Journal of Cleaner Production 233 (2019) 1387e1395

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Journal of Cleaner Production

journal homepage: www.elsevier.com/locate/jclepro

The impact of climate change on the sustainable development of

regional economy
Shibao Lu a, Xiao Bai b, *, Xiaoling Zhang c, **, Wei Li a, Yao Tang a
a
School of Public Administration, Zhejiang University of Finance and Economics, Hang Zhou, 310018, China
b
School of Finance, Zhejiang University of Finance and Economics, Hang Zhou, 310018, China
c
Department of Public Policy City University of Hong Kong, China

a r t i c l e i n f o a b s t r a c t

Article history: Global warming has aroused the attention all over the world, because not only can it directly damage the
Received 3 April 2019 living environment, but it can also impact on the social and economic development, of a region in an
Received in revised form obvious and far-reaching way. In this paper, we builded a trans-log production function model incor-
20 May 2019
porating variables, such as rainfall, labor force, technology and temperature to simulate how climate
Accepted 7 June 2019
Available online 12 June 2019
changes impacted on the regional economics. Time series data of the domestic economy of Nanjing, a city
in the southeast China, between 1996 and 2017, were used to verify the production theory of trans-log
production frontier. The results showed that: with the rainfall increased and the temperature declined,
Keywords:
Climate change
the climate impact on the economy and the absolute value of the output elasticity of the frontier
Trans-log diminished. In addtion, the climate change was also positively related to the capital investment. The
Trans-log production frontier larger variation of temperature negatively impacted on the economic development.
Trans-log frontier model © 2019 Published by Elsevier Ltd.
Economic development

1. Introduction
Global warming has aroused the world's attention. Climate
change have exerted an obvious and far-reaching impact on the
earth's eco and socioeconomic systems, such as rising sea levels and
land subsidence, directly threatening mankind's living environ-
ment and sustainable social and economic development. This has
been particularly noticeable in the last four decades, when the
earth's climate system has experienced a remarkable change
mainly characterized by global warming(M.L. et al., 2014) (Fig. 1).
The reasons for climate change are attributed to natural factors
and human factors. The former refers to solar-terrestrial relation-
ships and interactions and feedback within the climate system,
while the latter is concerned with greenhouse effects on the earth
arising from the CO2 emissions and other greenhouse gases
generated into the atmosphere as a result of human activities e
both of which are held to be responsible for global warming. In
assessing the extent to which each of these sets of factors is
responsible for climate change, the Inter-governmental Panel on
* Corresponding author.
** Corresponding author.
E-mail addresses: daisybaix@aliyun.com, xiaoling.zhang@cityu.edu.cn
(X. Zhang).
Climate Change (IPCC) has produced four reports(Lu et al., 2016),
the conclusions of which are that human activities, with a probably
above 90%, is the major reason for the global warming. As a result,
climate change in the United Nations Framework Convention on
Climate Change is directly defined as “… caused by human activities
directly or indirectly changing the global atmospheric
composition”.
Climate change has already resulted in great changes in the
global ecological environment, such as a shortage of water re-
sources, ecosystem degradation, aggravation of soil erosion, a sharp
decline in biodiversity and cryosphere retreat, thus exerting a sig-
nificant impact on human social development and economic life(-
Luis et al., 2015). Research has shown that climate change is
practically associated with vulnerability and adaptability(Giorgi
and Bi, 2005; Wei and Chen, 2009). “Vulnerability” to climatic di-
sasters, for instance, is concerned with the political and economic
analysis and discussion of early stage causes of droughts and
famine, and is a form of dynamic state relating to the community or
department's implications in the event of future climate change.
“Adaptability”, on the other hand, concerns the complicated re-
lationships among the driving force, resources allocation and
development of knowledge technologies in the face of climate
change. Arnell and Wang(Arnell, 2004; Yiyong et al., 2015), for
example, hold that, if one community and department can endure a

https://doi.org/10.1016/j.jclepro.2019.06.074
0959-6526/© 2019 Published by Elsevier Ltd.
1388 S. Lu et al. / Journal of Cleaner Production 233 (2019) 1387e1395

