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The Return of Adaptation to Extreme Weather

Author

Listed:
  • Harrison Hong
  • Serena Ng
  • Jiangmin Xu

Abstract

We estimate the return of climate adaptation by modeling the uncertain impact of global warming for extreme weather. Unexpected arrivals elevate extreme-weather risk, which leads households and firms to adapt and thereby lowering the damage of each subsequent arrival. Our approach provides country-specific estimates of disaster risk as extreme-weather events unfold, and state-dependent marginal effects of extreme-weather damage on economic growth. Applying our approach to cyclones and heatwaves from 1980-2019, average country income in 2019 is several percent lower absent state-dependent adaptation. Adaptation becomes significantly more valuable in the long run as the uncertainty regarding extreme weather is resolved.

Suggested Citation

  • Harrison Hong & Serena Ng & Jiangmin Xu, 2025. "The Return of Adaptation to Extreme Weather," NBER Working Papers 33824, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:33824
    Note: AP DEV EEE EFG
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    More about this item

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • 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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