Expectations and Adaptation to Environmental Risks

68 Pages Posted: 31 Jul 2018 Last revised: 19 Mar 2020

See all articles by Jeffrey Shrader

Jeffrey Shrader

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

Date Written: March 17, 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. This paper introduces a method for estimating forward-looking adaptation based on differences in responses to forecasts and realizations of weather. The method is applied to estimate climate damages and adaptation in a fishery. The application uses a novel dataset of climate forecasts and detailed, firm-level records. In this setting, most of the effect of climate variation can be controlled through adaptation. Important adaptation mechanisms involve 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, Expectations and Adaptation to Environmental Risks (March 17, 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 )

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HOME PAGE: http://jeffreyshrader.com

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