output of various industries in the United States indicate a rela-

tionship between meteorological factors and the American econ-
omy, with US$ 109.6 billion of output value of the American mining
industry (US$ 127.1 billion) likely to be affected by the climate as
well as the excavation of all of three (coal, oil and natural gas) major
energy sources. All the output of the construction industry, a major
industry sector, is also shown to affected by climate, but not
manufacturing, an even larger industry.
The most important research outcome on the effect of climate
change on economies Fang's 2019 regional climate-economy Dart
model (Fang et al., 2019) built from producer behavior, consump-
tion and government spending, foreign trade, factor markets, CO2
emissions, etc. The Dart model is a multi-region, multi-category
and computable dynamic regression general equilibrium model.
Fig. 1. Global mean temperature over land and ocean 1880e2011. (Source: NOAA
National Climatic Data Center). Economic structures fully embody all activities relating to regions
and products, consumption, investment and governments. Each
market is fully competitive, and the output and factor prices are all
elastic. The model in each region covers producers and represen-
series of unfavorable conditions (such as casualties, losses of
tative families classified by product categories and governments.
property and infrastructure, and forced migration caused by
The model's main feature is in taking into consideration CO2
climate change), adaptability is defined as “the systematic capa-
emissions as a factor of climate change affecting economic devel-
bility of regulating climate changes to relieve potential disasters
opment. CO2 is produced during the burning of fossil fuels such as
and take advantage of opportunities or counter threats”. In a similar
crude oil, natural gas and coal, and different fuel have different
vein, Lehner(Lehner et al., 2006) emphasizes that adaptability in
emission proportions. CO2 emissions also depend on the economic
climate change should not be confined simply to the construction
activities of enterprises, families and governments, and thus rely on
of specific counter change engineering projects, such as building
the speed of economic development. Since the CO2 emissions
dams and bulwarks, but should also cover behavioral adjustment in
caused by different economic activities are input factors in the
the face of the direct effects on families and enterprises and indirect
climate model, climate variations such as the average global tem-
effects such as changes in the means of production and product
perature, sediment deposit and sea levels are also determined. A
prices. The manifestations of adaptability include changes in
weakness of the model, on the other hand, is that rainfall and
resource management, approaches to product manufacturing and
temperature are omitted as factors affecting industrial and agri-
services, products and services purchased by families and resident
cultural production.
leisure behaviors(Hansen et al., 2005), as well as changes in pol-
Research on the impact of climate change on economies,
icies, laws and projects that impact on the motives of individuals
although immature, has already made some progress to date.
and organizations, increases in investment and information spread
However, several problems remain to be overcome: (1) most
regarding climate change and vulnerability.
research is limited to ideal adaptive strategies and measures, with
Ding and Wang (Ding et al., 2007, 2008) hold that adaptability
few empirical studies on actual adaptability to climate change
can be viewed as the weakening of negative effects or inducing
(especially extreme climate disasters) (Xiao et al., 2009); (2)
positive effects; usually on a large scale, and use an equilibrium or
although studies have been carried out on vulnerability and
statistical model to estimate the effects “with adaptive measures”
adaptability to climate change, none are concerned with adaptive
and “without adaptive measures” to determine the threat and
potential, factors influencing adaptability or policies to enhance
seriousness of climate change in different circumstances. However,
adaptability(Wei and Chen, 2009); and (3) studies of the vulnera-
Payne and Went (Payne et al., 2014; Went et al., 2007) believe that
bility and adaptability to climate change place more emphasis on
the effect of climate change includes direct, indirect and subse-
natural science, while ignoring the impact of climate change on
quent economic impacts. Ge (Ge et al., 2010) considers that, in
social economy and political conditions, and the lessons learned in
terms of the micro-level analysis of farmers, direct impacts are
adapting to climate change.
mainly concerned with production damage and income loss, such
Global climate change has become one of, if not the most, severe
as loss of capital, trees, urgent relief and repair costs as well as
challenges faced by the human race to date, and is expected to
production loss. Of course, the assessment of indirect and subse-
affect society, the economy, life, politics and diplomacy for many
quent economic impacts need to be distinguished in disaster eco-
years to come(Huang et al., 2016). As negotiations on climate
nomics(Lin et al., 2007). Indirect impacts are caused by direct losses
change between all nations deepen, studies on its impact on eco-
from the reduction of production and supplies, while both direct
nomic development are increasing exponentially(Xiong et al.,
and indirect impacts lead to subsequent impacts, which include
2008) and research into regional economies from an economic
inconsistency between individual and family income, ecological
perspective is constantly being extended in both width and depth.
changes or negative changes in the balance of payments (Shilong
This paper contributes by summarizing the problems in studies on
et al., 2010). Indirect and subsequent impacts are all measured at
the effect of climate change on economies. A trans-log production
the macro or medium level of regions or countries.
function concept is developed, from which the effect of climate
Chang et al. (2017) (Chang et al., 2019) adopt the Leontief input-
changes on economies is simulated by a trans-log production
output method to study the effect of climate change on industry,
frontier model incorporating such climate change factors as rainfall,
pointing out that global warming and long term increases or de-
labor force, technologies and temperature. The effect of tempera-
creases in rainfall all may cause a reduction in industrial output. To
ture and rainfall factors are considered from both static and dy-
prevent this negative effect, the amount of capital input in the in-
namic states. Then, using time series data of the domestic economy
dustrial sectors needs to be increased and inter-input between
between 1986 and 2007 in Nanjing as an example, the model and
different sectors of the national economy enlarged. Arnell's (2004)
the suitability of the production theory based on trans-log pro-
(Arnell, 2004) studies of the effect of meteorological factors on the
duction frontiers in analyzing the effect of climate change on the
 S. Lu et al. / Journal of Cleaner Production 233 (2019) 1387e1395 1389

regional economy is demonstrated and verified. the PPF expression (F) is F(C,I,K,L,A) ¼ 0, where A is an index rep-
resenting the advancement of science and technology.
2. Trans-log frontier production function model Equalizing the production frontiers logarithms and the output/
input logarithmic equation gives
2.1. Model introduction
InðF þ 1Þ ¼ a0 þ aC InC þa1 InI þ aK InK þ aL InL
 
