Jump to ContentJump to Main Navigation
Show Summary Details
More options …

Journal of Benefit-Cost Analysis

More options …

State of the literature on the economic impacts of climate change in the United States

James E. Neumann / Kenneth Strzepek
  • Research Scientist, Joint Program on the Science and Policy of Global Change, Massachusetts Institute of Technology, 77 Massachusetts Ave, E19-411, Cambridge, MA 02139, USA
  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
Published Online: 2015-01-13 | DOI: https://doi.org/10.1515/jbca-2014-9003


This paper discusses the current literature on impacts and adaptation costs at the sectoral level. The focus is primarily the US, but includes examples on international applications that highlight key differences or other relevant demonstrations of method and data use. The paper provides an overall framework that addresses the components of economic impacts, including definitions of impacts, adaptation costs, and residual damages. The paper then focuses on understanding the current breadth and depth of the literature that exists to characterize what we know about economic sectors studied in the recent literature (agriculture, coastal resources, water resources, infrastructure, health, crime, energy, labor productivity, and ecosystems), how the methodologies differ, what the gaps and challenges are, and offers a sense of the impacts at the US national level. A new generation of impact studies, including the U.S. EPA’s ongoing Climate Impacts and Risk Analysis (CIRA) project; the new Intergovernmental Panel on Climate Change (IPCC) AR5 Working Group II report; the U.S. National Climate Assessment; and the Risky Business Project led by the Next Generation Foundation, provide the motivation for this review. These efforts, taken together, have advanced the state of US economic impact assessment work along two critical frontiers, both of which support benefit-cost analyses of climate change: assessment of the risk and economic consequences of extreme climatic events; and assessment of ecosystem effects. Yet, the latest work also highlights gaps in the lack of comprehensive sectoral coverage; more complete incorporation of adaptation opportunities in impact assessment; and critical cross- and multi-sectoral effects that remain poorly understood.

Keywords: adaptation; climate change; economic impacts; economic sectors


  • Abel, J. R., Bram, J., Deitz, R., & Orr, J. (2012, December 17). What are the costs of Superstorm Sandy? [Federal Reserve Bank of New York]. Retrieved from http://libertystreeteconomics.newyorkfed.org/2012/12/what-are-the-costs-of-superstorm-sandy.html.

  • Agrawala, S., Bosello, F., Carraro, C., de Cian, E., & Lanzi, E. (2011). Adapting to climate change: Costs, benefits, and modelling approaches. International Review of Environmental and Resource Economics, 5(3), 245–284. doi:10.1561/101.00000043.CrossrefGoogle Scholar

  • Ahouissoussi, N., Neumann, J. E., & Srivastava, J. P. (2014). Building resilience to climate change in South Caucasus agriculture. The World Bank. Retrieved from http://elibrary.worldbank.org/doi/abs/10.1596/978-1-4648-0214-0.Crossref

  • America’s Energy Coast, America’s Wetlands Foundation, & Entergy Corporation. (2010). Building a resilient energy Gulf Coast: Executive report. America’s Energy Coast, America’s Wetlands Foundation, and Entergy. Retrieved from www.entergy.com/content/our_community/environment/GulfCoastAdaptation/Building_a_Resilient_Gulf_Coast.pdf.

  • Barreca, A., Clay, K., Deschenes, O., Greenstone, M., & Shapiro, J. S. (2013). Adapting to climate change: The remarkable decline in the U.S. temperature-mortality relationship over the 20th century (Working Paper No. 18692). National Bureau of Economic Research. Retrieved from http://www.nber.org/papers/w18692.

  • Bazzaz, F. A., & Sombroek, W. G. (1996). Global Climate Change and Agricultural Production: Direct and Indirect Effects of Changing Hydrological, Pedological, and Plant Physiological Processes. Chinchester, England: John Wiley & Sons Inc. Retrieved from http://www.fao.org/docrep/w5183e/w5183e00.htm.

  • Burke, M., & Emerick, K. (2013). Adaptation to climate change: Evidence from U.S. agriculture (p. 67). Department of Agricultural and Resource Economics, University of California at Berkeley. Retrieved from http://www.ocf.berkeley.edu/∼marshall/papers/burke_emerick_2013.pdf.

