Improving Climate Damage Estimates by Accounting for Adaptation

77 Pages Posted: 31 Jul 2018 Last revised: 21 Jun 2021

See all articles by Jeffrey Shrader

Jeffrey Shrader

Columbia University - School of International & Public Affairs (SIPA)

Date Written: June 21, 2020

Abstract

Climate change is projected to severely damage the global economy. Adaptation in response to a changing climate will affect how much damage ultimately occurs. A major source of uncertainty in existing damage estimates is the extent to which they include or exclude such adaptation. This paper shows how to estimate damages while accounting for forward-looking adaptation using an empirical strategy that compares responses to forecasts and to realizations of weather. The empirical strategy is applied to study climate damages and adaptation in a fishery using a novel dataset of climate forecasts and detailed, firm-level records. Empirically, the benefit of forward-looking adaptation is large and important, and accounting for adaptation substantially changes the estimated damages from climate variation. Mechanism analysis shows that firms adapt by reducing production costs and timing entry into the fishery.

Keywords: climate change, adaptation, forecasts, expectations

JEL Classification: D22, D84, Q22, Q54

Suggested Citation

Shrader, Jeffrey, Improving Climate Damage Estimates by Accounting for Adaptation (June 21, 2020). Available at SSRN: https://ssrn.com/abstract=3212073 or http://dx.doi.org/10.2139/ssrn.3212073

Jeffrey Shrader (Contact Author)

Columbia University - School of International & Public Affairs (SIPA) ( email )

420 West 118th Street
New York, NY 10027
United States

HOME PAGE: http://jeffreyshrader.com

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
162
Abstract Views
966
rank
253,630
PlumX Metrics