The production theory of homogeneous and cumulative 1
production-possibility frontier (PPF) plays an important role in þ aA InC bCC InC þ bCI InLþ bCK InK þ bCL InL þ bCA InA
2
statistical process control(Huang et al., 2017). This type of frontier  
1
exactly coincides with the constant elasticity of substitution pro- þ InI bII InI þ bIK InK þ bIL InL þ bIA InA
2
duction frontier. In ) (Xiong et al., 2010) research into the substi-  
1
tution between capital and labor, the analysis of two factor inputs þ InK bKK InK þ bKL InL þ bKA InA
and output with constant elasticity of substitution is often used as a 2
   
fruitful starting point. However, as demonstrated by Sakai (2006) 1 1
þ InL bLL InL þ bLA InA þ InA bAA InA
(Sakai et al., 2006) in models of multiple outputs and more than 2 2
two factor inputs, both the constant elasticity of substitution (CES) (1)
and constant elasticity of transformation (CET) assumptions require
relatively high restrictive constraints. When the PPF is zero, its conversion form is also zero(Hirofumi
A complete model includes a PPF and the necessary conditions and Kazuyuki, 2017), and the production theory has no meaning.
to reach a smoothed production. When there are constant returns An example of the conversion form is the addition of combination
to scale, the model implies the existence of a price possibility and logarithm forms. Furthermore, the PPF are converted into a
frontier on which productive profit is 0. After the relative price of function form that contains ф[ln(Fþ1)], in which ф[0] ¼ 0. When
the products and the production factor intensity equation are given, lnC ¼ lnI ¼ lnK ¼ lnL ¼ lnA ¼ 0, the trans-log similar coefficient
the necessary conditions to reach smoothed production requires relations are represented as
the existence of an equation that can be expressed using the rela-
tive price and which decides the products and factor intensity. The 4 ¼ a0
price possibility frontier and conditional equation jointly decide the 0 vInF
4 ¼ aC
PPF and the necessary conditions for a smoothed production. vInC (2)
To obtain the duality between the price and output, the loga- 2
0 v InF 00 vInF vInF
rithm of the squared prices is used to express the price possibility 4 þ4 ¼ bCC
vInC 2 vInC vInC
frontiers in the same way as the PPF(Elias et al., 2015), as the local
quadratic of these equations is similar to any price frontier. Here, where ф ¼ 0 means F ¼ 0 and vice versa. ф’ and ф’’ are used to
the duality between production and price frontiers is similar to represent the trans-log approximation of any PPF, and a convenient
breakthrough research on the duality of the direct and indirect normal equation is
utility equations of consumer demand. The PPF equations are called
trans-log PPF or trans-log production frontiers. The PPF constitutes aK þ aL ¼ 1; bCK þ bIK þ bIL ¼ o (3)
a trans-log equation relating to net output(Nic, 2008). Similarly, the
price possibility frontiers are summarized as trans-log price pos- The first normal equation aK þaL ¼ 1 is the relation of value
sibility frontiers or trans-log price frontiers. In many studies of the ratio equation parameters. The feature of the second normal
measurement of production and price frontiers, trans-log frontiers equation is that the trans-log approximation functions of possible
can provide accurate approximations, with the accuracy being superposition input/output related PPF can also be superposed.
independently decided by various application equations. As will be Provided these normal equations are given, we can calculate any of
demonstrated empirically, the limited conditions for production the parameters - [bCK, bCL, bIK, bIL] on the basis of other three.
frontiers under the superposition hypothesis can be satisfied and Based on the PPF trans-log function form and necessary condi-
production theory based on trans-log production frontiers verified. tions to reach smoothed production, the value ratio of commodity
investment to capital input is
2.2. Trans-log frontier model
qI I J
¼ I (4)
The trans-log frontiers aim to verify the production theory un- qK K JK
der the assumption that superposition and homogeneity do not
exist. New PPF and price possibility frontiers expressions are Here.
introduced(Hirofumi and Kazuyuki, 2017). The PPF expression is JI ¼ aI þ bCI InC þ bII InI þ bIK InK þ bIL InL þ bIA InA, and JK can
trans-log PPF. Similarly, the price possibility frontiers expression is be similarly expressed.
one of trans-log price possibility frontiers. All frontiers are the Likewise, the value ratio of labor force input to capital input is
respective trans-log function of quantity and price logarithms. For represented as
the purpose of further simplification, we call production and price
qL L J
frontiers trans-log production functions and price frontiers. ¼  L (5)
qK K JK
2.3. Trans-log production frontier
where JL, JI and JK have similar expressions.
In this case, discussion is focused on the national account data
Trans-logarithmic production frontiers express the dual prod-
and the output value and input values are equal
ucts and dual factors model(Davoodi and Zhiani, 2015). The simple
method may analogize the products and factor inputs of any cate-
qC C þ qI I ¼ qK K þ qL L (6)
gory. Letting the corresponding prices of rainfall (C), temperature
(I), capital (K) and labor forces (L) be qC, qI, qK and qL respectively, In this expression, if two ratios are given, the third can be
1390 S. Lu et al. / Journal of Cleaner Production 233 (2019) 1387e1395

