Climate change is the decisive challenge of our time. This column introduces the special issue of “Journal of Economic Geography” on climate change, which provides a basis for wise decision-making by discussing two main themes of economic geography of climate change. First, climate change will produce heterogeneous effects across spaces. Second, a key aspect of human adaptation to climate change is geographic mobility. Therefore, restrictions on mobility will exacerbate the socio-economic costs of climate change. Other adjustments covered in this issue include fertility, specialization, and trade.
Even with immediate radical action, the temperature of the earth in 2100 may be at least 3°C higher than at the time of writing (Tollefson 2020). Therefore, climate change is a decisive challenge of our time (the loss of biodiversity is equally urgent). The scenarios issued by the Intergovernmental Panel on Climate Change (IPCC) provide complex models of the complex interactions between human activities and climate. However, their modeling of heterogeneous spatial effects and multiple edges affected by this phenomenon is still fairly simple (Cruz and Rossi-Hansberg 2021a, 2021b). To address the concerns of Oswald and Sternâ????s (2019) and follow up on recent efforts, such as the special issue of the economic policy journal (Azmat et al., 2020), we have collected five articles in the new economic policy journal special issue paper. Economic Geography (JoEG) helps to address these shortcomings and address important aspects of the two main themes of the economic geography of climate change. 1 First, the effects of climate change are spatially heterogeneous. In turn, some regions of the world will lose more population and per capita output than others, and some regions may even get better because of this. Several papers in this special issue document this heterogeneity on a fine spatial scale. For example, Figure 1 reports the predicted temperature change caused by a 1°C increase in global temperature at a resolution of 1° x 1° in 2200.2 years. The resulting heterogeneity is amazing. Second, humans (and other species) must adapt to survive. The range of actions to mitigate climate change includes reducing the carbon and methane intensity of consumption habits and production processes. Several papers in this special issue emphasize adaptation through migration and geographic mobility. In particular, these papers emphasize how lack of mobility can exacerbate the socio-economic costs of climate change.
In the first paper in the special issue, Conte, Desmet, Nagy, and Rossi-Hansberg (2021a; see also Conte et al., 2021b) talked about the above two themes, and we organized this Vox column according to their perspectives. The author introduced a quantitative dynamic spatial growth model, just like the pioneering work of William Nordhaus (1993), which is characterized by a two-way relationship between economic activity, carbon emissions, and temperature. Importantly, the analysis allows two sectors (agricultural and non-agricultural) that are sensitive to temperature heterogeneity and a very fine spatial decomposition. The authors provided their model with data on global population, temperature, and sector output. The resolution is 1° x 1°, and the increase in carbon storage and global temperature following the carbon-intensive IPCC scenario (called the representative concentration) is 8.5. Using such a calibrated model, they let it run for 200 years to quantify the spatial heterogeneity of climate change on population, GDP per capita, and the production mix of agricultural and non-agricultural output. They also emphasized the role of trade and migration in mitigating or amplifying the loss per 1° x 1° space unit caused by climate change.
The initial scene of Conte et al. (2021a) Assume that the friction between population and commodity flows is constant over time. Their model predicts that the population of Scandinavia, Finland, Siberia, and northern Canada will increase, and the per capita income will also increase. North Africa, the Arabian Peninsula, northern India, Brazil, and Central America will have some differences in both aspects. decline. Figure 2 reproduces Figure 6 in their paper, reporting the impact of climate change on the predicted population in 2200. Agriculture has become more concentrated in space and moved to Central Asia, China, and Canada. These scenarios imply a large amount of population movement within and between countries, especially when trade costs are high. Therefore, obstacles to mobility may result in a significant reduction in efficiency.
Note: This figure shows the logarithm of the predicted population of 2,200 relative to the predicted population in the absence of climate change. The population of the dark blue area is expected to more than double; the dark red area is expected to lose more than half of its population.
The papers of Castells-Quitana, Krause, and McDermott (2021) supplement this work in two ways. First, it provides a retrospective regression analysis to quantify the impact of past climate change on urban-rural migration (see also Peri and Sasahara 2019a, 2019b), and Conte et al. (2021a) is mainly a forecasting exercise. Secondly, it studied the effects of long-term (1950-2015) rainfall and temperature evolution on the urbanization rate and the structure of large cities in various countries. Importantly, they allow for heterogeneous effects among low-income, middle-income, and high-income countries, and study the impact on the country’s overall urban structure and urban size, density, and form. They found that in countries with unfavorable initial climatic conditions, worsening climatic conditions (higher temperature and lower rainfall) are related to higher urbanization rates, and these effects are particularly strong in developing countries and affect various Dimensions of the density and growth of cities, including the largest metropolitan areas.
