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This paper examines how temperature affects worker productivity beyond the usual "on average" analysis, with a particular focus on distributional impacts of the increasing heat incidence across high- and low-productivity areas. Using a recentered influence function regression approach, we estimate unconditional reduced-form effects of a location shift in the temperature distribution—consistent with climate change trends—on the labor productivity distribution across counties in the contiguous U.S. We find that labor productivity is largely insensitive to changes in the frequency of cool-to-moderate maximum daily temperatures. However, as temperatures shift above 2 4 ∘ C , the effects on productivity turn increasingly negative, albeit with their magnitudes attenuating as a county's productivity rank rises. While highly productive locations in the top 5% are not adversely impacted even by the hottest temperatures, permanently increasing the incidence of ≥ 3 6 ∘ C temperatures just by a day lowers productivity at the bottom vigintile by a nontrivial 0.22% per year, an equivalent of 10.5 hours of work by a minimum-wage worker. As temperatures continue to rise, not only does worker productivity worsen on average, but the cross-county dispersion therein widens too. Given existing climate forecasts, we predict that future extreme temperatures would further deepen worker productivity inequality. [ABSTRACT FROM AUTHOR]

This paper analyzes the effects of partial cooperation on the breadth and depth of climate agreements in dynamic games in which countries emit, invest in green technology, decide to participate in a climate coalition and participants negotiate the contract duration. When choosing emissions reductions (pledges), coalition countries apply Harstad's (2023a) pledge-and-review bargaining and partially cooperate. We distinguish between stock-independent and stock-dependent investment costs. It is shown that narrow-but-deep agreements may be welfare superior to broad-but-shallow agreements for signatories. In addition, if the degree of partial cooperation is sufficiently high, broad-and-deep agreements and even first best can be achieved. [ABSTRACT FROM AUTHOR]

Using quarterly temperature and employment data between 1990 and 2021, this paper uncovers nuanced evidence on the impact of seasonal temperature within US counties: higher winter temperature increases private sector employment growth while higher summer temperature decreases it. The impacts of higher temperature in milder seasons, fall and spring, are statistically insignificant. Moreover, the negative impact of higher summer temperature persists while the positive impact of higher temperature in the winter is more short-lived. The negative effects of a hotter summer are pervasive and persistent in many sectors: most significantly in "Construction" and "Leisure and Hospitality" but also in "Trade, Transport, and Utilities" and "Financial Activities". In contrast, the positive effects of a warmer winter are less pervasive. The employment effect of a hotter summer has been more severe in recent decades. [ABSTRACT FROM AUTHOR]

This paper examines the effects of extreme temperatures on mortality rates, using random year-to-year variation in temperature based on county-level panel data from China. The analysis finds a robust, U-shaped relationship between temperature and mortality rates, indicating that extremely cold or hot temperatures lead to excess deaths. The heat-related (cold-related) effect is 3.5 times (3.2 times) as large as previous findings that used U.S. data, and it is especially large for the elderly population, mainly due to excess deaths caused by cardiovascular diseases. Applying these results to climate change predictions from Hadley Centre Global Environmental Model shows that by 2061–2080 the annual mortality rate is likely to increase by 14.2% if global greenhouse gas emissions continue to rise throughout the 21st century, the estimated health cost of which is around 0.98 trillion Chinese Yuan per year. The paper also explores households' adaptation behaviors to extreme temperatures. It finds that although urban households adaptively increase energy consumption when they are exposed to cold temperatures and purchase more air conditioners on hot and cold days, rural households are unresponsive to temperature fluctuations. This finding implies that rural people may be more resource constrained and suffer more when extreme temperatures occur. [ABSTRACT FROM AUTHOR]