calculated as regression method. Compared with principal component regres-

sion and partial least squares regression, the core idea of ridge
qC C qI q L estimation is simple and its algorithm is easy to be programmed,
þ I ¼1þ L (7)
qK K qK K qK K only requiring a slight modification to the original least squares
algorithm. Its regression results are also intuitively clearer and with
This means that the parameters regarding the consumables to
some practical value (H et al., 2005).
capital input value ratio can be deduction from the other two ratios
This core idea is based on the fact that when multiple co-
qC C J linearity occurs, XTX approximates a singularity(Ken-ichi &
¼  C (8) Shuya, 2009). It is not hard to think that the possibility of XTX's
qK K JK
approximating a singularity will be greatly lowered when a positive
where JC, JI and JK have similar expressions, and constant matrix (kI) is added, That is, the possibility of丨XTXþkI _
丨 ¼ 0 is much smaller than丨XTX丨 ¼ 0, and therefore using b ðkÞ
ac þ aI þ aK þ aL ¼ 0 T T
(X XþkI)-1X Y to estimate the parameters is more stable than
bCC þ bCI þ bCK þ bCL ¼ 0 using the least squares method. In this case, X is a design matrix
bCI þ bII þ bIK þ bKL ¼ 0 after standardization; kI a positive constant matrix; I a unit matrix;
(9) _
bCK þ bIK þ bKK þ bKL ¼ 0 0  k< ∞ are the south edge and b ðkÞ the south edge parameter
bCL þ bIL þ bKL þ bLL ¼ 0 regression estimates. The edge parameter k plays a part in reducing
bCA þ bIA þ bKA þ bLA ¼ 0 the singularity of the equation and improving the regression
function. It has been proven that the edge parameter k > 0, for
instance, makes the obtained regression coefficient possess a
smaller mean square error than in the least square estimation(-
2.4. Trans-log price frontier
Cheol-Woo and Woo-Chul, 2004; ),.
The key to ridge regression is k, the optimal value of which
The trans-log price possibility frontier is similar to that of the
depends on the unknown parameter b and standard deviation s.
PPF and is expressed as
Since the functional form of k to the unknown parameter b and
PðqC ; qI ; qK ; qL ; AÞ ¼ 0 (10) standard deviation s is unclear as yet, its determination has no
clear answer in theory. However, many methods and principles
where JL,A is the technology index. The price frontier can be have been used to determine the k values successively, most of
approximated through the logarithmic quadratic equation which are based on intuitive thinking or computer simulation (R.D,
1984; R.D, 1984).
InðP þ 1Þ ¼ a0 þ aC InqC þ aI InqI þ aK InqK þ aL InqL þ aA InAþ
 
1
InaC bCC InqC þ bCI InqL þ bCK InqK þ bCL InqI þ bCA InA þ 3. Analysis of cases of the economic impact of climate change
2
 
1 3.1. Assumptions
InqI bII InqI þ bIK InqK þ bIL InqL þ bIA InA þ
2
  The impact of climate change needs to be focused on both the
1
InqK bKK InqK þ bKL InqL þ bKA InA þ InqL manufacturing industry and other economic factors(Maolin and
2
    Minyin, 2014) as, apart from the climate change factors, factors
1 1
bLL InqL þ bLA InA þ InA bAA InA inside the economic system also impact on manufacturing. This
2 2 negates the use of the C-D production function model, which is
(11) more suited to the impact of a single climate change factor on the
manufacturing economy(Anis and Bassem, 2014).
Hence, we standardize the price possibility frontier parameters
Climate change effects also fluctuate around a stable value in the
as
regional economy, mainly because the climate is mostly in a quite
aK þ aL ¼ 1; stable state throughout the seasons, although some uncertainty
(12) exists as the climate is affected by both human activities and the
bCK þ bCL þ bIK þ bIL ¼ 0
laws of nature and extreme climate change is possible over a longer
Take a derivative of the trans-log price frontier; taking the profit period of time. Based on this constancy, both the temperature and
level is 0 as a condition; the relative net supply equation is ob- rainfall aspects of climate change need to be considered(Kwasi and
tained. For example, the ratio of investment goods to capital input is Moses, 2018). On the other hand, the dynamic/static states and
short/long-term effects also need to be closely observed when
qI I J* climate change impact on the manufacturing economy is consid-
¼  *I (13)
qK K JK ered, a role the trans-log production function model can better
satisfy by mean state and non-mean state analyses.
Here, In using the trans-log production function model to analyze the
impact of climate on the economy; the climate change factors,
J* ¼ aI þ bCI InqC þ bII InqI þ bIK InqK þ bIL InqL þ bIA InA (14) influential dependent variables and other economic factors are
therefore mainly treated as assumptions, with the impact mainly
where the definition of j*K is similar to the former. personified in the cross-products of the model and its economic
factors, while the climate change self impacts are mainly contained
2.5. Solving the model in the quadratic component(R.D & R.M, 1992; Houston, 2013). The
trans-log production function model should also satisfy the
The degree of fit and significance of the results depend on co- requirement that the climate change factor coefficients should be
linearity. This can be overcome through the use of the ridge smaller than unity.
 S. Lu et al. / Journal of Cleaner Production 233 (2019) 1387e1395 1391

