# **Appendix D: Mechanism analysis and projected impacts under future climate change**

# **_D1. Potential mechanisms_**

Having demonstrated strong evidence of the effects of warming temperature on poverty at the subnational level, we further explore why impact heterogeneity exists across regions. A possible explanation is that poor countries are often located in tropical areas, where climate change occurs faster and is more intense, and their livelihoods are more dependent on the climate vulnerable agriculture sector. In fact, a growing body of evidence suggests that extreme temperature has negative effects on crop yields, particularly in poor countries (e.g., Jacoby _et al._ , 2015; Knox _et al._ , 2012; Schlenker and Lobell, 2010). We analyze the global dataset of historical yields from Iizumi and Sakai (2020), which provides actual crop yields for years from 1981 to 2016 at 0.5° resolution. Using the panel fixed effects model and long differences model as in Equations (1) and (2), we find consistent and negative effects of higher temperature on different crop yields including rice, maze, and soybean, as shown in Table A11 (Appendix A). Again, we find the long differences model estimates to be smaller than the panel model estimates, which are in line with previous studies showing potential adaptation in the long run (e.g., Chen and Gong, 2021). Similarly, we also find the effects of global warming to be more pronounced among regions with a higher share of agriculture (Appendix A, Table A12).

Given the adverse impacts of temperature on agricultural production, we further examine whether there exists any correlation between poverty and agriculture. Specifically, we plot the effects of temperature on poverty taken from the panel model specification on the _y_ -axis, and the effects of temperature on agriculture in Table A11 on the _x_ -axis in Figure A6 (Appendix A). Since the unit of analysis is different across two samples, we aggregate the data at the country level for better comparison. For all the panels, we find a negative and strongly statistically significant correlation between crop yield and poverty. Consistent with our previous findings, African countries are found to be most vulnerable to the effects of global warming. In Figure A7 (Appendix A), we further plot the effects of temperature on poverty against a country’s share of agriculture in GDP and also find the effects to be stronger among countries which rely on agriculture as the main source of income. Overall, these findings suggest that by reducing crop yield, warmer temperature may directly contribute to more poverty.<sup>16</sup> Another potential mechanism that may explain the effects of temperature is migration. Since poverty is a major driver of people’s vulnerability to climate-related shocks, it is reasonable to expect that the flow of people escaping poverty is also affected by climate change. In fact, an emerging body of literature has shown that higher temperature increases both internal and international immigration rates (e.g., <mark>Cattaneo and Peri, 2016; Missirian and Schlenker, 2017)</mark> . We reaffirm findings from the literature by using migration data available at the subnational level. The data is provided by WorldPop Open Data Repository which captures internal migration flows between 2005 and 2010.<sup>17</sup> Using a simple OLS regression, we find suggestive evidence that hotter temperature results in higher migration flow (see Figure A8, Appendix A).

# **_D2. Projected impacts under future climate change_**

We next provide projections of the effects of future temperature on poverty to better understand potential effects under different scenarios. To do this, we combine the model estimates in Tables 1 and 2 with data on simulated weather conditions at the subnational level taken from the recent released Coupled Model Intercomparison Project Phase 6 (CMIP6). Following Burke and Emerick (2016) and Kalkuhl and Wenz (2020), we generate temperature projections as follows. First, we use annual

> 16 For simplicity, we assume land degradation to be constant, but it could play a role in the poverty and environment nexus (Barbier and Hochard, 2018). Temperature may also affect poverty via different channels such as civil conflicts and labor productivity (for a review, see Burke _et al._ , 2015 and <mark>Somanathan</mark> _<mark>et al.</mark>_ <mark>, 2021).</mark>

> 17 The data is available at https://hub.worldpop.org/.

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