Sat, June 22, 2024

Simon Says: Climate change to impact local economy?

Several weeks ago, I attended the American Economic Association annual meeting in San Antonio. As economists, we always have our annual meeting over the first weekend of the year, because who else wants to go to a conference at that time? We get great deals on hotel rooms ($115 per night!). As well as presenting a paper on Name Image and Likeness, I attended several other sessions.

One presentation I heard was from Daniel Wilson from the Federal Reserve Bank of San Francisco. He and a colleague analyzed the long-run effects, over 70 years, of climate on population, employment, wages, and house prices. They find that very hot days (70oF to 80oF) and extremely hot days (above 80oF) significantly impact the county population. An extra ten extremely hot days per year will reduce the population of a county by 16.2 percent over 30 years. Extremely cold days have a similar effect.

There is a similar effect on employment. For house prices and wages, only extremely hot days have a negative impact. Extremely cold days do not. Wilson suggests that the effects are driven by declines in productivity because of extreme hot and cold days.

Using this model of past changes, they then project future changes through 2050. The projected increase in the number of extremely hot days in the southeast and southwest will drive population and economic activity north, to the mountain west, and to the Pacific.

The long-run migration trend from the north to the south stalled in the 2010’s. According to Wilson’s projections, it will reverse in the next ten years. Augusta, being in the southeast will suffer a decline in economic activity and population due to the increased number of extremely hot days.

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