3.2. Homogeneity of the economic impact of climate change
(1) Taking temperature as a trans-production frontier
Table 1a summarizes the results from the trans-log production
function model and output elasticity based on formula (1) for the
temperature I frontier. This shows output elasticity to be positive
and increasing, ranging over 0.63 to 0.74 and with a mean value of
approximately 0.7.
Table 1b gives the matrices for both Pearson and Spearman's
bivariate correlation coefficients and their significance levels. Those
highlighted are significant for both, indicating all correlations
except rainfall C to be significant at the 0.01 level, and with all these
except technology A being positively correlated. Output elasticity of
the temperature frontier is therefore increasing significantly over
the period, which is understandable given that that the growth
pattern in this location's economic development is quite consistent
with that of the overall national trend - a growth pattern of
investment-led economic development based infrastructure con-
struction and developing heavy industry(Andrea et al., 2009). The
output elasticity of the temperature frontier was also systematically
affected by all factors except rainfall (C), which changed randomly.
Interestingly, technological progress is an anomaly, having reversed
over the period.
The correlation of the output elasticity of the temperature
frontier and investment growth K easy to understand as output
increases with increase in investment. However, why does the
output elasticity of the temperature frontier not positively relate to
technology and an increased labor force with the output of the
temperature frontier? One possibility is that advances in technol-
ogy change the working environment and make the worker's tools
more advanced, and therefore output is raised irrespective of
temperature. Traditional agriculture in China, for example, depends
on manpower, making high temperatures unsuitable for agricul-
tural work. With technological advances and therefore greater
industrialization of agricultural processes, such as in the use air-
conditioned tractors instead of manual peasant workers in the
fields, negates the effects of temperature change(Fang et al., 2019).
In terms of industrial production, the use of air-conditioning has a
similar effect on production efficiency in reducing sensitivity to
temperature and enhancing the working environment. An addi-
tional consideration in China's vast and multiclimatic geography, is
that the colder northern provinces benefitting from warmer tem-
peratures may balance any overheating felt in the hotter southern
provinces.
In terms of the output elasticity impact of the temperature
frontier on rainfall, Table 1 shows a negative contribution of one of
the trans-log production frontier factors. This is intuitively
appealing as rainfall and temperature variation are negatively
correlated and therefore, as temperature declines during rainfall, its
effect on the economy decreases as the absolute value of the
frontier's output elasticity becomes smaller.
(2) Taking rainfall as trans-production frontier.
Table 2 summarizes the results for the output elasticity of the
rainfall C frontier based on formula (1). As with temperature, the
annual output elasticities of the rainfall frontier are all positive,
with values ranging from 0.035 to 0.068 and a mean value of
approximately 0.051. Its variation trend is also quite similar to
temperature, being steady between 1996 and 2001, but clearly
rising between 2002 and 2017.
The values of rainfall variation over the period are similar to
those of the temperature I variation, all being positive and with an
increasing annual trend. The contribution is again the largest to the
positivity of the output elasticity for the rainfall frontier. The in-
vestment K and rainfall C factors are negatively correlated. The
investment variation having a positive contribution to the output
elasticity of the rainfall frontier in this area cannot exactly prove
that these two factors move in the same direction. But the positive
investment-to-rainfall output elasticity may be due larger in-
vestments and less rainfall side effects.
From Table 2, the values for rainfall C, labor force L, technology A
and temperature I are all negative, with the variation in values all
less than 0.01. The concurrent result of these four factors is to lower
the output elasticity of the rainfall frontier. Under larger investment
K, the result turns out to be positive. However, changes in labor
force and technology reduce the adverse effects on the economic
development. On one hand, changes in both rainfall and tempera-
ture have a negative impact on economic development; therefore,

Table 1a
Output Elasticity and its Structure with Temperature I as the Frontier.

Year I K L A C Output elasticity of I frontier

lnI lnK lnL lnA lnC

1996 0.2580 0.6652 0.1623 0.0339 0.0914 0.6356

1997 0.2592 0.6696 0.1644 0.0346 0.1009 0.6289
1998 0.2596 0.6742 0.1645 0.0340 0.0948 0.6404
1999 0.2596 0.6745 0.1648 0.0346 0.0991 0.6356
2000 0.2622 0.6705 0.1648 0.0345 0.0952 0.6383
2001 0.2588 0.6738 0.1652 0.0348 0.1043 0.6284
2002 0.2596 0.6787 0.1653 0.0347 0.0942 0.6440
2003 0.2588 0.6886 0.1629 0.0346 0.0989 0.6510
2004 0.2644 0.6967 0.1627 0.0351 0.0899 0.6734
1995 0.2611 0.7013 0.1628 0.0353 0.0923 0.6720
1996 0.2597 0.7037 0.1623 0.0358 0.0986 0.6667
2007 0.2625 0.7071 0.1619 0.0362 0.0945 0.6770
2008 0.2644 0.7109 0.1616 0.0358 0.0989 0.6791
2009 0.2613 0.7152 0.1612 0.0358 0.0986 0.6810
2010 0.2635 0.7197 0.1603 0.0362 0.0963 0.6904
2011 0.2640 0.7252 0.1599 0.0363 0.0917 0.7014
2012 0.2644 0.7302 0.1602 0.0366 0.0969 0.7008
2013 0.2622 0.7359 0.1601 0.0367 0.1029 0.6983
2014 0.2654 0.7440 0.1594 0.0365 0.0956 0.7180
2015 0.2632 0.7544 0.1597 0.0367 0.0958 0.7255
2016 0.2652 0.7605 0.1596 0.0367 0.0973 0.7321
2017 0.2669 0.7661 0.1603 0.0370 0.0969 0.7388
1392 S. Lu et al. / Journal of Cleaner Production 233 (2019) 1387e1395

Table 1b
Correlation matrix.

