Understanding Climate Damages: Consumption versus Investment

Gregory Casey, Stephie Fried and Matthew Gibson

No 19229, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Existing climate-economy models assume climate change has equal impacts on the productivity of firms that produce consumption and investment goods and services. We develop a model of structural change to show that the split between damage to consumption and investment productivity matters for the aggregate consequences of climate change. When investment is more vulnerable to climate, we find smaller short-run consumption losses than leading models suggest, but larger long-run consumption losses. We provide a quantitative illustration of these effects for one type of climate damage in the US economy: labor productivity losses from heat stress. We find that accounting for heterogeneous damages increases the welfare cost of the climate damage from heat stress by approximately 4 to 23\%, depending on the discount factor.

Keywords: Growth (search for similar items in EconPapers)
JEL-codes: O13 O44 Q56 (search for similar items in EconPapers)
Date: 2024-07
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP19229 (application/pdf)

Related works:
Journal Article: Understanding climate damages: Consumption versus investment (2024)
Working Paper: Understanding Climate Damages: Consumption versus Investment (2024)
Working Paper: Understanding Climate Damages: Consumption versus Investment (2022)
Working Paper: Understanding Climate Damages: Consumption versus Investment (2021)
Working Paper: Understanding Climate Damages: Consumption versus Investment (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:19229

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP19229

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().