Another important aspect that complements the economic impact of climate change is its impact on local social tensions and conflicts. The paper by Bosetti, Cattaneo, and Peri (2021) analyzed whether cross-border migration between 1960 and 2000 affected the link between rising temperatures and conflict in 126 countries. On the one hand, rising temperatures and more frequent droughts will increase the scarcity of local resources, thereby affecting the possibility of local conflicts (for example, Hsiang et al., 2011). On the other hand, the economic model of immigration by Conte et al. (2021a) shows that due to the decline in productivity due to climate change, mobility reduces economic losses. Bosetti et al. Combining these two insights, it proves that in poor countries, the probability of internal conflict is positively correlated with temperature, and this correlation is particularly strong in countries with a low tendency to emigrate. Immigration as a “escape valve” is under economic pressure. Relieving population pressure in developing countries where agricultural productivity is declining seems to be an effective way to reduce the risk of these areas becoming local conflicts.
The impact of climate change on fertility has not been explored. The solution to this problem is Green’s (2021) paper, which examines the relationship between climate shocks and demographic transitions in the United States from 1870 to 1930. The author recorded a positive correlation between changes in rainfall in an area and the difference in fertility between farm and non-farm households. In rural societies, when climate change and uncertainty increase changes in agricultural productivity, child labor provides additional resources; therefore, rural households may increase fertility rates, and this mechanism does not work in urban households.
Climate change leads to rising sea levels and more frequent hurricanes and typhoons. Coastal areas are especially dangerous. 3 Use the approach conceptually close to Conte et al. (2021a), Desmet et al. (2021) Estimate the economic cost of coastal flooding. A paper by Indaco, Ortega, and Taspinar (2021) in the JoEG special issue complements the paper by documenting the impact of Hurricane Sandy on New York City’s business. The floods in 2021 led to heterogeneous reductions in employment (approximately 4% on average) and wages (approximately 2% on average), and the impact of Brooklyn and Queens was greater than that of Manhattan. These heterogeneous effects reflect the heterogeneity of flood severity and industry composition.
De Smet et al. (2021) Developed a model in the same family as Conte et al. (2021a) It is estimated that the economic loss caused by coastal flooding in 2200 will increase from 0.11% of the actual income when the migration response is allowed to 4.5% when the response is not allowed. The other three papers in this special issue also focus on the role of migration as a climate change adaptation mechanism.
Castells-Quitana et al. (2021) Documented migration from rural areas to cities within national borders, and focused on mobility as a force affecting the consequences of urbanization of climate change. Bosetti et al. (2021) analyzes how cross-border migration between 1960 and 2000 affected the link between warming and conflict in 126 countries. 4 Immigration reduces the impact of rising temperatures on the possibility of armed conflict, while not increasing the possibility of conflict in neighboring countries (immigration) countries.
Mobility is also important for companies and employers. Indak et al. (2021) shows that enterprises are adapting to flood risks by relocating institutions, and some enterprises may even benefit from flooding. The ability to relocate depends on the business sector, but in general, the company’s mobility is also a key room for adapting to climate change.
Conte et al. (2021a) It is also found that immigration and trade are substitutes. High trade friction is an obstacle for the local production mix to adapt to climate change, because the shift to self-sufficiency prevents the use of a region’s growing comparative advantages. This encourages migration from areas most adversely affected to areas least affected by rising temperatures. Interestingly, these regions are concentrated in high-productivity Europe, Japan, and the United States. Therefore, high trade costs will not lead to consistently higher climate costs.
The recent work of Cruz and Rossi-Hansberg (2021a, 2021b) is also a supplement to Conte et al. (2021a), considering the other two edges of climate-induced changes: comfort and fertility. Although still not fully explored, the fertility channel occupies a central position in Green’s (2021) paper. Grimm analyzed the fertility differences between farm and non-farm households in the county over time to determine the causal impact of rainfall and drought risks on population transitions. He found that the difference in fertility rates in areas with large changes in rainfall was significantly higher than in areas with small changes in rainfall. Interestingly, this effect disappeared when irrigation and agricultural machinery weakened the link between changes in rainfall and yield.
Ultimately, we need to analyze a series of complex consequences of climate change on the economy and society. We must consider not only the channels, mechanisms, and heterogeneity that guide us to understand the impact, but also case studies and more targeted empirical analysis. One or several of them, and provide details and causality. We collected some groundbreaking papers that combined these two methods in this special issue of the Journal of Economic Geography. We hope that these papers will encourage research and more interaction between microeconomists and macroeconomists who study the consequences of climate change.
Azmat, G, J Hassler, A Ichino, P Krusell, T Monacelli, and MSchularick (2020), “Call for Impact: Economic Policy Special Issue on the Economics of Climate Change,” VoxEU. Organization, January 17.