Year Pearson's correlation

I K L A C Elasticity

lnI lnK lnL lnA lnC

Spearman's correlation Year 1.000 .826** .986** .886** -.969** -.049 .973**
I .819** 1.000 .824** .733** -.802** .215 .863**
K .991** .814** 1.000 .898** -.948** -.018 .991**
L .870** .731** .877** 1.000 -.869** .109 .913**
A -.971** -.777** -.962** -.841** 1.000 .105 -.930**
C .063 .183 -.054 .049 .116 1.000 .112
Elasticity .968** .858** .976** .902** -.917** .116 1.000

**p < 0.01 two-tailed, *p < 0.05.

Table 2a
Output Elasticity and its Structure with the Rainfall C Frontier.

Year I K L A C Output elasticity of C frontier

lnI lnK lnL lnA lnC

1996 0.0725 0.2346 0.0436 0.0423 0.0376 0.0386

1997 0.0754 0.2361 0.0441 0.0431 0.0379 0.0356
1998 0.0735 0.2377 0.0442 0.0424 0.0380 0.0396
1999 0.0749 0.2378 0.0443 0.0431 0.0380 0.0376
2000 0.0737 0.2364 0.0443 0.0430 0.0386 0.0369
2001 0.0764 0.2376 0.0444 0.0434 0.0378 0.0357
2002 0.0734 0.2393 0.0444 0.0433 0.0380 0.0403
2003 0.0748 0.2428 0.0437 0.0432 0.0378 0.0433
2004 0.0720 0.2457 0.0437 0.0438 0.0391 0.0470
1995 0.0728 0.2473 0.0437 0.0440 0.0383 0.0485
1996 0.0747 0.2481 0.0436 0.0446 0.0380 0.0472
2007 0.0734 0.2493 0.0435 0.0451 0.0387 0.0486
2008 0.0748 0.2507 0.0434 0.0446 0.0391 0.0488
2009 0.0747 0.2522 0.0433 0.0446 0.0384 0.0512
2010 0.0740 0.2538 0.0430 0.0452 0.0389 0.0527
2011 0.0726 0.2557 0.0429 0.0452 0.0390 0.0559
2012 0.0742 0.2575 0.0430 0.0457 0.0391 0.0555
2013 0.0760 0.2595 0.0430 0.0457 0.0386 0.0561
2014 0.0738 0.2623 0.0428 0.0455 0.0393 0.0610
2015 0.0738 0.2660 0.0429 0.0458 0.0388 0.0647
2016 0.0743 0.2681 0.0429 0.0457 0.0393 0.0660
2017 0.0742 0.2701 0.0431 0.0461 0.0397 0.0671

Table 2b
; Correlation matrix.

Year Pearson's correlation

I K L A C Elasticity

lnI lnK lnL lnA lnC

Spearman's correlation Year 1.000 -.048 .986** .875** -.970** -.824** .969**
I -.060 1.000 -.016 .116 -.056 -.208 .096
K .991** .051 1.000 .885** .314 -.821** .992**
L .859** .070 .867** 1.000 .464* -.712** .900**
A -.975** .007 .553** .290 1.000 -.166 .324
C -.811** .189 -.809** -.702** .502* 1.000 -.816**
Elasticity .972** .071 .983** .903** -.490* -.796** 1.000

**p < 0.01 two-tailed, *p < 0.05.

temperature change has a less negative impact on the regional
economy than does rainfall, which involves rainstorms, regional
water-logging, floods and other forms of negative impact that exert
further effects on the economy than do high and low temperatures.
Heavy snowfalls, typhoons and other climate anomalies have
occurred in this area, bringing about the extreme destruction of
traffic, logistics and manufacturing output, with great losses(Xiong
et al., 2010; Alexander et al., 2014). On the other hand, technological
advancement and labor force changes can reduce these negative
impacts. For example, advances in weather forecasting techniques
can help better predict future climactic conditions in advance, thus
enabling a positive response and preparation to effectively reduce
the potential losses caused by climate variation. That the contri-
bution of temperature variation to output elasticity for the rainfall
frontier is positive can also be related to the mutual offsetting
relationship existing between the two factors, which is again an
intuitively acceptable result. The mean average temperature and
mean annual rainfall anomalies, (DI) and (DC) are also regarded as
the typical examples of the fluctuating climate state, as considered
in the next sections.
 S. Lu et al. / Journal of Cleaner Production 233 (2019) 1387e1395 1393