There is a lack of evidence regarding how natural resource markets have responded to recent increases in climate-induced extreme events like wildfire. Wildfire can affect the economic value of forests by directly damaging the existing tree stock and by altering landowner risk expectations of future wildfire arrival. This paper uses parcel data over a seventeen-year period to estimate the effects of large wildfires and drought stress on market prices for private timberland across the three Pacific states of the western U.S. In addition to estimating the land price impacts of wildfires on parcels that were directly burned, we identify changes in risk expectations by estimating the impacts from wildfires that burned in close proximity rather than directly on timberland that was sold in the land market. Results indicate that recent increases in large wildfires and drought stress over the past two decades have lowered the economic value of timberland by approximately 10%, or about $11.2 billion in damages across the three Pacific states, with approximately 5.5% (∼$6.2 billion) due to climate change. Most of the wildfire damages arise from changes in risk expectations. Results provide evidence on the costs of climate-induced extreme events on natural capital that have already occurred. • Climate-induced extreme events, such as drought stress and large wildfires, negatively affect the economic value of timberland in the Pacific states. • Wildfires lower timberland values through two avenues: direct damage to the existing forest stock and neighboring fires that alter landowners' expectations of fire arrival. • As a result of recent increases in drought stress and large wildfires, the economic value of timberland has been reduced by approximately 10%, or about $11.2 billion in damages across three Pacific states, with approximately 5.5% (∼$6.2 billion) due to climate change. Most of the wildfire damages arise from changes in risk expectations. [ABSTRACT FROM AUTHOR]

We introduce nine papers on sustainable resource dynamics. In addition, we provide analytical results on the effect of stochastic damages on optimal economic growth, the effects of habits and loss aversion on the cost-benefit discount rate, and the effect of a carbon budget and carbon capture and storage (CCS) on optimal investment in technical change. [ABSTRACT FROM AUTHOR]

Currently, cap-and-trade programs are a cornerstone of many countries' climate change policies and proposals. This paper investigates the economic and environmental effects of different climate change policy designs in a general equilibrium setting with heterogeneous firms and monopolistic competition. The analysis predicts that the cap on emissions perfectly defines the environmental quality but has no effect on firms' profits, or decisions to enter or exit the market. In contrast, increasing the share of free allocations of emission allowances, as opposed to auctions, has no effect on environmental quality but reallocates resources among firms toward the most productive ones which has an impact on firms' entry and exit decisions, the mass of firms, and the composition of the market. Firm heterogeneity magnifies these economic effects of changes in the initial allocation of allowances. The paper provides a decomposition of the change in aggregate emissions which takes account of the changes at sector level, across the firms within a sector, and at the firm level. [ABSTRACT FROM AUTHOR]

Abstract Weather anomalies have a range of adverse contemporaneous impacts on health and socio-economic outcomes. This paper tests if temperature anomalies around the time of birth can have long-term impacts on individuals' economic productivity. Using unique data sets on historical weather and earnings, place and date of birth of all 1.5 million formal employees in Ecuador, we find that individuals who have experienced in-utero temperatures that are 1 °C above average are less educated and earn about 0.7% less as adults. Results are robust to alternative specifications and falsification tests and suggest that warming may have already caused adverse long-term economic impacts. [ABSTRACT FROM AUTHOR]

Abstract The provision of many ecosystem services depends on the spatial pattern of land use across multiple landowners. Even holding land use constant, ecosystem service provision may change through time due to climate change. This paper develops an auction mechanism that implements an optimal solution for providing ecosystem services through time with multiple landowners who have private information about the net benefits of alternative uses of their land. Under the auction, each landowner has a dominant strategy to truthfully reveal their private information. With this information a regulator can then implement the optimal landscape pattern, which maximizes the present value of net benefits derived from the landscape, following the rules of the auction mechanism. The auction can be designed as a subsidy auction that pays landowners to conserve or a tax auction where landowners pay for the right to develop. Our mechanism optimizes social adaptation of ecosystem management to climate change. [ABSTRACT FROM AUTHOR]

Abstract In a general equilibrium model with two periods and a finite fossil resource, I analyze the non-cooperative climate policies of symmetric countries that are in competition for mobile factors of production (capital and fossil energy). The paper shows that countries that want to slow down climate change but are also concerned about tax revenues from mobile tax bases have a rationale to supplement environmental taxes on fossil fuels with source-based capital taxes (or subsidies). More specifically, countries find it beneficial to subsidize capital in period one and tax it in period two. The first-period subsidy on capital facilitates a higher environmental tax by counteracting its adverse effects, and increases national and global welfare in equilibrium. By contrast, the capital tax in period two induces inter- and intratemporal distortions that lead to lower welfare. The rate of resource extraction is inefficiently high in equilibrium, no matter which tax portfolio is at the governments' disposal. Furthermore, unintended ('Green Paradox') effects of demand-side policies are shown to arise even in general equilibrium with factor mobility. Finally, factor mobility does not necessarily lead to a higher rate of extraction and lower welfare compared to autarky. [ABSTRACT FROM AUTHOR]

