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Economic impact of climate change

Claudia Custodio, Miguel A. Ferreira, Emilia Garcia-Appendini and Adrian Lam

Nova SBE Working Paper Series from Universidade Nova de Lisboa, Nova School of Business and Economics

Abstract: We estimate the economic impact of climate change by exploiting variation in local temperature across suppliers of the same client. We find that suppliers experiencing a 1 C increase in average daily temperature decrease their sales by 2%. The effect is more pronounced among suppliers in manufacturing and heat-sensitive industries, which is consistent with lower labor productivity and supply when temperatures are higher. Financially constrained suppliers are more affected due to their lack of financial flexibility to adapt to changes in temperatures. We also find that episodes of extremely hot and cold weather lead to large drops in sales.

Keywords: Climate change; Climate finance; Economic costs; Firm sales; Production networks; Productivity; Financial constraints (search for similar items in EconPapers)
JEL-codes: G31 G32 L11 L14 Q54 (search for similar items in EconPapers)
Pages: 65 pages
Date: 2022
New Economics Papers: this item is included in nep-agr, nep-cfn, nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:unl:unlfep:wp645

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