3.3. Non-homogeneous state of the economic impact of climate
change
(1) Taking temperature as trans-production frontier.
Table 3 summarizes the results of the trans-log production
function model for the output elasticity of the temperature DI
frontier based on formula (11). This shows that the output elasticity
of the temperature DI frontier is negative between 1996 and 2003
and positive between 2004 and 2017. The range of variation is 0.10
to þ0.17 and the mean values is approximately 0.05. The variation is
basically based on the fluctuating and increasing trend, with an
increasingly obvious trend from 2004 and a big jump between
2009 and 2011.
As with the temperature I variation frontier, the temperature DI
variation is positively correlated with the investment K for the
likely reason already explained. Similarly with labor force L, tech-
nology A and rainfall C. The variation structure in Table 3, however,
shows that the contribution of temperature to investment and
technology factors to output elasticity for the temperature DI
frontier are positive; the increase of contribution value of the in-
vestment factor is obvious with that of the technology factor being
more subtle. The contribution values of temperature are basically
maintained above 0.1, with a slight increase but without any
obvious momentum, since the range of the climate's non-mean
state variation is far larger than that of the climate. The output
elasticity and actual effect of temperature on the economy are
positive, this being more obvious for the non-mean state than for
the mean state. For this region, it is expected that the degree of
impact of rainfall factors will be slightly larger than that of tem-
perature, and these research results are consistent with that view.
The C-D production function model indicates that the output
elasticity for temperature is positive(Maolin and Minyin, 2014) and
a significant variation relationship between temperature and
technology. Between 1996 and 2003, the elasticity values for
temperature variation are negative, which means that temperature
variation negatively impacted on economic growth at that time.
During 2004 and 2017, on the other hand, the relationship was
positive, which is consistent with expectations. The rainfall
contribution of the trans-log production frontier factor probably
results from the existence of the same changing correlations, being
negative before 2003, with the temperature declining during
rainfall so its factor and absolute value of output elasticity for the
frontier's impact became large, and therefore had a large economic
impact, but reversed between 2004 and 2017. For the same reason,
the impact on the labor force is also consistent, perhaps because the
climate variation reduces the number of workers on the one hand,
and affects the operation of some industries on the other hand, thus
reducing the efficiency of the workers.
(2) Taking rainfall as trans-production frontier
Table 4 summarizes the results for the output elasticity impact
of the rainfall DC frontier based on formula (11). As with Table 3, the
output elasticity for the rainfall DC frontier has also a negative-to-
positive trend. With the exception of 1996, the values are all
negative between 1986 and 1998 and, with the exception of 2001,
all positive between 2009 and 2017. The range of changes in the
values is 0.10 to þ0.07 (mean value 0.01), with the growth trend
since 2004 being the most obvious.
As with the rainfall C frontier, the contributions of labor force L,
technology A and temperature DI to the output elasticity are
negative; the negative contribution of the labor force is a declining
curve while that of the technology factor is a growing trend, while
the temperature contribution is steady. The labor force and tech-
nology factors are the main reasons leading to the negative values
of the output elasticity for the temperature frontier between 1986
and 1998, while between 2009 and 2017 these two factors to some
extent ameliorate the positive effect of the investment K factor,
thus reducing the absolute values of the output elasticity for the
rainfall frontier and relieving the economic impact caused by
rainfall, further emphasizing the effect of labor, technological fac-
tors and climate change factors on the economic environment.
4. Conclusion
Climate changes are exerting an obvious and far-reaching
impact on the ecosystem and socio-economic developments of
the world.. In order to analyze how climate changes impacted on
the economic development, this paper developed a trans-log

Table 3a
Output elasticity of its structure with mean temperature DI frontier.

Year DI K L A DC Output elasticity of DI Frontier

lnI lnK lnL lnA lnC

1996 0.0699 0.0000 0.0575 0.0000 0.0245 0.0122

1997 0.0821 0.0066 0.0769 0.0063 0.1000 0.0819
1998 0.0847 0.0136 0.0781 0.0013 0.0598 0.0383
1999 0.0847 0.0140 0.0801 0.0065 0.0897 0.0646
2000 0.0964 0.0080 0.0801 0.0059 0.0628 0.0327
2001 0.0790 0.0130 0.0829 0.0077 0.1174 0.1006
2002 0.0847 0.0202 0.0835 0.0074 0.0546 0.0257
2003 0.0790 0.0351 0.0639 0.0068 0.0884 0.0314
2004 0.1023 0.0471 0.0624 0.0098 0.0000 0.0969
1995 0.0924 0.0539 0.0633 0.0106 0.0355 0.0580
1996 0.0857 0.0574 0.0578 0.0129 0.0865 0.0117
2007 0.0973 0.0625 0.0538 0.0146 0.0570 0.0636
2008 0.1023 0.0680 0.0491 0.0129 0.0882 0.0459
2009 0.0931 0.0744 0.0434 0.0129 0.0865 0.0504
2010 0.1001 0.0809 0.0272 0.0147 0.0712 0.0974
2011 0.1014 0.0890 0.0184 0.0149 0.0282 0.1587
2012 0.1022 0.0963 0.0267 0.0162 0.0754 0.1126
2013 0.0961 0.1047 0.0246 0.0164 0.1107 0.0818
2014 0.1043 0.1166 0.0000 0.0158 0.0656 0.1710
2015 0.0993 0.1317 0.0112 0.0166 0.0675 0.1689
2016 0.1040 0.1405 0.0083 0.0164 0.0782 0.1744
2017 0.1073 0.1486 0.0290 0.0173 0.0751 0.1692
1394 S. Lu et al. / Journal of Cleaner Production 233 (2019) 1387e1395

Table 3b
Correlation matrix.