Abstract We perform two tests that estimate the mass of the upper tail of the distribution of aggregate US tropical cyclone damages. Both tests reject the hypothesis that the distribution of damages is thin tailed at the 95% confidence level, even after correcting for inflation and growth in population and per capita income. Our point estimates of the shape parameter of the damage distribution indicate that the distribution has finite mean, but infinite variance. In the second part of the paper, we develop a microfoundations model of insurance and storm size that generates a fat tail in aggregate tropical cyclone damages. The distribution of the number of properties within a random geographical area that lies in the path of a tropical cyclone is shown to drive fat tailed storm damages, and we confirm that the distribution of coastal city population is fat tailed in the US. We show empirically and theoretically that other random variation, such as the distribution of storm strength and the distribution of damages across individual properties, does not generate a fat tail. We consider policy options such as climate change abatement, policies which encourage adaptation, reducing subsidies for coastal development, and disaster relief policies, which distort insurance markets. Such policies can reduce the thickness of the tail, but do not affect the shape parameter or the existence of the fat tail. [ABSTRACT FROM AUTHOR]

Ricardian analyses of farmland values have become a cornerstone of the literature valuing the impacts of climate change on agriculture. However, concerns about the lack of a formal econometric strategy to deal with omitted farmland characteristics have raised doubts about the identification of such impacts. This paper proposes an original method for estimating Ricardian models with plot fixed effects to control for confounding omitted variables. Specifically, we use plot-level repeat-sales French data from 1996 to 2019 to investigate how differences in farmland prices between two sale dates are explained by differences in climate evolutions. We show that our repeat-Ricardian estimates suggest greater benefits of climate change than those found with standard Ricardian analyses. In particular, our repeat-Ricardian estimates indicate that warmer summers benefit French agriculture, in complete opposition to our pooled Ricardian estimates or to the remainder of the literature. Our repeat-Ricardian results are robust to several specifications, climate length-definitions and sub-samples. We provide elements suggesting that the repeat-Ricardian analysis is better able to capture crop-switching towards high-value crops requiring particular soil conditions (e.g. vineyards). Our repeat-Ricardian analysis also indicates greater benefits of climate change compared to those estimated with short-term weather-based approaches, shedding new lights on previous inconsistent findings from the literature. [ABSTRACT FROM AUTHOR]

This paper analyzes the relationship between temperature, mortality, and adaptation opportunities in a tropical country. Such countries host almost 40% of the world's population and face inherently different environmental, demographic, and socio-economic conditions than their counterparts in temperate areas. Using detailed data from all Colombian municipalities, I show that anomalously hot or cold days increase mortality even at narrow temperature ranges, which are characteristic of the tropics. An additional day with a mean temperature above 27 °C (80.6 ∘ F) increases mortality rates by approximately 0.24 deaths per 100,000, equivalent to 0.7% of monthly death rates. Unlike temperate locations, I find that deaths attributed to infectious diseases and respiratory illnesses drive this relationship in the hot part of the distribution, mainly affecting children aged 0–9. These findings uncover new factors and populations at risk and imply that the average person who dies after a hot temperature shock loses approximately 30 years of life. I also provide evidence that access to health care and quality of services could mediate between temperature and mortality. [ABSTRACT FROM AUTHOR]

