Hostname: page-component-586b7cd67f-r5fsc Total loading time: 0 Render date: 2024-11-24T02:20:57.813Z Has data issue: false hasContentIssue false
  • English
  • Français

State of the literature on the economic impacts of climate change in the United States

Published online by Cambridge University Press:  17 April 2015

James E. Neumann  and
Kenneth Strzepek
Kenneth Strzepek
Affiliation:
Research Scientist, Joint Program on the Science and Policy of Global Change, Massachusetts Institute of Technology, 77 Massachusetts Ave, E19-411, Cambridge, MA 02139, USA
Rights & Permissions [Opens in a new window]

Abstract:

Core share and HTML view are not available for this content. However, as you have access to this content, a full PDF is available via the ‘Save PDF’ action button.

This paper discusses the current literature on impacts and adaptation costs at the sectoral level. The focus is primarily the US, but includes examples on international applications that highlight key differences or other relevant demonstrations of method and data use. The paper provides an overall framework that addresses the components of economic impacts, including definitions of impacts, adaptation costs, and residual damages. The paper then focuses on understanding the current breadth and depth of the literature that exists to characterize what we know about economic sectors studied in the recent literature (agriculture, coastal resources, water resources, infrastructure, health, crime, energy, labor productivity, and ecosystems), how the methodologies differ, what the gaps and challenges are, and offers a sense of the impacts at the US national level. A new generation of impact studies, including the U.S. EPA’s ongoing Climate Impacts and Risk Analysis (CIRA) project; the new Intergovernmental Panel on Climate Change (IPCC) AR5 Working Group II report; the U.S. National Climate Assessment; and the Risky Business Project led by the Next Generation Foundation, provide the motivation for this review. These efforts, taken together, have advanced the state of US economic impact assessment work along two critical frontiers, both of which support benefit-cost analyses of climate change: assessment of the risk and economic consequences of extreme climatic events; and assessment of ecosystem effects. Yet, the latest work also highlights gaps in the lack of comprehensive sectoral coverage; more complete incorporation of adaptation opportunities in impact assessment; and critical cross- and multi-sectoral effects that remain poorly understood.

Keywords

adaptationclimate changeeconomic impactseconomic sectors
Type
Research Article
Information
Journal of Benefit-Cost Analysis , Volume 5 , Issue 3: Special Issue: Perspectives on Implementing Benefit-Cost Analysis in Climate Assessment , December 2014 , pp. 411 - 443
Copyright
Copyright © Society for Benefit-Cost Analysis 2014