  • Chambwera, M., Heal, G., Dubeux, C., Hallegatte, S., Leclerc, L., Markandya, A., …, Neumann, J. E. (2014). Economics of adaptation. In C. B. Field, V. R. Barros, D. J. Dokken, K. J. Mach, M. D. Mastrandrea, T. E. Bilir, …, L. L. White (Eds.), Climate Change 2014: Impacts, Adaptation, and Vulnerability. Part A: Global and Sectoral Aspects. Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge, UK and New York, NY: Cambridge University Press.Google Scholar

  • Chinowsky, P. S., Price, J. C., & Neumann, J. E. (2013). Assessment of climate change adaptation costs for the U.S. road network. Global Environmental Change, 23(4), 764–773. doi:10.1016/j.gloenvcha.2013.03.004.CrossrefGoogle Scholar

  • Deschênes, O., & Greenstone, M. (2007). The economic impacts of climate change: Evidence from agricultural output and random fluctuations in weather. American Economic Review, 97(1), 354–385. doi:10.1257/aer.97.1.354.CrossrefGoogle Scholar

  • Deschênes, O., & Greenstone, M. (2011). Climate change, mortality, and adaptation: Evidence from annual fluctuations in weather in the US. American Economic Journal: Applied Economics, 3(4), 152–185. doi:10.1257/app.3.4.152.CrossrefGoogle Scholar

  • Ebi, K. L., Balbus, J., Kinney, P. L., Lipp, E., Mills, D., O’Neill, M. S., & Wilson, M. (2008). Effects of global change on human health. In Analyses of the effects of global change on human health and welfare and human systems (pp. 2–1–2–78). Washington, DC: U.S. Environmental Protection Agency.Google Scholar

  • Executive Office of the President. (2013). The President’s climate action plan. Washington, DC: Executive Office of the President.Google Scholar

  • Fankhauser, S. (2010). The costs of adaptation. Wiley Interdisciplinary Review Climate Change, 1(1), 23–30.Google Scholar

  • Fankhauser, S., Smith, J.B., & Tol, R.S.J. (1999). Weathering climate change: some simple rules to guide adaptation decisions. Ecological Economics, 30(1), 67–78.Google Scholar

  • Fishman, J., Creilson, J. K., Parker, P. A., Ainsworth, E. A., Vining, G. G., Szarka, J., …, Xu, X. (2010). An investigation of widespread ozone damage to the soybean crop in the Upper Midwest determined from ground-based and satellite measurements. Atmospheric Environment, 44(18), 2248–2256. doi:10.1016/j.atmosenv.2010.01.015.CrossrefGoogle Scholar

  • Frumhoff, P. C., McCarthy, J. J., Melillo, J. M., Moser, S. C., & Wuebbles, D. J. (2007). Confronting climate change in the U.S. Northeast: Science, impacts, and solutions. Cambridge, Massachusetts: Union of Concerned Scientists. Retrieved from http://www.northeastclimateimpacts.org/pdf/confronting-climate-change-in-the-u-s-northeast.pdf.

  • Gordon, K. (2014). Risky business: The economic risks of climate change in the United States. Risky Business Project.Google Scholar

  • Graff Zivin, J., & Neidell, M. (2014). Temperature and the Allocation of Time: Implications for Climate Change. Journal of Labor Economics, 32(1), 1–26. doi:10.1086/671766.CrossrefGoogle Scholar

  • Greene, S., Kalkstein, L. S., Mills, D. M., & Samenow, J. (2011). An examination of climate change on extreme heat events and climate–mortality relationships in large U.S. cities. Weather, Climate, and Society, 3(4), 281–292. doi:10.1175/WCAS-D-11-00055.1.CrossrefGoogle Scholar

  • Houser, T., Kopp, R., Hsiang, S., Delgado, M., Jina, A., Larsen, K., …, Wilson, P. (2014). American climate prospectus: Economic risks in the United States (Prepared as input to the Risky Business Project). Rhodium Group. Retrieved from http://rhg.com/reports/climate-prospectus.

  • IPCC. (2007). Climate change 2007: Impacts, adaptation and vulnerability. Working Group II contribution to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change. (T. R. Carter, R. N. Jones, S. B. X. Lu, C. Conde, L. O. Mearns & B. C. O’Neill, Eds.). Cambridge, UK: Cambridge University Press.Google Scholar

  • IPCC. (2014). Climate change 2014: Impacts, adaptation, and vulnerability. Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. (C. B. Field, V. R. Barros, D. J. Dokken, K. J. Mach, M. D. Mastrandrea, T. E. Bilir, …, L. L. White, Eds.). Cambridge, UK and New York, NY: Cambridge University Press.Google Scholar

  • Jacob, B., Lefgren, L., & Moretti, E. (2007). The dynamics of criminal behavior: Evidence from weather shocks. Journal of Human Resources, 42(3), 489–527.Google Scholar

  • Key, N., Sneeringer, S., & Marquardt, D. (2014). Climate change, heat stress, and U.S. dairy production (No. Economic Research Service Report Number 175). Washington, D.C.: U.S.Department of Agriculture.Google Scholar

  • Kirshen, P., Merrill, S., Slovinsky, P., & Richardson, N. (2012). Simplified method for scenario-based risk assessment adaptation planning in the coastal zone. Climatic Change, 113(3–4), 919–931. doi:10.1007/s10584-011-0379-z.CrossrefGoogle Scholar

  • Kunreuther, H., & Michel-Kerjan, E. (2009). At war with the weather managing large-scale risks in a new era of catastrophes. Cambridge, MA: MIT Press. Retrieved from http://site.ebrary.com/id/10309187.