This paper proposes a simple two-step estimation method (C limate A daptive R esponse E stimation - CARE) to estimate sectoral climate damage functions, which account for long-run adaptation. The paper applies this method in the context of residential electricity and natural gas demand for the world's fifth largest economy — California. The advantage of the proposed method is that it only requires detailed information on intensive margin behavior, yet does not require explicit knowledge of the extensive margin response (e.g., technology adoption). Using almost two billion energy bills, we estimate spatially highly disaggregated intensive margin temperature response functions using daily variation in weather. In a second step, we explain variation in the slopes of the dose response functions across space as a function of summer climate. Using 18 climate models, we simulate future demand by letting households vary consumption along the intensive and extensive margins. We show that failing to account for extensive margin adjustment in electricity demand leads to a significant underestimate of the future impacts on electricity consumption. We further show that reductions in natural gas demand more than offset any climate-driven increases in electricity consumption in this context. [ABSTRACT FROM AUTHOR]

This paper studies the impacts of renewable energy support policies on energy prices, fossil fuel supply and thus carbon emissions from fossil fuels. Such supports are climate friendly if the renewables are already competitive against fossil fuels. But if the renewables are not yet competitive, the climate change impacts are often ambiguous and are sensitive to capacity constraints of renewables production and to the fossil fuel market structure. If the renewables do not have capacity constraints, then the subsidies are subject to the Green Paradox under perfect competition, but might be climate friendly under monopoly. Supports for capacity constrained renewables under perfect competition lead to more current fossil fuel supply but delay fossil fuel exhaustion time, and these effects are reversed under monopoly. Our results highlight the importance of considering the long-term effects on fossil fuel supply as well as capacity constraints and market power in designing renewable energy policies and evaluating their carbon footprints. [ABSTRACT FROM AUTHOR]

Tropical deforestation in Brazil is a major source of greenhouse gas emissions that contribute to climate change. Brazil has taken several steps to reduce emissions associated with deforestation including the development of policies to promote and reward cattle ranching intensification. Intensification practices are hypothesized to reduce the conversion of tropical forests while simultaneously increasing the productivity of ranching on current pasture lands. This paper assesses the impact of intensification on the demand for productive land. A theoretical model of land use, which considers the degree of intensification in the estimation of the derived demand for pasture, is tested with data from small-scale landowners who operate dairy farms and calving operations in the greater Ouro Preto do Oeste region of Rondônia. Results suggest different trajectories for beef and dairy production. The intensification of cattle production exhibits a nonlinear relationship with the demand for productive land: first as farms become more intensive the demand for newly cleared land increases, but then decreases with further intensification. The results are different for dairy intensification, which is found to be correlated with reduced deforestation. Findings suggest that the reliance on policies that promote intensification can be a risky way of achieving climate change objectives. [ABSTRACT FROM AUTHOR]

This paper uses detailed production data from a half million Chinese manufacturing plants over 1998–2007 to estimate the effects of temperature on firm-level total factor productivity (TFP), factor inputs, and output. We detect an inverted U-shaped relationship between temperature and TFP and show that it primarily drives the temperature-output effect. Both labor- and capital- intensive firms exhibit sensitivity to high temperatures. By mid 21st century, if no additional adaptation were to occur, we project that climate change will reduce Chinese manufacturing output annually by 12%, equivalent to a loss of $39.5 billion in 2007 dollars. This implies substantial local and global economic consequences as the Chinese manufacturing sector produces 32% of national GDP and supplies 12% of global exports. [ABSTRACT FROM AUTHOR]

How does climate-change mitigation affect the aggregate consumption risk borne by future generations? In other words, what is the ‘climate beta’? In this paper we argue using a combination of theory and integrated assessment modelling that the climate beta is positive and close to unity for maturities of up to about one hundred years. This is because the positive effect on the climate beta of uncertainty about exogenous, emissions-neutral technological progress overwhelms the negative effect on the climate beta of uncertainty about the carbon-climate-response, particularly the climate sensitivity, and the damage intensity of warming. Mitigating climate change therefore has no insurance value to hedge the aggregate consumption risk borne by future generations. On the contrary, it increases that risk, which justifies a relatively high discount rate on the expected benefits of emissions reductions. However, the stream of undiscounted expected benefits is also increasing in the climate beta, and this dominates the discounting effect so that overall the net present value of carbon emissions abatement is increasing in the climate beta. [ABSTRACT FROM AUTHOR]

