American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
The Economic Impacts of Climate Change: Evidence from Agricultural Output and Random Fluctuations in Weather
American Economic Review
vol. 97,
no. 1, March 2007
(pp. 354–385)
Abstract
This paper measures the economic impact of climate change on US agricultural land by estimating the effect of random year-to-year variation in temperature and precipitation on agricultural profits. The preferred estimates indicate that climate change will increase annual profits by $1.3 billion in 2002 dollars (2002$) or 4 percent. This estimate is robust to numerous specification checks and relatively precise, so large negative or positive effects are unlikely. We also find the hedonic approach—which is the standard in the previous literature—to be unreliable because it produces estimates that are extremely sensitive to seemingly minor choices about control variables, sample, and weighting. (JEL L25, Q12, Q51, Q54)Citation
Deschênes, Olivier, and Michael Greenstone. 2007. "The Economic Impacts of Climate Change: Evidence from Agricultural Output and Random Fluctuations in Weather." American Economic Review, 97 (1): 354–385. DOI: 10.1257/aer.97.1.354Additional Materials
JEL Classification
- L25 Firm Performance: Size, Diversification, and Scope
- Q12 Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
- Q15 Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
- Q51 Valuation of Environmental Effects
- Q54 Climate; Natural Disasters; Global Warming