Working Paper: CEPR ID: DP16194
Authors: Derek Lemoine
Abstract: I formally relate the consequences of climate change to the panel variation in weather extensively explored by recent empirical literature. I show that short-run responses to weather shocks differ from long-run responses to climate change when payoffs depend on a capital or resource stock. I develop a new indirect least squares estimator that bounds long-run climate impacts from short-run responses to weather. Applying this new method, I find that an additional 2 degrees Celsius of global warming would eliminate profits from the average acre of current farmland in the eastern U.S.
Keywords: climate; weather; adaptation; forecasts; agriculture; indirect least squares
JEL Codes: C23; Q12; Q51; Q54
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Additional 2 degrees Celsius of global warming (F69) | Eliminate profits from the average acre of current farmland in the eastern US (Q15) |
| Growing degree days (Q49) | Profits from the average acre of current farmland in the eastern US (Q15) |
| Short-run responses to weather shocks (Q54) | Long-run climate impacts (Q54) |
| Direct weather effects and adaptation channels (Q54) | Estimation of climate impacts (Q54) |
| Indirect least squares estimator (C51) | Bounding of climate impacts (Q54) |
| Adaptation channels (O36) | Biases in estimation of climate impacts (Q54) |