DP12380 Climate Risk, Cooperation, and the Co-Evolution of Culture and Institutions

Author(s): Johannes Buggle, Ruben Durante
Publication Date: October 2017
Keyword(s): Climate, Cooperation, Persistence, Political Institutions, Risk, Trust
JEL(s): N53, O11, O13, Q54, Z10
Programme Areas: Public Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12380

This research examines the historical relationship between economic risk and the evolution of social cooperation. We hypothesize that norms of generalized trust developed in pre-industrial times as a result of experiences of cooperation triggered by the need of subsistence farmers to cope with climatic risk. These norms persisted over time, even after climate had become largely unimportant for economic activity. We test this hypothesis for Europe combining high-resolution climate data for the period 1500-2000 with survey data at the sub-national level. We find that regions with higher inter-annual variability in precipitation and temperature display higher levels of trust. This effect is driven by variability in the growing season months, and by historical rather than recent variability. Regarding possible mechanisms, we find that regions with more variable climate were more closely connected to the Medieval trade network, indicating a higher propensity to engage in inter-community exchange. These regions were also more likely to adopt inclusive political institutions earlier on, and are characterized by a higher quality of local governments still today. Our findings suggest that, by favoring the emergence of mutually-reinforcing norms and institutions, exposure to environmental risk had a long-lasting impact on human cooperation.