References

Abel, J. R., Bram, J., Deitz, R. & Orr, J. (2012, December 17). What are the costs of Superstorm Sandy? [Federal Reserve Bank of New York]. Retrieved from http://libertystreeteconomics.newyorkfed.org/2012/12/what-are-the-costs-of-superstorm-sandy.html.Google Scholar
Agrawala, S., Bosello, F., Carraro, C., de Cian, E. & Lanzi, E. (2011). Adapting to climate change: Costs, benefits, and modelling approaches. International Review of Environmental and Resource Economics, 5(3), 245–284. doi:10.1561/101.00000043.Google Scholar
Ahouissoussi, N., Neumann, J. E. & Srivastava, J. P. (2014). Building resilience to climate change in South Caucasus agriculture. The World Bank. Retrieved from http://elibrary.worldbank.org/doi/abs/10.1596/978-1-4648-0214-0.Google Scholar
America’s Energy Coast, America’s Wetlands Foundation, & Entergy Corporation. (2010). Building a resilient energy Gulf Coast: Executive report. America’s Energy Coast, America’s Wetlands Foundation, and Entergy. Retrieved from www.entergy.com/content/our_community/environment/GulfCoastAdaptation/Building_a_Resilient_Gulf_Coast.pdf.Google Scholar
Barreca, A., Clay, K., Deschenes, O., Greenstone, M. & Shapiro, J. S. (2013). Adapting to climate change: The remarkable decline in the U.S. temperature-mortality relationship over the 20th century (Working Paper No. 18692). National Bureau of Economic Research. Retrieved from http://www.nber.org/papers/w18692.Google Scholar
Bazzaz, F. A. & Sombroek, W. G. (1996). Global Climate Change and Agricultural Production: Direct and Indirect Effects of Changing Hydrological, Pedological, and Plant Physiological Processes. Chinchester, England: John Wiley & Sons Inc. Retrieved from http://www.fao.org/docrep/w5183e/w5183e00.htm.Google Scholar
Burke, M. & Emerick, K. (2013). Adaptation to climate change: Evidence from U.S. agriculture (p. 67). Department of Agricultural and Resource Economics, University of California at Berkeley. Retrieved from http://www.ocf.berkeley.edu/∼marshall/papers/burke_emerick_2013.pdf.Google Scholar
Chambwera, M., Heal, G., Dubeux, C., Hallegatte, S., Leclerc, L., Markandya, A., …, Neumann, J. E. (2014). Economics of adaptation. In Field, C. B., Barros, V. R., Dokken, D. J., Mach, K. J., Mastrandrea, M. D., Bilir, T. E. …, White, L. L. (Eds.), Climate Change 2014: Impacts, Adaptation, and Vulnerability. Part A: Global and Sectoral Aspects. Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge, UK and New York, NY: Cambridge University Press.Google Scholar
Chinowsky, P. S., Price, J. C. & Neumann, J. E. (2013). Assessment of climate change adaptation costs for the U.S. road network. Global Environmental Change, 23(4), 764–773. doi:10.1016/j.gloenvcha.2013.03.004.Google Scholar
Deschênes, O. & Greenstone, M. (2007). The economic impacts of climate change: Evidence from agricultural output and random fluctuations in weather. American Economic Review, 97(1), 354–385. doi:10.1257/aer.97.1.354.Google Scholar
Deschênes, O. & Greenstone, M. (2011). Climate change, mortality, and adaptation: Evidence from annual fluctuations in weather in the US. American Economic Journal: Applied Economics, 3(4), 152–185. doi:10.1257/app.3.4.152.Google Scholar
Ebi, K. L., Balbus, J., Kinney, P. L., Lipp, E., Mills, D., O’Neill, M. S. & Wilson, M. (2008). Effects of global change on human health. In Analyses of the effects of global change on human health and welfare and human systems (pp. 2–1–2–78). Washington, DC: U.S. Environmental Protection Agency.Google Scholar
Executive Office of the President. (2013). The President’s climate action plan. Washington, DC: Executive Office of the President.Google Scholar
Fankhauser, S. (2010). The costs of adaptation. Wiley Interdisciplinary Review Climate Change, 1(1), 23–30.CrossRefGoogle Scholar
Fankhauser, S., Smith, J.B. & Tol, R.S.J. (1999). Weathering climate change: some simple rules to guide adaptation decisions. Ecological Economics, 30(1), 67–78.Google Scholar
Fishman, J., Creilson, J. K., Parker, P. A., Ainsworth, E. A., Vining, G. G., Szarka, J., …, Xu, X. (2010). An investigation of widespread ozone damage to the soybean crop in the Upper Midwest determined from ground-based and satellite measurements. Atmospheric Environment, 44(18), 2248–2256. doi:10.1016/j.atmosenv.2010.01.015.Google Scholar
