Climate Damage Functions for Estimating the Economic Impacts of Climate Change in the United States

Abstract

Recent advancements in the availability of models and data to characterize the economic impacts of climate change have improved our ability to project both the physical impacts and economic effects of climate change across economic sectors of the United States. These advancements have in turn provided an opportunity to estimate these impacts across multiple economic sectors using a consistent set of damage functions. These functions can be used to inform decision making regarding the diversity and magnitude of future impacts and how adaptation and other actions can affect the risk of economic impacts. This article shows how damage functions can be developed from the results of detailed modeling studies and then used to estimate future economic impacts. We estimate damage functions based on 15 sectoral impact models that project the economic impacts of climate change on human health, infrastructure, and ecosystems and, with a focus on temperature, apply these functions to changes in economic impacts for seven U.S. regions through 2100. We also discuss the uncertainty of these results. We conclude that, although further research is needed, the methods presented here can be usefully applied to a range of alternative temperature trajectories to estimate the economic effects of climate change.

Sustainable Mobility: A Review of Possible Actions and Policies

“…The research aimed at estimating the damage caused by climate change is so numerous that it would need to receive a specific review. Here, referring to some work, in which you can find further references, we quote [41][42][43][44][45][46][47][48][49]. In particular, a welfare theoretic approach to estimate the damage caused by climate change is proposed in [41], while the consequences on economic growth are examined in [42]; an economic quantification of damage is reported in [45,48].…”

“…Legal aspects related to climate change damage are examined in [43], while a human rights-based approach is reported in [46]. Specific studies are reported in [44,49] for the US and in [47] for China.…”

A temperature binning approach for multi-sector climate impact analysis

“…Roson and Sartori (2016) developed damage functions for six sectors for 140 world regions, relying on a heterogeneous set of studies whose results could be interpreted in a degree-based framework. Neumann et al (2020) calculated reduced form functions for a number of impact sectors considered in the Climate change Impacts and Risk Analysis (CIRA) project (Martinich and Crimmins 2019). Hsiang et al (2017) used end-of-century impacts from 4 RCPs, applied to 2012 economic and population values, to calculate percent GDP damages to the US across 8 sectors.…”

“…This makes it possible to create an algebraic fit to the impact estimates applicable to any time period. These fits can be used within reduced form tools to allow for benefit analysis of incremental mitigation policies ( Neumann et al 2020 ) or within integrated assessment models (IAMs) to explore how sectoral damages interact in a broader economic setting. The fits themselves also allow for the characterization of non-linearities.…”

“…In this study, we apply a temperature binning approach to nine US sectors. This approach combines several key features of previous studies: providing quantified, monetized damages in a consistent fashion for a number of different impact sectors as in Hsiang et al (2017) or Neumann et al (2020) , but rather than the ensemble of opportunity used in those studies, we use a “time-slice” approach as in Schleussner et al (2016) or Wobus et al (2018) . We further extend these approaches by considering multiple socioeconomic scenarios as in IPCC (2019) but with sector-specific details for socioeconomic scenario influences on results as well as different assumptions about adaptation.…”