African continental free trade area (AfCFTA): projected economic impact assessment under future warming in CMIP6

Abstract

Launched on 1 January 2021, the African Continental Free Trade Area (AfCFTA) aims to bring together 1.3 billion people in a US$3.4 trillion economic bloc. The World Bank estimates that the AfCFTA could lift tens of millions of people out of poverty by 2035. Previous studies have shown that an increase in annual mean temperature can significantly affect economic growth. The AfCFTA economy will therefore be affected by future warming. However, without the AfCFTA, the impact of the increased annual average temperature on local economies could be severe, further depriving low-income African countries of economic recovery. To assess the damage to regional economic growth caused by future warming, trend analyses are conducted in the aggregated historical CFSR/NCEP and CMIP6 (GFDL-ESM4) climate projection data from 1979 to 2100 for different emission pathways over some major continental economic centres. The long-term impact of surface temperature increase on gross regional product (GRP) per capita growth rates are investigated by fitting CMIP6 daily and annual mean temperatures to a log-polynomial regression model. The results show that an increase in annual mean temperature will significantly affect the economic growth of low latitude and altitude regions compared to high latitude and altitude regions. Most emerging African economies and many member states of the African Union and AfCFTA are located in this low latitude zone. This makes the economies of the newly created AfCFTA very vulnerable to climate change. Several studies suggest that FTAs can help reduce the economic vulnerability of developing countries. The results presented here can contribute to better design and implementation of economic, trade and climate policies in the AfCFTA to mitigate the economic impacts of future warming.