This paper empirically estimates the economic impacts of a large-scale public investment in natural infrastructure aimed at adapting to climate change and increasing coastal resilience. I utilize temporal and spatial variation in investment in dunes to provide a hedonic property value estimate of the economic benefits. I identify the net effect of treatment utilizing the doubly robust Oaxaca-Blinder estimator and show that coastal housing price increases attributable to constructed dunes are approximately 3.6%. A decomposition of the average impact suggests that the policy intervention generates ancillary costs related to impaired ocean views and privacy concerns that partially offset large protection benefits. [ABSTRACT FROM AUTHOR]

Although previous studies have examined the association between temperature exposure and pregnancy losses (mainly focusing on the risk of stillbirth), causal estimates are still missing. The literature also lacks projections on the impacts of climate change. Using Hungarian administrative data spanning 1984 to 2018, this paper estimates the effect of temperature on the weekly spontaneous pregnancy loss rate. We show that, compared to a mild temperature, heat causes a substantial increase in the risk of pregnancy loss, whereas cold temperatures slightly decrease it. These impacts are not due to near-term displacement of some pregnancy losses but represent changes in the pregnancy outcomes. Combining the estimated effects with outputs of thirty climate models implies that climate change will increase the spontaneous pregnancy loss rate in the 21st century. The risk of pregnancy loss will be especially elevated during summer. [ABSTRACT FROM AUTHOR]

Climate change shifts the distributions of a set of climatic variables, including temperature, precipitation, humidity, wind speed, sunshine duration, and evaporation. This paper explores the importance of those additional climatic variables other than temperature and precipitation. Using the county-level agricultural data from 1980 to 2010 in China, we find that those additional climatic variables, especially humidity and wind speed, are critical for crop growth. Therefore, omitting those variables is likely to bias the predicted impacts of climate change on crop yields. In particular, omitting humidity tends to overpredict the cost of climate change on crop yields, while ignoring wind speed is likely to underpredict the effect. Our preferred specification indicates that climate change is likely to decrease the yields of rice, wheat, and corn in China by 36.25%, 18.26%, and 45.10%, respectively, by the end of this century. [ABSTRACT FROM AUTHOR]

This paper examines climate-change benefit-cost analysis in the presence of scientific uncertainty in the form of ambiguity. The specific issue addressed is the robustness of benefit-cost analyses of climate-change policy alternatives to relaxation of Savage's original axioms. Two alternatives to subjective expected utility (SEU) are considered: maximin expected utility (MEU) and incomplete expected utility (IEU). Among other results, it is demonstrated that polar opposite recommendations can emerge in an ambiguous decision setting even if all agree on Society's rate of time preference, Society's risk attitudes, the degree of ambiguity faced, and the scientific primitives. We show that, for a simple numerical simulation of our model, an MEU decision maker favors policies which immediately tackle climate change while an IEU decision prefers “business as usual”.“Each agency shall assess the costs and benefits of the intended regulation, and recognizing that some costs and benefits are difficult to quantify, propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its cost.” Executive Order 12866 of the US President. [ABSTRACT FROM AUTHOR]

While there is considerable interest in understanding the climate–migration relationship, particularly in the context of concerns about global climatic change, little is known about its underlying mechanisms. In the paper, we combine a rich panel data on annual bilateral international migration flows with an extensive data on climate variability across the countries to investigate in-depth the climate–migration link. We find a positive and statistically significant relationship between temperature and international outmigration only in the most agriculture-dependent countries, consistent with the widely documented adverse impact of temperature on agricultural productivity. Further, the temperature–migration relationship is nonlinear and resembles the nonlinear temperature–yield relationship. In addition, migration flows to current major destinations are especially temperature-sensitive. Policies to address issues related to climate-induced international migration would be more efficient if focused on the agriculture-dependent countries and especially people in those countries whose livelihoods depend on agriculture. [ABSTRACT FROM AUTHOR]