Balboni, C (2019), â???? In Harm’s Way? Infrastructure investment and the sustainability of coastal cities????, working paper, Massachusetts Institute of Technology.
Bosetti, V, C Cattaneo and G Peri (2021)-should they stay or should they leave? Climate migration and local conflict-Journal of Economic Geography 21(4), Special Issue of Economic Geography of Climate Change.
Castells-Quitana, D, M Krause and T McDermott (2021), “The Urbanization Forces of Global Warming: The Role of Climate Change in the Spatial Distribution of Population”, Journal of Economic Geography 21 (4), Economic Geography of Climate Change Study special issue.
Cattaneo, C, M Beine, C Fröhlich, etc. (2019), â???? Human migration in the era of climate change. ???? Environmental Economics and Policy Review 13: 189–206.
Cattaneo, C, and G Peri (2015), “Immigration” response to temperature rise-VoxEU, November 14.
Cattaneo, C and G Peri (2016), â???? Migration response to temperature increase. â???? Journal of Development Economics 122: 127â????146.
Conte, Bruno, Klaus Desmet, Dávid K Nagy, and Esteban Rossi-Hansberg (2021a), “Local Sector Specialization in a Warming World”, Journal of Economic Geography 21(4), Special Issue on Economic Geography of Climate Change.
Conte, B, K Desmet, DK Nagy, and E Rossi-Hansberg (2021b), “Adapting to trade: Changing specialization to combat climate change”, VoxEU.org, May 4.
Cruz, JL and E Rossi-Hansberg (2021a), “The Economic Geography of Global Warming”, CEPR Discussion Paper 15803.
Cruz, JL and E Rossi-Hansberg (2021b), “Unequal Benefits: Assessing the Overall and Spatial Economic Impact of Global Warming”, VoxEU.org, March 2.
Desmet, K, DK Nagy, and E Rossi-Hansberg (2018), “Adapt or be overwhelmed”? ? , VoxEU.org, October 2nd.
Desmet, K, RE Kopp, SA Kulp, DK Nagy, M Oppenheimer, E Rossi-Hansberg, and BH Strauss (2021), “Assessing the economic cost of coastal flooding”? ? , American Economic Journal: Macroeconomics 13 (2): 444-486.
Grimm, M (2021), “Rainfall Risk, Fertility Rate, and Development: Evidence of Farm Settlements During the Transition Period of the U.S.”, Journal of Economic Geography 21(4), Climate Economic Geography Special Issue Change.
Hsiang, SM, KC Meng and MA Cane (2011), â???? Civil war is related to global climate â????, Nature 476: 438â????40
Indaco, A, F Ortega, and S Taspinar (2021), “Hurricane, Flood Risk, and Business Economic Adaptation”, “Journal of Economic Geography” 21(4), “Economic Geography” Special Issue Climate Change.
Lin, T, TKJ McDermott and G Michaels (2021a), “Cities and Sea Level”, CEPR Discussion Paper 16004.
Lin, T, TKJ McDermott and G Michaels (2021b), â?????? Why build housing in coastal areas prone to flooding? , VoxEU.org, April 22.
Nordhaus, WD (1993), “Roll the Dice”: The Best Transition Path to Control Greenhouse Gases, Resource and Energy Economics 15(1): 27-50.
Oswald, A and N Stern (2019), â?????Why do economists disappoint the world on climate change???? VoxEU.org, September 17th.
Peri, G and A Sasahara (2019a), “The Impact of Global Warming on Urban and Rural Migration: Evidence from Global Big Data”, NBER Working Paper 25728.
Peri, G and A Sasahara (2019b), “The Impact of Global Warming on Rural-Urban Migration-”, VoxEU.org, July 15.
Tollefson, J (2020). â???? How can the Earth not get it by 2100? â????, Nature News feature, April. doi.org/10.1038/d41586-020-01125-x
Yohe, G, and M Schlesinger (2002). â?????The economic geography of climate change impacts â?????, Journal of Economic Geography 2(3): 311-341.
2 This figure reproduces figure 5 in the paper by Conte Desmet, Nagy, and Rossi-Hansberg (2021). We thank these authors for sharing their data with us.
3 Lin et al. (2021a, 2021b) recorded an alarming increase (from 12% to 14%) of housing units constructed in coastal areas at risk of flooding along the Atlantic and Gulf of Mexico between 1990 and 2010. Balboni (2019) pointed out that past investments in infrastructure may explain the continued existence of coastal cities.
4 Yohe and Schelsinger (2002) and Cattaneo et al. (2019) also recorded the response of urbanization to rising temperatures; Cattaneo and Peri (2015, 2016) recorded the response of international migration.
Post time: Oct-12-2021
