ARTICLES

Development and Climate

By Vasco Laranjo, CFA

I hope you enjoyed my previous article about the relationship between Economic Wealth and Climate.

In this article, I intend to talk about a related but different concept: Human Development!

The reader may think that the richest (wealthiest) countries are ALWAYS the most developed. Despite a strong relationship between the two concepts, these are different.

How to measure a Country’s Human Development?

To explain Human Development, I will focus on an indicator developed and compiled by the United Nations: the Human Development Index.

Human Development Index (HDI) was created to emphasize that people and their capabilities should be the ultimate criteria for assessing the development of a country, not economic growth alone. The HDI can also be used to question national policy choices, asking how two countries with the same level of GNI per capita can end up with different human development outcomes. These contrasts can stimulate debate about government policy priorities.

United Nations HDR

HDI is an index calculated based on 3 metrics:

  1. Life Expectancy at Birth: represents how long and healthy an individual’s life is;
  2. Expected Years of Schooling: measures how knowledgeable individuals are;
  3. Gross National Income (GNI) per capita PPP: indicates the general standard of living.

As you can perceive, the third metric is very similar to the wealth metric used in the previous article: GDP per capita PPP, as a measure of general standard of living. The other 2 are relatively straightforward metrics.

Indeed, we can conclude that this metric provides us more overall information about a country’s economic development than just Wealth.

After all, one must agree that without health being wealthy is not that important, so including the “Life Expectancy at Birth” should help concluding on the nicest country to live in. Which after all, is what we are looking for here!

Finally, let’s compare wealth by using the metric GDP per Capita PPP among countries and compare their temperatures:

HDI and Temperature by Country

Below you will see a scatter plot where each circle represents a country and is placed according to HDI (Index) and the Temperature (in Celsius). For the reader’s convenience, the different colours represent the different continent where a country belongs.

Note that, the data presented is an average between 2010-2016 values, when available. It was decided to take the average, to avoid overstating the figures on specifically warm years for some countries.

Also, it is important to remind the reader that the higher the index the more developed a country is considered to be.

Tip: zoom available in the left-bottom corner.

Main conclusions from the figure:

  • There seems to be a negative relationship between Development and Temperature, from the black trendline;
  • Also, this relationship is more negative than the relationship Wealth and Temperature;
  • The European countries are the milder, with most of the EU countries above the trendline;
  • The Middle East countries, known for their Oil & Gas exports, which were outliers as the hottest and wealthiest are now close to some countries in the Caribbean and Pacific Ocean;
  • Most of the African countries seem rather isolated on the bottom-right corner of the plot.

Canada:

  • Despite and outstanding development with and HDI of 0.9, the cold weather brings Canada below the trendline.

Possible sweet spot?

  • Australia, Israel, Malta and Cyprus seem to enjoy not extremely warm temperatures with a high HDI.

Climate is not only about warm temperature! Some readers may not care much about cold temperatures and are just looking for a country with limited amount of rain shower.

HDI and Rainfall by Country

I found this plot very interesting as it is the most unique of the 4 plots in this series of 2 articles:

  • There doesn’t seem to be any trend between Human Development and Rainfall, as there’s a horizontal trendline;
  • All the European countries, apart from Moldova, are above the trendline;
  • The Middle East rich countries are now almost on a vertical line in terms of development close to the 0-mark of rainfall;
  • The African countries now seem to be more widespread along the x-axis, although mostly below the trendline;

Israel:

  • Shows up now relatively isolated as a country with a high HDI and relatively small rainfall.

Canada, US and Australia:

  • Show up close to the European developed countries in the plot.

Don’t be shy and share your findings below.

HDI and Climate by Country Table

Bokeh Plot

Sources

Data Source:

World Bank: Climate Data

UN HDR: HDI

Code Source: GitHub Page

Cover Image Credits: © No intentions of copyright infringement. Taken from https://au.exoticca.com/america/caribbean/bahamas/paradise-island

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