Climate Change and State Evolution

Despite the vast evidence on the short run effects of adverse climate shocks on the economy, our understanding of their long run impact on institutions is limited. To tackle such a key issue, a vast body of research has focused on ancient societies because of the limited complexity of their economies and their unparalleled experience with environmental and institutional change. Notably, the “Collapse Archaeology” literature has reported countless correlations consistent with the mantra that severe droughts are bound to trigger institutional crises. This conclusion, however, has been recently challenged by a stream of papers that, building on more detailed data on Bronze Age Mesopotamia and a more credible theory-based empirical strategy, have yielded two novel results. First, severe droughts pushed the elites to grant strong political and property rights to the nonelites to convince them that a sufficient part of the returns on joint investments would be shared via public good provision and, thus, to cooperate and accumulate a culture of cooperation. Second, a more favorable climate allowed the elites to elicit cooperation under less inclusive political regimes as well as a weaker culture of cooperation and, possibly, incomplete property rights. These patterns emphasize the importance of considering the asymmetric effect of droughts and, more generally, combining natural and social sciences for the evaluation of climate-related policies.