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 and Midwest.
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 happiness and 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 elsewhere.
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 people.