Frumhoff, P. C., McCarthy, J. J., Melillo, J. M., Moser, S. C. & Wuebbles, D. J. (2007). Confronting climate change in the U.S. Northeast: Science, impacts, and solutions. Cambridge, Massachusetts: Union of Concerned Scientists. Retrieved from http://www.northeastclimateimpacts.org/pdf/confronting-climate-change-in-the-u-s-northeast.pdf.Google Scholar
Gordon, K. (2014). Risky business: The economic risks of climate change in the United States. Risky Business Project.Google Scholar
Graff Zivin, J. & Neidell, M. (2014). Temperature and the Allocation of Time: Implications for Climate Change. Journal of Labor Economics, 32(1), 1–26. doi:10.1086/671766.Google Scholar
Greene, S., Kalkstein, L. S., Mills, D. M. & Samenow, J. (2011). An examination of climate change on extreme heat events and climate–mortality relationships in large U.S. cities. Weather, Climate, and Society, 3(4), 281–292. doi:10.1175/WCAS-D-11-00055.1.Google Scholar
Houser, T., Kopp, R., Hsiang, S., Delgado, M., Jina, A., Larsen, K., …, Wilson, P. (2014). American climate prospectus: Economic risks in the United States (Prepared as input to the Risky Business Project). Rhodium Group. Retrieved from http://rhg.com/reports/climate-prospectus.Google Scholar
IPCC. (2007). Climate change 2007: Impacts, adaptation and vulnerability. Working Group II contribution to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change. (Carter, T. R., Jones, R. N., Lu, S. B. X., Conde, C., Mearns, L. O. & O’Neill, B. C., Eds.). Cambridge, UK: Cambridge University Press.Google Scholar
IPCC. (2014). Climate change 2014: Impacts, adaptation, and vulnerability. Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. (Field, C. B., Barros, V. R., Dokken, D. J., Mach, K. J., Mastrandrea, M. D., Bilir, T. E., …, White, L. L., Eds.). Cambridge, UK and New York, NY: Cambridge University Press.Google Scholar
Jacob, B., Lefgren, L. & Moretti, E. (2007). The dynamics of criminal behavior: Evidence from weather shocks. Journal of Human Resources, 42(3), 489–527.Google Scholar
Key, N., Sneeringer, S. & Marquardt, D. (2014). Climate change, heat stress, and U.S. dairy production (No. Economic Research Service Report Number 175). Washington, D.C.: U.S. Department of Agriculture.Google Scholar
Kirshen, P., Merrill, S., Slovinsky, P. & Richardson, N. (2012). Simplified method for scenario-based risk assessment adaptation planning in the coastal zone. Climatic Change, 113(3–4), 919–931. doi:10.1007/s10584-011-0379-z.Google Scholar
Kunreuther, H. & Michel-Kerjan, E. (2009). At war with the weather managing large-scale risks in a new era of catastrophes. Cambridge, MA: MIT Press. Retrieved from http://site.ebrary.com/id/10309187.Google Scholar
Larsen, P. H., Goldsmith, S., Smith, O., Wilson, M. L., Strzepek, K., Chinowsky, P. & Saylor, B. (2008). Estimating future costs for Alaska public infrastructure at risk from climate change. Global Environmental Change, 18(3), 442–457. doi:10.1016/j.gloenvcha.2008.03.005.Google Scholar
Lempert, R.J., Groves, D.G., Popper, S.W. & Bankes, S.C., (2006). A general, analytic method for generating robust strategies and narrative scenarios. Management Science, 52(4), 514–528.Google Scholar
Lempert, R. & Kalra, N., (2009). Managing Climate Risks in Developing Countries with Robust Decision Making. World Resources Report, Washington, DC. Available online at http://www.worldresourcesreport.org.Google Scholar
Lin, N., Emanuel, K., Oppenheimer, M. & Vanmarcke, E. (2012). Physically based assessment of hurricane surge threat under climate change. Nature Climate Change, 2(6), 462–467. doi:10.1038/nclimate1389.Google Scholar
Martinich, J., Neumann, J., Ludwig, L. & Jantarasami, L. (2013). Risks of sea level rise to disadvantaged communities in the United States. Mitigation and Adaptation Strategies for Global Change, 18(2), 169–185. doi:10.1007/s11027-011-9356-0.CrossRefGoogle Scholar
McFarland, J., Zhou, Y., Clarke, L., Sullivan, P., Colman, J., Jaglom, W., …, Creason, J. (2014). Climate change impacts on electricity demand and supply in the United States: A multi-model comparison. Climatic Change. (In Press).Google Scholar
McKinsey & Company. (2009). Pathways to a low-carbon economy: Version 2 of the global greenhouse gas abatement cost curve (p. 190). McKinsey & Company.Google Scholar