  • Larsen, P. H., Goldsmith, S., Smith, O., Wilson, M. L., Strzepek, K., Chinowsky, P., & Saylor, B. (2008). Estimating future costs for Alaska public infrastructure at risk from climate change. Global Environmental Change, 18(3), 442–457. doi:10.1016/j.gloenvcha.2008.03.005.CrossrefGoogle Scholar

  • Lempert, R.J., Groves, D.G., Popper, S.W., & Bankes, S.C., (2006). A general, analytic method for generating robust strategies and narrative scenarios. Management Science, 52(4), 514–528.Google Scholar

  • Lempert, R., & Kalra, N., (2009). Managing Cl imate Risks in Developing Countries with Robust Decision Making. World Resources Report, Washington, DC. Available online at http://www.worldresourcesreport.org.

  • Lin, N., Emanuel, K., Oppenheimer, M., & Vanmarcke, E. (2012). Physically based assessment of hurricane surge threat under climate change. Nature Climate Change, 2(6), 462–467. doi:10.1038/nclimate1389.CrossrefGoogle Scholar

  • Martinich, J., Neumann, J., Ludwig, L., & Jantarasami, L. (2013). Risks of sea level rise to disadvantaged communities in the United States. Mitigation and Adaptation Strategies for Global Change, 18(2), 169–185. doi:10.1007/s11027-011-9356-0.CrossrefGoogle Scholar

  • McFarland, J., Zhou, Y., Clarke, L., Sullivan, P., Colman, J., Jaglom, W., …, Creason, J. (2014). Climate change impacts on electricity demand and supply in the United States: A multi-model comparison. Climatic Change. (In Press).Google Scholar

  • McKinsey & Company. (2009). Pathways to a low-carbon economy: Version 2 of the global greenhouse gas abatement cost curve (p. 190). McKinsey & Company.Google Scholar

  • Mendelsohn, R., & Neumann, J. E. (Eds.). (1999). The impact of climate change on the United States economy. Cambridge, New York: Cambridge University Press.Google Scholar

  • Mendelsohn, R., Nordhaus, W. D., & Shaw, D. (1994). The impact of global warming on agriculture: A Ricardian analysis. The American Economic Review, 84(4), 753–771.Google Scholar

  • Mills, D., Schwartz, J., Lee, M., Sarofim, M., Jones, R., Lawson, M., …, Deck, L. (2014a). Climate change impacts on extreme temperature mortality in select metropolitan areas in the United States. Climatic Change, 1–13. doi:10.1007/s10584-014-1154-8.CrossrefGoogle Scholar

  • Mills D., Jones, R., Carney, K., St. Juliana, A., Ready, R., Crimmins, A., …, Monier, E. (2014b). Quantifying and monetizing potential climate change policy impacts on terrestrial ecosystem carbon storage and wildfires in the United States. Climatic Change. doi:10.1007/s10584-014-1118-z.CrossrefGoogle Scholar

  • Moser, S. C., Davidson, M. A., Kirshen, P., Mulvaney, P., Murley, J. E., Laura, P., & Reed, D. (2014). Coastal zone development and ecosystems. In Climate Change Impacts in the United States: The Third National Climate Assessment (pp. 579–618). USGCRP. Retrieved from http://nca2014.globalchange.gov/report/regions/coasts.

  • Neumann, J. E., Emanuel, K., Ravela, S., Ludwig, L., Kirshen, P., Bosma, K., & Martinich, J. (2014a). Joint effects of storm surge and sea-level rise on US coasts: New economic estimates of impacts, adaptation, and benefits of mitigation policy. Climatic Change. doi: 10.1007/s10584-014-1304-z.CrossrefGoogle Scholar

  • Neumann, J. E., Hudgens, D. E., Herter, J., & Martinich, J. (2010). The economics of adaptation along developed coastlines. Wiley Interdisciplinary Reviews: Climate Change, 2(1), 89–98.Google Scholar

  • Neumann, J. E., Price, J., Chinowsky, P., Wright, L., Ludwig, L., Streeter, R., …, Martinich, J. (2014b). Climate change risks to US infrastructure: impacts on roads, bridges, coastal development, and urban drainage. Climatic Change, 1–13. doi:10.1007/s10584-013-1037-4.CrossrefGoogle Scholar

  • Neumann, J. E., Yohe, G. W., Nicholls, R., & Manion, M. (2001). Sea-level rise and its effects on coastal resources. In E. Claussen (Ed.), Climate Change: Science, Strategies, and Solutions (1 edition.). Leiden, NL and Boston, MA: Pew Center on Global Climate Change and Brill Academic Pub.Google Scholar

  • Park, R., Trehan, M., Mausel, P., & Howe, R. (1989). The effects of sea level rise on U.S. coastal wetlands (Report to Congress). Washington, DC: U.S. Environmental Protection Agency. Retrieved from http://nepis.epa.gov/Adobe/PDF/91012RLB.PDF.

