Although most poverty policies address relative poverty, absolute poverty is a greater concern when assessing the impact of climate on income. As countries become richer, they can afford to air-condition larger fractions of their homes, businesses, and factories. In addition, the climate-sensitive agricultural sector typically becomes a smaller fraction of GDP. At the same time, richer countries can afford to plant the more expensive, climate-tolerant hybrid seeds and spend more on irrigation and other yield-enhancing agricultural capital.
As with virtually all adversity, a stronger economy helps to overcome the challenges posed by warming—although not all effects of warming on income are negative.[6] By the same logic, as weak economies grow stronger, the impact of global warming becomes less problematic.
Expected economic growth of the developing countries will move more and more countries above the income threshold at which Dell et al. found a negative impact on economic growth. However, rising temperatures will retard the progress toward this climate insulation. Policies to moderate warming could, therefore, help poorer countries reach this income threshold sooner and reduce the economic losses caused by warming until they do so.
The authors divided their database into high-income and low-income groups by comparing each country’s per capita GDP to the world average for the year in which the country entered the database. Those above the cutoff are high income. One of the authors suggested that the average income for the middle year (1976) of their database would be a proxy for the threshold of income. This threshold is $6,574 in 2011 dollars. A single threshold makes an admittedly crude variable, but we use it in our analysis because Dell and her coauthors used it.