Climate Change and the Economy

Richmond Fed senior economist Toan Phan has spent the past decade exploring the economics of climate change. His research in this area began as he was finishing graduate school in 2012, when he was struck by the potential economic implications of climate-related disasters like flooding and hurricanes. So, along with colleagues Riccardo Colacito of the University of North Carolina and Bridget Hoffmann of the Inter-American Development Bank, he began a project to understand the relationship between increasing temperatures and economic growth. The resulting article, "Temperature and Growth: A Panel Analysis of the United States," garnered a great deal of attention from economists, the business world, and policymakers, as it showed that increasing temperatures throughout the United States are associated with reduced growth in the service industry and other sectors that comprise a significant portion of the economy, not just in agriculture as was previously thought.