Policy makers search for strategies to promote resilience and mitigate the effects of future climatic shocks. In this paper, we assess whether small regular cash transfers strengthen poor households' ability to mitigate the welfare effects of drought shocks. We analyze mechanisms through which cash transfers contribute to resilience, including savings, asset accumulation as well as income smoothing in agriculture and off-farm activities. We combine household survey data collected as part of a randomized control trial in rural Niger with satellite data used to identify exogenous rainfall shocks. The results show that cash transfers increase household consumption by about 10 percent on average. Importantly, this increase is mostly concentrated among households affected by drought shocks, for whom welfare impacts are larger than transfer amounts due to households' enhanced ability to protect earnings in agriculture and off-farm businesses when shocks occur. The results suggest that multi-year cash transfer programs can foster poor households' resilience by facilitating savings and income smoothing. [ABSTRACT FROM AUTHOR]

Extreme heat shocks are increasingly linked to poor economic and health outcomes. This paper constructs hour-degree bins of temperature exposure to assess the effects of extreme heat on early child nutrition, a health outcome correlated with educational attainment and income in adulthood. Linking 15 rounds of repeated cross-section data from five West African countries to geo-coded weather data, we find that extreme heat exposure increases the prevalence of both chronic and acute malnutrition. We find that a 2 °C rise in temperature will increase the prevalence of stunting by 7.4 percentage points, reversing the progress made on improving nutrition during our study period. [ABSTRACT FROM AUTHOR]

This paper studies a social planner who chooses countries' carbon prices so as to maximize global welfare. Product markets are characterized by firm heterogeneity, market power, and international trade. Because of the market-power distortion, the planner's optimal policy is second-best. The main insight is that optimal carbon prices may be highly asymmetric: zero in some countries and above the social cost of carbon in countries with relatively dirty production. This result obtains even though a uniform global carbon price is always successful at reducing countries' emissions. Competition policy that mitigates market power may enable stronger climate action. [ABSTRACT FROM AUTHOR]

Scientific evidence reveals that renewable resource stock dynamics are subject to uncertainty due to changes in environmental conditions. Despite its critical impacts on management, little is known about the effects of such uncertainty on the formation of regional fisheries management organizations (RFMOs). In this paper, we design a dynamic stock recruitment framework to examine this issue in a common pool setting. We find that stock growth uncertainty critically affects equilibrium behaviors under both open loop membership and dynamic membership. For instance, we delineate conditions under which uncertainty induces full non-cooperation in equilibrium. Strategic behaviors may also shift equilibrium outcomes from full non-cooperation under deterministic conditions to full cooperation under uncertainty when countries anticipate a small environmental variability. Moreover, strategic interactions to extract the resource stock may lead to higher individual payoffs under uncertainty. We also outline the differences in equilibrium responses of membership, harvest, and payoff to mean preserving spreads under both open loop membership and dynamic membership. [ABSTRACT FROM AUTHOR]

How do innovators respond to the shock of a natural disaster? Do natural disasters spur technical innovations that can reduce the risk of future hazards? This paper examines the impact of three types of natural disasters—floods, droughts and earthquakes—on the innovation of their respective mitigation technologies. Using patent and disaster data, our study is the first to empirically examine adaptation responses across multiple sectors at the country level. Considering the potential endogeneity of disaster damages, we use meteorological and geophysical data to create hazard intensity measures as instrumental variables. Overall, we show that natural disasters lead to more risk-mitigating innovations, while the degree of influence varies across different types of disasters and technologies. [ABSTRACT FROM AUTHOR]

Global warming and the carbon cycle are a dynamic system with positive feedbacks. Fossil fuels are exhaustible resources. These two facts mean that innovation in clean energy technology, rather than mitigating global warming, can lead to a permanently higher temperature path. This paper explores the impact of innovation in the simplest model linking the economic theory of exhaustible resources with positive feedback dynamics in the carbon cycle. [ABSTRACT FROM AUTHOR]

Decreasing greenhouse gas emissions from electricity generation is crucial to tackle climate change. Empirically, however, little is known about the effectiveness of existing economic instruments in the power sector. This paper examines the impact of the UK Carbon Price Support (CPS), a carbon tax implemented in the UK power sector in 2013. Relative to a synthetic control unit built from other European countries, I find that emissions from the UK power sector declined by 20 to 26 percent per year on average between 2013 and 2017. The tax operated via three mechanisms: a decrease in emissions at the intensive margin; the closure of some high-emission plants at the extensive margin; and a higher probability of closure for plants already at risk due to European air quality regulations. [ABSTRACT FROM AUTHOR]

