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On the spatial economic impact of global warming

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  • Desmet, Klaus
  • Rossi-Hansberg, Esteban

Abstract

We propose a dynamic spatial theory to analyze the geographic impact of climate change. Agricultural and manufacturing firms locate on a hemisphere. Trade is costly, firms innovate, and technology diffuses over space. Emissions from energy used in production contribute to the atmospheric stock of carbon, which increases temperature. Warming differs across latitudes and its effect on productivity varies across sectors. We calibrate the model to analyze how climate change affects the spatial distribution of economic activity, trade, migration, growth, and welfare. We assess quantitatively the impact of migration and trade restrictions, energy taxes, and innovation subsidies.

Suggested Citation

  • Desmet, Klaus & Rossi-Hansberg, Esteban, 2015. "On the spatial economic impact of global warming," Journal of Urban Economics, Elsevier, vol. 88(C), pages 16-37.
  • Handle: RePEc:eee:juecon:v:88:y:2015:i:c:p:16-37
    DOI: 10.1016/j.jue.2015.04.004
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    More about this item

    Keywords

    Space; Climate change; Geography; Migration; Trade; Innovation; Growth; Mobility frictions;
    All these keywords.

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • F10 - International Economics - - Trade - - - General
    • F18 - International Economics - - Trade - - - Trade and Environment
    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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