Evaluating the Effects of Climate Change on Diverse Economic Sectors in Developing Nations

Abstract

Climate change has emerged as the pre-eminent structural threat to sustainable development in the Global South, yet the distribution of its economic burden across productive sectors remains insufficiently synthesised. This paper evaluates the effects of climate change on the four principal economic sectors of developing nations—agriculture, industry, energy, and services—over the period 2010 to 2024, which encompasses the warmest fifteen-year span in the instrumental record and the first calendar year (2024) in which global mean temperature exceeded 1.5°C above the pre-industrial baseline. Adopting a secondary-data analytical design, the study compiles and triangulates evidence from the World Bank, the Food and Agriculture Organization, the International Labour Organization, the Intergovernmental Panel on Climate Change, the International Energy Agency, the EM-DAT International Disaster Database, and the Swiss Re Institute, among other internationally recognised sources. The analysis is organised around exposure, sensitivity, and adaptive capacity, following the risk framework of the Intergovernmental Panel on Climate Change. The findings indicate that agriculture is the most directly and pervasively affected sector, absorbing roughly 23 per cent of all disaster losses in developing countries and more than 60 per cent of drought-related losses, while the energy sector, though accounting for a smaller direct loss share, exhibits the highest transmission coefficient because hydropower-dependent economies convert single droughts into national electricity crises. Industry and services are shown to be increasingly exposed through supply-chain disruption, heat-related productivity loss, tourism dependence, and an insurance protection gap that leaves under 10 per cent of catastrophe losses insured in low-income countries. Working hours lost to heat stress are projected to reach 5.3 per cent in Southern Asia by 2030, more than double the world average. The study concludes that climate change in developing nations constitutes a systemic, economy-wide risk rather than a sector-specific one, and that the convergence of multi-sector climate events after 2019 demands integrated adaptation, resilient infrastructure, diversified energy systems, and expanded risk-transfer mechanisms rather than piecemeal sectoral responses.