Since it's basically a blog post, here's the oral testimony I gave last week to the House Budget Committee during the Hearing on "The Costs of Climate Change: Risks to the U.S. Economy and the Federal Budget." If you have hours to spare, you can watch the whole hearing
or read the full (referenced) written testimony
. It's not every day that someone asks you summarize a decade of research progress from your field in 800 words, so it seems worth documenting it somewhere.
Thank you Chairman Yarmuth, Ranking
Member Womack, and members of the Committee for inviting me to speak today.
My name is Solomon Hsiang, and I am
the Chancellor’s Professor of Public Policy
at the University of California,
Berkeley and currently a Visiting Scholar at Stanford. I was trained in both economics
and climate physics at Columbia, MIT, and Princeton. My research focuses on the
use of econometrics to measure the effect of the climate on the economy.
The last decade has seen dramatic
advances in our understanding of the economic value of the climate. Crucially, we now are able to use real-world
data to quantify how changes in the climate cause changes in the economy. This means that in addition to
being able to project how unmitigated emission of greenhouse gasses will cause the
physical climate to change, we can now also estimate the subsequent effect that
these changes are likely to have on the livelihoods of Americans.
Although, as with any emerging research
field, there are large uncertainties and much work remains to be done. Nonetheless, I’d like to describe
to you some key insights from this field regarding future risks if past
emissions trends continue unabated.
First, climate change is likely to have substantial negative impact on
the US economy. Expected damages are on the scale of several trillions of
dollars, although there remains uncertainty in these numbers. For example, in a detailed analysis
of county-level productivity, a colleague at University of Illinois and I
estimated that the direct thermal effects alone would likely reduce incomes nation-wide
over the next 80 years, a loss valued at roughly 5-10 trillion dollars in net
present value. In another analysis, a colleague
from University of Chicago and I computed that losses from intensified
hurricanes were valued at around 900 billion dollars. Importantly, these numbers are not
a complete accounting of impacts and other notable studies report larger losses.
Second, extreme weather events are short-lived, but their economic
impact is long-lasting. Hurricanes, floods, droughts, and
fires destroy assets that took communities years to build. Rebuilding then diverts resources
away from new productive investments that would have otherwise supported future
growth. For example, a colleague at Rhodium
Group and I estimated that Hurricane Maria set Puerto Rico back over two
decades of progress; and research from MIT indicates that communities in the
Great Plains have still not fully recovered from the Dustbowl of the 1930s. As climate change makes extreme
events more intense and frequent, we will spend more attention and more money replacing
depreciated assets and repairing communities.
Third, the nature and magnitude of projected costs differs between
locations and industries. For example, extreme heat will impose large
health, energy, and labor costs on the South; sea level rise and hurricanes
will damage the Gulf Coast; and declining crop yields will transform the Plains
Fourth, because low income regions and individuals tend to be hurt more,
climate change will widen existing economic inequality. For example, in a
national analysis of many sectors, the poorest counties suffered median losses
that were 9 times larger than the richest.
Fifth, many impacts of climate change will not be felt in the
marketplace, but rather in homes where health, happiness, and freedom from
violence will be affected. There are many examples of this. Mortality due to extreme heat is projected
to rise dramatically. Increasingly humid summers are
projected to degrade happinessand
sleep quality. Research from Harvard indicates
that warming will likely elevate violent crime nationwide, producing over 180,000
sexual assaults and over 22,000 murders across eight decades. Colleagues at Stanford and I estimate
that warming will generate roughly 14,000 additional suicides in the next
thirty years. Increasing exposure of pregnant
mothers to extreme heat and cyclones will harm fetuses for their lifetime. These impacts do not easily convert
to dollars and cents, but they still merit attention.
Sixth, populations across the country will try to adapt to climate
change at substantial cost. Some adaptions will transform jobs
and lifestyles, some will require constructing new defensive infrastructure,
and some will involve abandoning communities and industries where opportunities
have deteriorated. In all cases, these adaptations
will come at real cost, since resources expended on coping cannot be invested
Lastly, outside of the US, the global consequences of climate change
are projected to be large and destabilizing. Unmitigated warming will likely slow global
growth roughly 0.3 percentage points and reduce political stability throughout
the tropics and subtropics.
Together, these findings indicate
that our climate is one of the nation’s most important economic assets. We should manage it with the
seriousness and clarity of thought that we would apply to managing any other
asset that also generates trillions of dollars in value for the American