Anticipating Climate Change Across the United States

Esteban Rossi-Hansberg, University of Chicago http://www.rossihansberg.com Slides and Summary: https://sites.google.com/modelingtalks.org/entry/anticipating-climate-change-across-the-united-states Join group talk notices: https://groups.google.com/a/modelingtalks.org/g/talks Abstract: 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 5% in 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. Bio: Esteban Rossi-Hansberg is the Glen A. Lloyd Distinguished Service Professor in the Kenneth C. Griffin Department of Economics at the University of Chicago (since 2021). Previously, he was a Professor of Economics at Princeton University from 2005 to 2021 and at Stanford University from 2002 to 2005. He earned a Ph.D. from the University of Chicago in 2002. He is a research associate at the National Bureau of Economic Research and a research fellow at the Center for Economic Policy Research. He is the co-director of the International Economics and Economic Geography Initiative at the Becker Friedman Institute. In 2021 he became an Editor of the Journal of Political Economy. Rossi-Hansberg’s research specializes in international trade, regional and urban economics, as well as growth and organizational economics. Among other topics, his work has studied the internal structure of cities; the implications of offshoring and changes in firm organization on economic outcomes; and the impact of spatial frictions and agglomeration and congestion forces on the gains from migration and the cost of climate change. He has published extensively in all major journals in economics. In 2007 he received the prestigious Alfred Sloan Research Fellowship and in 2010 he received the August Lösch Prize and the Geoffrey Hewings Award. He is an elected fellow of the Econometric Society since 2017 and won the Robert E. Lucas Jr. Prize in 2019. In 2022 he was elected to the American Academy of Arts and Sciences. #modeling #economics #econometrics #climatefinance #climatechange #climateaction #climateimpact

Added 12 Sept 2026