Climate Change and Uneven Development*

In this paper, using a theoretical model with endogenous capital depreciation, we study the effects of climate change and adaptation on long‐run development. We show that climate change affects economic growth depending on climate exposure and adaptation efficiency, which are asymmetric between different countries. Poor countries are likely to be hurt more, because of the negative effects of climate change on the rate of depreciation of the assets that represent the engine of growth. These asymmetries generally induce growth deficits and unsustainability traps in less‐developed economies.