansion of the U.S. in the 19th century: much faster in the North
than in the South.
Reversal in the second half of the 20th century:, Buffalo versus Atlanta.
Glaeser and Tobiot (2008).
Political economic consequences.
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Consequences II
Tropical diseases are highly damaging and difficult to fight.
New England: winter kills all germs.
Different patterns of economic, social, and political life.
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Malaria
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Geography Determines Political Structure
Daron Acemoglu, Simon Johnson, and James Robinson: The Colonial
Origins of Comparative Development: An Empirical Investigation.
Former European colonies have performed very differently: U.S. versus
Belize.
Not clear correlation with former colony.
Differences in settlers mortality induced different institutions.
Differences in outcomes:
1
British America: 9 universities for 2.5 million people.
2
Spanish and Portuguese America: 2 universities for 17 million people.
Karen Kupperman: Providence Island, 1630-1641: The Other Puritan
Colony, compares Providence Island and New England.
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HKG
10
r)
S
CAN
H
~~~~~~~~~~~~MLTBHS
|
GM PER DOMTW)
8
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SLV
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NEBRGD
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TZA
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FIGURE
2. OLS RELATIONSHIP BETWEEN EXPROPRIATION RISK
Jesús Fernández-Villaverde (PENN)
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8
6
Average ExpropriationRisk 1985-95
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10
NZL
USA
CAN
AUS
SGP
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MYS
C)
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~~~~~~~~CMR
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NABGA MDG
4 4
SDN
~~~~~~~~~~~HTI
MLI
ZAR
2
4
6
8
Log of Settler Mortality
EXPROPRIATION
RELATIONSHIP BETWEEN
SETTLER MORTALITY AND
3. FIRST-STAGE(PENN)
FIGURE
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TABLE4-IV
REGRESSIONS
OF LOG GDP PERCAPITA
Base
Base
Base
sample,
Base
Base
sample
sample
dependent
Base sample Base sample sample sample
with
with
variable is
Base
Base
without
without
without without continent continent log output
sample sample Neo-Europes Neo-Europes Africa Africa dummies dummies per worker
(1)
(2)
(4)
(5)
(7)
(3)
(6)
(8)
(9)
Panel A: Two-Stage Least Squares
Average protectionagainst
expropriationrisk 1985-1995
Latitude
0.94
(0.16)
1.00
(0.22)
-0.65
(1.34)
1.28
(0.36)
1.21
(0.35)
0.94
(1.46)
0.58
(0.10)
0.58
(0.12)
0.04
(0.84)
Asia dummy
0.98
(0.30)
-0.92
(0.40)
-0.46
(0.36)
-0.94
(0.85)
Africa dummy
"Other"continent dummy
1.10
(0.46)
-1.20
(1.8)
-1.10
(0.52)
-0.44
(0.42)
-0.99
(1.0)
0.98
(0.17)
-0.34
(0.18)
2.00
(1.40)
0.47
(0.50)
-0.26
(0.41)
1.1
(0.84)
0.33
-0.63
(0.13)
Panel B: First Stage for Average ProtectionAgainst ExpropriationRisk in 1985-1995
Log Europeansettler mortality
-0.61
(0.13)
Latitude
-0.51
(0.14)
2.00
(1.34)
-0.39
(0.13)
-0.39
(0.14)
-0.11
(1.50)
-1.20
(0.22)
-1.10
(0.24)
0.99
(1.43)
Asia dummy
Africa dummy
"Other"continent dummy
R2
0.27
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0.30
0.13
0.13
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0.47
0.47
-0.43
(0.17)
0.33
(0.49)
-0.27
(0.41)
1.24
(0.84)
0.30
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0.28
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