Int. J. Environ. Res. Public Health 2011, 8 1. Introduction 914 Vector-borne diseases are among the diseases that have been linked with climate change [1]. Malaria is probably the deadliest climate sensitive vector-borne disease [2]. In 2008, globally there were an estimated 243 million malaria cases with 863,000 deaths. 89% of the reported deaths were in Africa. Most of the deaths were among children under 5 years’ old and pregnant women. The annual economic costs of malaria in Africa in terms of foregone production have been estimated to be about US $12 billion [3]. However, that estimate is likely low as it neglects costs of treatment, loss of life, and lifelong disabilities that often result from childhood infections. Goodman et al. [4] estimates that the malaria burden in Africa is about 10% of the region’s total disease burden in terms of disability adjusted life years (DALY). HIV/AIDS is also a factor as it weakens the immune system increasing vulnerability to malaria infection and there are an estimated 25 million infected people. Together, HIV/AIDS and malaria cause more than 4 million deaths per year [5]. Consequently malaria is a critical public health issue in Africa. A number of researchers have investigated the relationship between malaria and climatic factors as reviewed in [1] and [6]. Zhou et al. [7] and Wandiga et al. [8] work on African highlands and indicate that climatic factors such as temperature and precipitation play an important role in explaining the variation in malaria cases but these studies were conducted on a small scale (in a specific region of a country) creating a need for larger scale investigation. The role of climate change in the increase of malaria incidence in African highlands has particularly been controversial [9,10] but it is difficult to totally deny the fact that climatic factors play an important role on malaria incidence [11,12]. Most of the economic analyses have been oriented toward cost effectiveness analysis of anti-malaria drugs [3,13,14] and available treatment options [4]. Goodman et al. [15] reviewed literature on the measurement of the economic impact of malaria in sub-Saharan Africa and concluded that the few available studies are less reliable and there is a need of more sophisticated research in the area. A number of biophysical research models [16-18] have been developed but do not include economic impact assessment. This paper reports on a larger scale econometric study of the relationship between climatic factors and reported malaria cases using data from 25 African countries from 1990 to 2000. In turn we examine the potential effect of climate change using IPCC temperature and precipitation projections. This research differs from the existing literature in several noteworthy ways; (1) many relevant socio-economic factors are accounted for in modeling malaria-climate relationship in order to separate socio-economic factors impact from pure climate factors impact, (2) a semi-parametric specification is estimated and tested that does not assume a priori knowledge of the functional relationship between climatic factors and malaria prevalence, (3) more African countries are included in the study and (4) a model based projection of the malaria treatment cost increase/decrease due to climate change by the end of the century is given. 2. Malaria and Its Link to Climate: An Overview Malaria is transmitted by mosquitos carrying malaria parasites. Malaria’s distribution depends on the availability and productivity of mosquito breeding habitat. The availability of the breeding habitat is related to stagnant water that remains after rainfall while productivity of the breeding