Anticipating Climate Change Across the United States /
Bilal, Adrien.
Anticipating Climate Change Across the United States / Adrien Bilal, Esteban Rossi-Hansberg. - Cambridge, Mass. National Bureau of Economic Research 2023. - 1 online resource: illustrations (black and white); - NBER working paper series no. w31323 . - Working Paper Series (National Bureau of Economic Research) no. w31323. .
June 2023.
We evaluate how anticipation and adaptation shape the aggregate and local costs of climate change. We develop a dynamic spatial model of the U.S. economy and its 3,143 counties that features costly forward-looking migration and capital investment decisions. Recent methodological advances that leverage the `Master Equation' representation of the economy make the model tractable. We estimate the county-level impact of severe storms and heat waves over the 20th century on local income, population, and investment. The estimated impact of storms matches that of capital depreciation shocks in the model, while heat waves resemble combined amenity and productivity shocks. We then estimate migration and investment elasticities, as well as the structural damage functions, by matching these reduced-form results in our framework. Our findings show, first, that the impact of climate on capital depreciation magnifies the U.S. aggregate welfare costs of climate change twofold to nearly 5in 2023 under a business-as-usual warming scenario. Second, anticipation of future climate damages amplifies climate-induced worker and investment mobility, as workers and capitalists foresee the slow build-up of climate change. Third, migration reduces substantially the spatial variance in the welfare impact of climate change. Although both anticipation and migration are important for local impacts, their effect on aggregate U.S. losses from climate change is small.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.
Mathematical Methods • Programming Models • Mathematical and Simulation Modeling
Prices, Business Fluctuations, and Cycles
Climate • Natural Disasters and Their Management • Global Warming
Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
Anticipating Climate Change Across the United States / Adrien Bilal, Esteban Rossi-Hansberg. - Cambridge, Mass. National Bureau of Economic Research 2023. - 1 online resource: illustrations (black and white); - NBER working paper series no. w31323 . - Working Paper Series (National Bureau of Economic Research) no. w31323. .
June 2023.
We evaluate how anticipation and adaptation shape the aggregate and local costs of climate change. We develop a dynamic spatial model of the U.S. economy and its 3,143 counties that features costly forward-looking migration and capital investment decisions. Recent methodological advances that leverage the `Master Equation' representation of the economy make the model tractable. We estimate the county-level impact of severe storms and heat waves over the 20th century on local income, population, and investment. The estimated impact of storms matches that of capital depreciation shocks in the model, while heat waves resemble combined amenity and productivity shocks. We then estimate migration and investment elasticities, as well as the structural damage functions, by matching these reduced-form results in our framework. Our findings show, first, that the impact of climate on capital depreciation magnifies the U.S. aggregate welfare costs of climate change twofold to nearly 5in 2023 under a business-as-usual warming scenario. Second, anticipation of future climate damages amplifies climate-induced worker and investment mobility, as workers and capitalists foresee the slow build-up of climate change. Third, migration reduces substantially the spatial variance in the welfare impact of climate change. Although both anticipation and migration are important for local impacts, their effect on aggregate U.S. losses from climate change is small.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.
Mathematical Methods • Programming Models • Mathematical and Simulation Modeling
Prices, Business Fluctuations, and Cycles
Climate • Natural Disasters and Their Management • Global Warming
Regional Economic Activity: Growth, Development, Environmental Issues, and Changes