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Climate Change, Migration, and Regional Economic Impacts in the United States

Qin Fan, Karen Fisher-Vanden and Henry Klaiber

Journal of the Association of Environmental and Resource Economists, 2018, vol. 5, issue 3, 643 - 671

Abstract: Recent studies predict that climate change will lead to a redistribution of population across the United States, as people choose to locate in regions less susceptible to extreme climate. However, these studies ignore the fact that migration will be dampened by changes in wage rates and housing prices as a result of migration. In this study, we apply a novel approach of linking a residential sorting model to an interregional computable general equilibrium model of the United States to capture wage and housing price feedbacks to assess the economic impacts of climate-change-induced migration. We find that endogenizing wages significantly dampens migration patterns. However, there are significant positive impacts on gross regional product and consumption in the Northeast, West, and California at the expense of the South and Midwest. In addition, wage effects are found to dominate housing price and climate effects, which results in larger welfare changes.

Date: 2018
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Handle: RePEc:ucp:jaerec:doi:10.1086/697168