Mendelsohn, R. & Neumann, J. E. (Eds.). (1999). The impact of climate change on the United States economy. Cambridge, New York: Cambridge University Press.Google Scholar
Mendelsohn, R., Nordhaus, W. D. & Shaw, D. (1994). The impact of global warming on agriculture: A Ricardian analysis. The American Economic Review, 84(4), 753–771.Google Scholar
Mills, D., Schwartz, J., Lee, M., Sarofim, M., Jones, R., Lawson, M., …, Deck, L. (2014a). Climate change impacts on extreme temperature mortality in select metropolitan areas in the United States. Climatic Change, 1–13. doi:10.1007/s10584-014-1154-8.Google Scholar
Mills, D., Jones, R., Carney, K., St. Juliana, A., Ready, R., Crimmins, A., …, Monier, E. (2014b). Quantifying and monetizing potential climate change policy impacts on terrestrial ecosystem carbon storage and wildfires in the United States. Climatic Change. doi:10.1007/s10584-014-1118-z.Google Scholar
Moser, S. C., Davidson, M. A., Kirshen, P., Mulvaney, P., Murley, J. E., Laura, P. & Reed, D. (2014). Coastal zone development and ecosystems. In Climate Change Impacts in the United States: The Third National Climate Assessment (pp. 579–618). USGCRP. Retrieved from http://nca2014.globalchange.gov/report/regions/coasts.Google Scholar
Neumann, J. E., Emanuel, K., Ravela, S., Ludwig, L., Kirshen, P., Bosma, K. & Martinich, J. (2014a). Joint effects of storm surge and sea-level rise on US coasts: New economic estimates of impacts, adaptation, and benefits of mitigation policy. Climatic Change. doi: 10.1007/s10584-014-1304-z.Google Scholar
Neumann, J. E., Hudgens, D. E., Herter, J. & Martinich, J. (2010). The economics of adaptation along developed coastlines. Wiley Interdisciplinary Reviews: Climate Change, 2(1), 89–98.Google Scholar
Neumann, J. E., Price, J., Chinowsky, P., Wright, L., Ludwig, L., Streeter, R., …, Martinich, J. (2014b). Climate change risks to US infrastructure: impacts on roads, bridges, coastal development, and urban drainage. Climatic Change, 1–13. doi:10.1007/s10584-013-1037-4.Google Scholar
Neumann, J. E., Yohe, G. W., Nicholls, R. & Manion, M. (2001). Sea-level rise and its effects on coastal resources. In Claussen, E. (Ed.), Climate Change: Science, Strategies, and Solutions (1 edition.). Leiden, NL and Boston, MA: Pew Center on Global Climate Change and Brill Academic Pub.Google Scholar
Park, R., Trehan, M., Mausel, P. & Howe, R. (1989). The effects of sea level rise on U.S. coastal wetlands (Report to Congress). Washington, DC: U.S. Environmental Protection Agency. Retrieved from http://nepis.epa.gov/Adobe/PDF/91012RLB.PDF.Google Scholar
Ranson, M. (2014). Crime, weather, and climate change. Journal of Environmental Economics and Management, 67(3), 274–302.Google Scholar
Revesz, R. L., Howard, P. H., Arrow, K., Goulder, L. H., Kopp, R. E., Livermore, M. A., …, Sterner, T. (2014). Global warming: Improve economic models of climate change. Nature, 508(7495), 173–175. doi:10.1038/508173a.Google Scholar
Schlenker, W. & Roberts, M. J. (2009). Nonlinear temperature effects indicate severe damages to U.S. crop yields under climate change. Proceedings of the National Academy of Sciences, 106(37), 15594–15598. doi:10.1073/pnas.0906865106.Google Scholar
Schlenker, W., Hanemann, M. W. & Fisher, A. C. (2005). Will U.S. agriculture Really Benefit from Global Warming? Accounting for Irrigation in the Hedonic Approach. American Economic Review, 95(1), 395–406. doi:10.1257/0002828053828455.Google Scholar
Schlenker, W., Roberts, M. J. & Lobell, D. B. (2013). US maize adaptability. Nature Climate Change, 3(8), 690–691. doi:10.1038/nclimate1959.Google Scholar
Strzepek, K., Neumann, J. E., Smith, J., Martinich, J., Boehlert, B., Hejazi, M., …, Yoon, J. H. (2014). Benefits of greenhouse gas mitigation on the supply, management, and use of water resources in the United States. Climatic Change. Doi:10.1007/s10584-014-1279-9.Google Scholar
Sussman, F. G., Krishnan, N., Maher, K., Miller, R., Mack, C., Stewart, P., …, Perkins, B. (2013). Climate change adaptation cost in the US: What do we know? Climate Policy, 14(2), 242–282. doi:10.1080/14693062.2013.777604.Google Scholar
