Estimating the Consequences of Climate Change from Variation in Weather

Derek Lemoine

NBER Working Paper No. 25008
Issued in September 2018, Revised in December 2019
NBER Program(s):Environment and Energy Economics

I formally relate the consequences of climate change to the time series variation in weather extensively explored by recent empirical literature. I show that reduced-form fixed effects estimators can recover the effects of climate if agents are myopic, if agents' payoff functions belong to a particular class, or if the actions agents take in each period do not depend on actions taken in previous periods. I also show how to recover structural estimates of climate change impacts from reduced-form weather regressions. Applying this new method, I find that an additional 2°C of global warming would reduce eastern U.S. agricultural profits by around 50% under the median estimates.

Supplementary materials for this paper:

• data appendix

Acknowledgments

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Document Object Identifier (DOI): 10.3386/w25008