Year Pearson's correlation

I K L A C Elasticity

lnI lnK lnL lnA lnC

Spearman's correlation Year 1.000 .817** .986** .898** .947** -.101 .905**
I .804** 1.000 -.051 .070 .007 -.189 .071
K .991** .798** 1.000 .867** -.553** -.809** .983**
L .860** .707** .866** 1.000 -.290 -.702** .903**
A .978** .754** .969** .833** 1.000 .502* -.490*
C .058 .205 -.049 .060 .102 1.000 -.796**
Elasticity .902** .846** .904** .896** .867** .306 1.000

**p < 0.01 two-tailed, *p < 0.05.

Table 4a
Output Elasticity and its Structure with the Mean Rainfall DC Frontier.

Year DI K L A DC Output elasticity of DC Frontier

lnI lnK lnL lnA lnC

1996 0.0066 0.0000 0.0289 0.0000 0.0000 0.0355

1997 0.0217 0.0080 0.0386 0.0016 0.0362 0.0467
1998 0.0066 0.0165 0.0392 0.0003 0.0441 0.0605
1999 0.0178 0.0170 0.0403 0.0016 0.0441 0.0511
2000 0.0078 0.0097 0.0403 0.0015 0.0786 0.1028
2001 0.0282 0.0157 0.0416 0.0019 0.0269 0.0266
2002 0.0047 0.0245 0.0419 0.0019 0.0441 0.0586
2003 0.0173 0.0426 0.0321 0.0017 0.0269 0.0008
2004 0.0157 0.0571 0.0313 0.0025 0.0961 0.0885
1995 0.0025 0.0653 0.0318 0.0027 0.0667 0.0383
1996 0.0166 0.0696 0.0291 0.0032 0.0470 0.0069
2007 0.0056 0.0758 0.0270 0.0037 0.0811 0.0305
2008 0.0173 0.0825 0.0247 0.0033 0.0961 0.0242
2009 0.0166 0.0902 0.0218 0.0032 0.0689 0.0129
2010 0.0109 0.0981 0.0137 0.0037 0.0895 0.0022
2011 0.0052 0.1079 0.0092 0.0037 0.0933 0.0037
2012 0.0125 0.1168 0.0134 0.0041 0.0957 0.0161
2013 0.0257 0.1269 0.0124 0.0041 0.0777 0.0584
2014 0.0088 0.1413 0.0000 0.0040 0.1020 0.0442
2015 0.0095 0.1597 0.0056 0.0042 0.0871 0.0722
2016 0.0135 0.1704 0.0042 0.0041 0.1011 0.0745
2017 0.0123 0.1802 0.0145 0.0044 0.1107 0.0630

Table 4b
Correlation matrix.

Year Pearson's correlation

I K L A C Elasticity

lnI lnK lnL lnA lnC

Spearman's correlation Year 1.000 .219 .986** .898** -.947** -.816** .845**
I .184 1.000 .071 -.030 -.157 .142 .363
K .991** .051 1.000 .911** -.910** -.795** .871**
L .860** .057 .866** 1.000 -.805** -.693** .839**
A -.973** .097 -.963** -.825** 1.000 .825** -.740**
C -.804** .196 -.798** -.707** .765** 1.000 -.419
Elasticity .860** .345 .853** .820** -.840** -.471* 1.000

**p < 0.01 two-tailed, *p < 0.05.

production function model in preference to the commonly used C-
D production function due to its greater accuracy. Both static and
dynamic states (Lu, 2018) were used in an application the domestic
economy of Nanjing, from 1996 to 2017, which verified the pro-
duction theory based on trans-log production frontiers. This paper
particularly focused on the economic impact of the changing
temperature and rainfall over the mentioned period, together with
other variables such as the investment levels, the labor forces and
the technological developments.
The static results indicated that with the rainfall increased and
the temperature declined, the elasticity of the frontier's economic
impact decreased; which meant the increased rainfall leaded to less
economic impact. In addition, increases of temperature variation
was associated with the decreased capital investment. Therefore,
more temperature variation (higher or lower) impacted negatively
on the economic development. From the dynamic perspective,
when the mean climate temperature of the frontier was among
0.6e0.7 and the rainfall was among 0.3e0.7, the output elasticity
values for both temperature and rainfall frontiers will increase
gradually, with an output elasticity for the frontier of 0.68. When
 S. Lu et al. / Journal of Cleaner Production 233 (2019) 1387e1395
the frontier's mean climate temperature ranges from 0.1 to þ0.18
and the rainfall from 0.3 to 0.7, the output elasticity values for both
temperature and rainfall frontiers will increase gradually, with
output elasticity values for the frontiers being 0.05 and 0.1
to þ0.18 respectively.
A limitation of the model should be mentioned is that the fac-
tors needed to be considered is large in quantity and the model is
very complicated, which limited this kind of studies to pure theo-
retical ones. Furthermore, once all factors are considered, the re-
sults will be more accurate.
5. Conflicts of interest
The authors declared that they have no conflict of interests to
this work.
Acknowledgment
The paper is funded by Zhejiang province Funds for Distin-
guished Young Scientists (Grant No.: LR15E090002), The New Type
Key Think Tank of Zhejiang Province “China Research Institute of
Regulation and Public Policy” and The National Natural Science
Foundation of China (Grant No.:51379219).
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