As the frequency and severity of wildfires escalates in many regions, the study of fire-resilient forestry practices becomes crucial. While forest owners may employ several silvicultural practices to mitigate fire damage, the analytical study of optimal forest management has been reduced to the effects of fire on optimal rotation only. The fundamental result of this literature date back to the early 1980s and has remained virtually uncontested since then. This paper develops an infinite rotation cycle forest model in which landowners optimally choose rotation age, volume, and timing of partial harvesting in the presence of fire risk. We show that this setting fundamentally changes earlier results. In particular, more frequent fires imply beginning commercial thinning sooner but not necessarily shortening the rotation age. Two numerical applications highlight the empirical relevance of our findings. [ABSTRACT FROM AUTHOR]

This paper studies how extreme weather and natural disasters affect campaign contributions and elections. Weather events associated with climate change may influence these outcomes by leading voters to re-evaluate the incumbent politician's environmental position. In a short-run analysis, we find that the number of online contributions to the Democratic Party increases in response to higher weekly temperature, with a larger effect in counties with more anti-environment incumbent politicians. In a medium-run analysis, we find that, when a natural disaster strikes, the election becomes more competitive if the incumbent leans more anti-environment: total campaign contributions increase for both candidates and the increase is skewed toward the challenger, the race is more likely to be contested, and the incumbent is less likely to be re-elected. These results suggest that extreme weather events carry a moderate electoral penalty for anti-environment incumbents during 1990–2012. This mechanism will likely play a more important role as the public awareness of climate change continues to increase. [ABSTRACT FROM AUTHOR]

This paper investigates the relationship between temperature and hospitalization in China. Using inpatient visit claims of two major public insurance schemes covering 47 cities in 28 provinces for three years, we see a 7.3% increase in hospital admissions on days on which the average temperature is above 27 °C, and a 2% increase in 31-day cumulative hospital admissions relative to a benchmark-temperature day in the subsequent weeks. Such an effect is much larger than evidence from developed economies. Using detailed information on medical bills, we calculate that an additional hot day nationwide is associated with approximately 2 billion yuan (roughly equivalent to 0.3 billion US dollars) increase in medical expenses that are related to inpatient services, 1.9 billion yuan (roughly equivalent to 0.29 billion US dollars) of which is borne by the public insurance system, and 0.2 billion yuan (roughly equivalent to 0.01 billion US dollars) of which is borne by the insured. [ABSTRACT FROM AUTHOR]

Climate change effects on agricultural yields will be uneven over the world. A few countries, mostly in high latitudes, may experience gains, while most will see average yield decrease. This paper aims to quantify the role of market-mediated adjustments in attenuating the effects of climate change by allowing the expression of the new climate-induced pattern of comparative advantages within and between countries. To do this, we develop a quantitative general equilibrium trade model where the representation of land use choice is inspired from modern Ricardian trade models. We use spatially explicit information from the agronomic literature about potential yields before and after climate change for calibration and counterfactual simulations. The results show that the climate-induced yield changes generate large price movements that incentivize adjustments in production and trade. Both production and trade adjustments contribute to reducing welfare losses globally, with production adjustments making the larger contribution. [ABSTRACT FROM AUTHOR]

Against a backdrop of rising uncertainty driven by a warming climate, environmental policy has become increasingly reliant on precautionary buffers to safeguard public health, prevent irreversible environmental damages and limit the likelihood of exceeding critical thresholds. These probabilistic constraints are usually implemented under a separability assumption even though outcomes are often dependent. Examples include ambient air pollution and water quality standards, phytosanitary trade measures, and reference points in fisheries management. In this paper, we characterize how stochastic dependence among environmental variables influences environmental policy when the governing regulatory systems use probabilistic precautionary buffers. Our approach builds on Sklar's theorem and the copula representation of multivariate distributions and uses stochastic dependence orderings to compare policy design for different dependence structures including correlated, independent and separable risks. Dependence typically renders policy based on separability suboptimal and we characterize how policy should be adjusted in the presence of correlated risks. We illustrate the theory using fisheries management in the Gulf of Maine, one of the fastest-warming ocean ecosystems on the planet. In its multispecies fishery, even a mild positive correlation between stocks can result in a substantial reduction in effort limits if overfishing is to be avoided. [ABSTRACT FROM AUTHOR]

