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Techniques for Valuing Climate
EPA Grant Number: FP916932Title: Techniques for Valuing Climate
Investigators: Hsiang, Solomon
Institution: Columbia University
EPA Project Officer: Just, Theodore J.
Project Period: September 1, 2008 through September 1, 2011
RFA: STAR Graduate Fellowships (2008)
Research Category: Academic Fellowships
Description:
Objective:State actors must collectively decide how, when and the extent to which they should invest in actions that will mitigate global climatic changes. Making such a choice will require an understanding of the costs and benefits of continuing to live in our current climate compared to living in one that we alter. However, it is often difficult to know exactly how the climate affects a certain aspect of our lives, since it affects virtually all aspects in some (often small and hard to measure) way; and each of these aspects of our life interact with and affect other parts of our life. Trying to measure all of these small interactions and then combine them to predict how something as encompassing as “climate” will influence large social phenomena (such as civil conflict, for example) is extraordinarily difficult. Nonetheless, climate policies must be set and policy-makers can only use existing information to do so. Thus, we must try to develop the best understanding that we can of the value of climate if we are to rationally choose the intensity with which we invest in it.
Approach:In each region studied, two principles guide the analysis. First, physics-based measures of aggregate climate are constructed, with special attention paid to measuring the type of variation that exposed populations experience. This generally requires some departure from standard physical measures, since standard measures are usually designed to reveal mechanical relationships within the climate system and do not usually capture human-scale experience. Second, respecting the idea (described above) that the large number of mechanisms through which climate affects a population are too numerous and complex to measure directly, I measure only aggregate responses revealed once a large economic system has reached a “general equilibrium” (for example, measures of macroeconomic performance). To identify the general equilibrium effects of variations in climate, large spatial regions exhibiting a common form of climate variation are compared both across space and time using a variety of panel-data methods. Current work focuses on three regions: the impact of tropical cy-clones on Caribbean macroeconomics, the influence of drought on refugee movements in the African Sahel and the relationship between drought, climate change and political-economic outcomes in Australia.
Expected Results:This work will contribute to the literature on climate impacts and adaptation by constructing climate measures and quantifying their influence on particular populations in meaningful ways. Such results will support the work of policy-makers trying to balance the social costs of anthropogenic climate change with the social costs of mitigation efforts.
Supplemental Keywords:climate change, environmental economics, climate impacts, hurricanes, drought, non-market valuation, mitigation and adaptation,