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State of the literature on the economic impacts of climate change in the United States

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  • Neumann, James E.
  • Strzepek, Kenneth

Abstract

This paper discusses the current literature on impacts and adaptation costs at the sectoral level. The focus is primarily the US, but includes examples on international applications that highlight key differences or other relevant demonstrations of method and data use. The paper provides an overall framework that addresses the components of economic impacts, including definitions of impacts, adaptation costs, and residual damages. The paper then focuses on understanding the current breadth and depth of the literature that exists to characterize what we know about economic sectors studied in the recent literature (agriculture, coastal resources, water resources, infrastructure, health, crime, energy, labor productivity, and ecosystems), how the methodologies differ, what the gaps and challenges are, and offers a sense of the impacts at the US national level. A new generation of impact studies, including the U.S. EPA’s ongoing Climate Impacts and Risk Analysis (CIRA) project; the new Intergovernmental Panel on Climate Change (IPCC) AR5 Working Group II report; the U.S. National Climate Assessment; and the Risky Business Project led by the Next Generation Foundation, provide the motivation for this review. These efforts, taken together, have advanced the state of US economic impact assessment work along two critical frontiers, both of which support benefit-cost analyses of climate change: assessment of the risk and economic consequences of extreme climatic events; and assessment of ecosystem effects. Yet, the latest work also highlights gaps in the lack of comprehensive sectoral coverage; more complete incorporation of adaptation opportunities in impact assessment; and critical cross- and multi-sectoral effects that remain poorly understood.

Suggested Citation

  • Neumann, James E. & Strzepek, Kenneth, 2014. "State of the literature on the economic impacts of climate change in the United States," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 5(3), pages 411-443, December.
  • Handle: RePEc:cup:jbcoan:v:5:y:2014:i:03:p:411-443_00
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    Cited by:

    1. Toman Michael, 2014. "The need for multiple types of information to inform climate change assessment," Journal of Benefit-Cost Analysis, De Gruyter, vol. 5(3), pages 469-485, December.
    2. Sussman Fran & Grambsch Anne & Weaver Christopher P. & Li Jia, 2014. "Introduction to a special issue entitled Perspectives on Implementing Benefit-Cost Analysis in Climate Assessment," Journal of Benefit-Cost Analysis, De Gruyter, vol. 5(3), pages 333-346, December.
    3. Luis Moisés Peña-Lévano & Farzad Taheripour & Wallace E. Tyner, 2019. "Climate Change Interactions with Agriculture, Forestry Sequestration, and Food Security," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(2), pages 653-675, October.
    4. Sussman Fran & Weaver Christopher P. & Grambsch Anne, 2014. "Challenges in applying the paradigm of welfare economics to climate change," Journal of Benefit-Cost Analysis, De Gruyter, vol. 5(3), pages 347-376, December.
    5. Weyant John, 2014. "Integrated assessment of climate change: state of the literature," Journal of Benefit-Cost Analysis, De Gruyter, vol. 5(3), pages 377-409, December.
    6. Anita Lazurko & Henry David Venema, 2017. "Financing High Performance Climate Adaptation in Agriculture: Climate Bonds for Multi-Functional Water Harvesting Infrastructure on the Canadian Prairies," Sustainability, MDPI, vol. 9(7), pages 1-20, July.
    7. Rising, James A. & Taylor, Charlotte & Ives, Matthew C. & Ward, Robert E.t., 2022. "Challenges and innovations in the economic evaluation of the risks of climate change," LSE Research Online Documents on Economics 114941, London School of Economics and Political Science, LSE Library.
    8. Li Jia & Mullan Michael & Helgeson Jennifer, 2014. "Improving the practice of economic analysis of climate change adaptation," Journal of Benefit-Cost Analysis, De Gruyter, vol. 5(3), pages 445-467, December.
    9. Lempert Robert J., 2014. "Embedding (some) benefit-cost concepts into decision support processes with deep uncertainty," Journal of Benefit-Cost Analysis, De Gruyter, vol. 5(3), pages 487-514, December.
    10. Sussman, Fran & Grambsch, Anne & Li, Jia & Weaver, Christopher P., 2014. "Introduction to a special issue entitled Perspectives on Implementing Benefit-Cost Analysis in Climate Assessment," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 5(3), pages 333-346, December.
    11. Rising, James A. & Taylor, Charlotte & Ives, Matthew C. & Ward, Robert E.T., 2022. "Challenges and innovations in the economic evaluation of the risks of climate change," Ecological Economics, Elsevier, vol. 197(C).
    12. Li, Jia & Mullan, Michael & Helgeson, Jennifer, 2014. "Improving the practice of economic analysis of climate change adaptation," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 5(3), pages 445-467, December.

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