This paper estimates the causal effect of urban road expansion on Vehicle-Kilometers Traveled (VKT) in 103 Chinese cities. We develop a novel matching IV strategy to address endogeneity concerns that complements traditional historical infrastructure instruments to provide time-varying identification in a panel data setting. We find that the estimated elasticity of VKT with respect to road length is approximately 1, indicating that newly built urban roads lead to a proportional increase in total traffic. Given significant ongoing infrastructure investment and more recently enacted traffic alleviation policies in many Chinese cities, this result provides important new information on the impacts of infrastructure investment on traffic. [ABSTRACT FROM AUTHOR]

The seminal studies by Allcott and Mullainathan (2010), Allcott (2011), and Allcott and Rogers (2014) show that social comparison-based home energy reports (HER) are a cost-effective climate policy intervention in the US. Our paper demonstrates the context-dependency of this result. In most industrialized countries, average electricity consumption and carbon intensity are well below US levels. Consequently, HER interventions can only become cost-effective if treatment effect sizes are substantially higher. For Germany, we provide evidence from a large-scale randomized controlled trial that effect sizes are in fact considerably lower than in the US. We conclude by illustrating that targeting highly responsive subgroups is crucial to reach cost-effectiveness and by identifying the few countries in which HER are promising policy instruments. [ABSTRACT FROM AUTHOR]

This paper compares the impact of different climate mitigation policies — mandates, feebates, performance standards, and carbon pricing — in a Ramsey model with clean and polluting capital, irreversible investment, and a climate constraint. These policy instruments imply different transitions to the same balanced growth path. The optimal carbon price minimizes the discounted social cost of the transition to clean capital, but may prompt premature retirement of existing polluting capacities and significant private costs in the form of stranded assets. Second-best mandates and feebates affect new investment decisions without providing incentives to under-use existing polluting equipment. These instruments lead to higher discounted social costs, but smoother abatement costs, and do not result in premature retirement or stranded assets. A phased-in carbon price can avoid premature retirement but still result in stranded assets, that is in a drop of wealth for the owners of polluting capital. We discuss a potential trade-off between the political feasibility and cost-effectiveness of climate mitigation policies. • Carbon prices are efficient but can cause stranded assets. • Feebates and mandates lead to the same long-term outcome as carbon prices. • Feebates and mandates do not create stranded assets. • Phased-in carbon prices avoid premature retirement but not stranded assets. [ABSTRACT FROM AUTHOR]

On June 1, 2017, President Trump announced the United States' withdrawal from the Paris agreement on climate change. Despite this decision, American firms continued investing in low-carbon technologies and some states committed to tougher environmental standards. To understand this apparent paradox, this paper studies how a weakening of environmental standards affects the behavior of profit-maximizing firms. It finds that a relaxation of emission standards (i) may increase firms' incentives to adopt clean technologies, but not to pollute less; (ii) may negatively affect industry profitability if it is perceived as temporary; and, when this is the case, (iii) the unilateral adoption of stricter standards by large states may increase the expected profitability of every firm. [ABSTRACT FROM AUTHOR]

The sustainability of dynamic natural systems often depends on their capacity to adapt to uncertain climate-related changes, where different management options may be combined to facilitate this adaptation. Salt marshes exemplify such a system. Marsh sustainability under rapid sea level rise requires the preservation of transgression zones - undeveloped uplands onto which marshes migrate. Whether these uplands eventually become marsh depends on uncertain sea level rise and natural dynamics that determine migration onto different land types. Under conditions such as these, systematically diversified management actions generally outperform ad hoc or non-diversified alternatives. This paper develops the first adaptation portfolio model designed to optimize the benefits of a migrating coastal system. Results are illustrated using a case study of marsh conservation in Virginia, USA. Results suggest that models of this type can enhance adaptation benefits beyond those available through current approaches. [ABSTRACT FROM AUTHOR]