Discussion Paper Details

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Title: Estimating the Consequences of Climate Change from Variation in Weather

Author(s): Derek Lemoine

Publication Date: May 2021

Keyword(s): Adaptation, Agriculture, Climate, Forecasts, indirect least squares and Weather

Programme Area(s): Occasional Paper

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.

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Bibliographic Reference

Lemoine, D. 2021. 'Estimating the Consequences of Climate Change from Variation in Weather'. London, Centre for Economic Policy Research.