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On the Spatial Economic Impact of Global Warming

  • Klaus Desmet
  • Esteban Rossi-Hansberg

We propose a dynamic spatial theory to analyze the geographic impact of climate change. Agricultural and manufacturing firms locate on a hemisphere. Trade across locations is costly, firms innovate, and technology diffuses over space. Energy used in production leads to emissions that contribute to the global stock of carbon in the atmosphere, which affects temperature. The rise in temperature differs across latitudes and 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.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18546.

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Date of creation: Nov 2012
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Publication status: published as Journal of Urban Economics Volume 88, July 2015, Pages 16–37 Cover image On the spatial economic impact of global warming ☆ Klaus Desmeta, , , Esteban Rossi-Hansbergb,
Handle: RePEc:nbr:nberwo:18546
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