Sussman, F. G., Weaver, C., and Grambsch, A.. (2014) “Challenges in applying the paradigm of welfare economics to climate change, The Journal of Benefit-Cost Analysis, 5(3), 347–376.Google Scholar
Sutton, W. R., Srivastava, J. P. & Neumann, J. E. (2013). Looking beyond the horizon: How climate change impacts and adaptation responses will reshape agriculture in Eastern Europe and Central Asia (No. 76184) (pp. 1–201). The World Bank. Retrieved from http://documents.worldbank.org/curated/en/2013/03/17473996/looking-beyond-horizon-climate-change-impacts-adaptation-responses-reshape-agriculture-eastern-europe-central-asia.Google Scholar
Titus, J. G., Park, R. A., Leatherman, S. P., Weggel, J. R., Greene, M. S., Mausel, P. W., …, Yohe, G. (1991). Greenhouse effect and sea level rise: The cost of holding back the sea. Coastal Management, 19(2), 171–204. doi:10.1080/08920759109362138.Google Scholar
Transportation Research Board. (2008). Potential impacts of climate change on U.S. transportation (No. Special Report 290). Washington, DC: Committee on Climate Change and U.S. Transportation, National Research Council of the National Academies. Retrieved from http://onlinepubs.trb.org/onlinepubs/sr/sr290.pdf.Google Scholar
Tubiello, F. N., Soussana, J.-F. & Howden, S. M. (2007). Crop and pasture response to climate change. Proceedings of the National Academy of Sciences, 104(50), 19686–19690. doi:10.1073/pnas.0701728104.Google Scholar
U.S. EPA. (1989). The potential effects of global climate change on the United States (No. EPA-230-05-89-050). Office of Policy, Planning, and Evaluation U.S. Environmental Protection Agency.Google Scholar
U.S. EPA. (2011). The benefits and costs of the clean air act from 1990 to 2020: Full report. Washington, DC: U.S. Environmental Protection Agency. Retrieved from http://www.epa.gov/cleanairactbenefits/feb11/fullreport_rev_a.pdf.Google Scholar
U.S. Global Change Research Program. (2014). Climate change impacts in the United States: The third national climate assessment. Retrieved from http://dx.doi.org/10.7930/J0Z31WJ2.CrossRefGoogle Scholar
Waldhoff, S., Martinich, J., Sarofim, M., DeAngelo, B., McFarland, J., Jantarasami, L., …, Li, J. (2014). Overview of the special issue: a multi-model framework to achieve consistent evaluation of climate change impacts in the United States. Climatic Change, DOI 10.1007/s10584-014-1206-0.Google Scholar
Watkiss, P. (ed.) (2011). The Climate Cost Project. Final Report. Volume 1: Europe. Published by the Stockholm Environment Institute, Sweden, 2011. ISBN 978-91-86125-35-6.Google Scholar
Wobus, C., Lawson, M., Jones, R., Smith, J. & Martinich, J. (2014). Estimating monetary damages from flooding in the United States under a changing climate: Climate change and damaging floods. Journal of Flood Risk Management. 7(3), 217–229. doi:10.1111/jfr3.12043.Google Scholar
World Bank (2010). The Costs to Developing Countries of Adapting to Climate Change: New Methods and Estimates. Washington DC: World Bank.Google Scholar
Wright, L., Chinowsky, P., Strzepek, K., Jones, R., Streeter, R., Smith, J. B., …, Perkins, W. (2012). Estimated effects of climate change on flood vulnerability of U.S. bridges. Mitigation and Adaptation Strategies for Global Change, 17(8), 939–955. doi:10.1007/s11027-011-9354-2.Google Scholar
Yohe, G. (1990). The cost of not holding back the sea: Toward a national sample of economic vulnerability. Coastal Management, 18(4), 403–431. doi:10.1080/08920759009362123.Google Scholar
Yohe, G., Schlesinger, M. (1998). Sea level change: the expected economic cost of protection or abandonment in the United States. Climatic Change, 38, 447–472.Google Scholar
Yohe, G., Knee, K. & Kirshen, P. (2011). On the economics of coastal adaptation solutions in an uncertain world. Climatic Change, 106(1), 71–92. doi:10.1007/s10584-010-9997-0.CrossRefGoogle Scholar
Yohe, G., Neumann, J., Marshall, P. & Ameden, H. (1996). The economic cost of greenhouse-induced sea-level rise for developed property in the United States. Climatic Change, 32(4), 387–410. doi:10.1007/BF00140353.Google Scholar
Zhang, X., Zwiers, F. W., Hegerl, G. C., Lambert, F. H., Gillett, N. P., Solomon, S., …, Nozawa, T. (2007). Detection of human influence on twentieth-century precipitation trends. Nature, 448(7152), 461–465. doi:10.1038/nature06025.Google Scholar