Innovation and adaptation to climate change: Evidence from the water sector in Africa

Abstract

Abstract 1 Africa is predicted to be the region most affected by climate change and water is one of the sectors with anticipated severe impacts. Innovations in this sector are being promoted as part of the adaptation solutions to this problem. In this paper, we use available data on water-related climate change adaptation technological developments to examine the degree to which the vulnerability to climate change in the water sector is motivating these innovations. Using pooled data for African countries between 1990 and 2016, we estimate the relationship between climate-induced vulnerability in the water sector and water-related innovations, controlling for country size and proxies for technology transfer environment, institutional and regulatory quality, knowledge base, and research and development activity. Data on innovative activity shows evidence of over-dispersion; thus we use the negative binomial distribution with robust standard errors for estimation of our model. We find evidence that countries most exposed to water stress are innovating at lower rates. Though counterintuitive, this result is explained by the fact that such vulnerable countries also tend to have little research and development infrastructure needed to develop the kind of high quality innovations that usually necessitate patenting. Our result suggests that African countries experiencing water stress may need to reconsider priorities in the design of water-related adaptation to climate change. We also find that a country’s knowledge base and openness to trade are important determinants of adaptation technologies in the water sector.