  • Ranson, M. (2014). Crime, weather, and climate change. Journal of Environmental Economics and Management, 67(3), 274–302.Google Scholar

  • Revesz, R. L., Howard, P. H., Arrow, K., Goulder, L. H., Kopp, R. E., Livermore, M. A., …, Sterner, T. (2014). Global warming: Improve economic models of climate change. Nature, 508(7495), 173–175. doi:10.1038/508173a.CrossrefGoogle Scholar

  • Schlenker, W., & Roberts, M. J. (2009). Nonlinear temperature effects indicate severe damages to U.S. crop yields under climate change. Proceedings of the National Academy of Sciences, 106(37), 15594–15598. doi:10.1073/pnas.0906865106.CrossrefGoogle Scholar

  • Schlenker, W., Hanemann, M. W., & Fisher, A. C. (2005). Will U.S. agriculture Really Benefit from Global Warming? Accounting for Irrigation in the Hedonic Approach. American Economic Review, 95(1), 395–406. doi:10.1257/0002828053828455.CrossrefGoogle Scholar

  • Schlenker, W., Roberts, M. J., & Lobell, D. B. (2013). US maize adaptability. Nature Climate Change, 3(8), 690–691. doi:10.1038/nclimate1959.CrossrefGoogle Scholar

  • Strzepek, K., Neumann, J. E., Smith, J., Martinich, J., Boehlert, B., Hejazi, M., …, Yoon, J. H. (2014). Benefits of greenhouse gas mitigation on the supply, management, and use of water resources in the United States. Climatic Change.Doi:10.1007/s10584-014-1279-9.CrossrefGoogle Scholar

  • Sussman, F. G., Krishnan, N., Maher, K., Miller, R., Mack, C., Stewart, P., …, Perkins, B. (2013). Climate change adaptation cost in the US: What do we know? Climate Policy, 14(2), 242–282. doi:10.1080/14693062.2013.777604.CrossrefGoogle Scholar

  • Sussman, F. G., C. Weaver, and A. Grambsch. (2014) “Challenges in applying the paradigm of welfare economics to climate change, The Journal of Benefit-Cost Analysis, 5(3), 347–376.Google Scholar

  • Sutton, W. R., Srivastava, J. P., & Neumann, J. E. (2013). Looking beyond the horizon: How climate change impacts and adaptation responses will reshape agriculture in Eastern Europe and Central Asia (No. 76184) (pp. 1–201). The World Bank. Retrieved from http://documents.worldbank.org/curated/en/2013/03/17473996/looking-beyond-horizon-climate-change-impacts-adaptation-responses-reshape-agriculture-eastern-europe-central-asia.

  • Titus, J. G., Park, R. A., Leatherman, S. P., Weggel, J. R., Greene, M. S., Mausel, P. W., …, Yohe, G. (1991). Greenhouse effect and sea level rise: The cost of holding back the sea. Coastal Management, 19(2), 171–204. doi:10.1080/08920759109362138.CrossrefGoogle Scholar

  • Transportation Research Board. (2008). Potential impacts of climate change on U.S. transportation (No. Special Report 290). Washington, DC: Committee on Climate Change and U.S. Transportation, National Research Council of the National Academies. Retrieved from http://onlinepubs.trb.org/onlinepubs/sr/sr290.pdf.

  • Tubiello, F. N., Soussana, J.-F., & Howden, S. M. (2007). Crop and pasture response to climate change. Proceedings of the National Academy of Sciences, 104(50), 19686–19690. doi:10.1073/pnas.0701728104.CrossrefGoogle Scholar

  • U.S. EPA. (1989). The potential effects of global climate change on the United States (No. EPA-230-05-89-050). Office of Policy, Planning, and Evaluation, U.S. Environmental Protection Agency.Google Scholar

  • U.S. EPA. (2011). The benefits and costs of the clean air act from 1990 to 2020: Full report. Washington, DC: U.S. Environmental Protection Agency. Retrieved from http://www.epa.gov/cleanairactbenefits/feb11/fullreport_rev_a.pdf.

  • U.S. Global Change Research Program. (2014). Climate change impacts in the United States: The third national climate assessment. Retrieved from http://dx.doi.org/10.7930/J0Z31WJ2.Crossref

  • Waldhoff, S., Martinich, J., Sarofim, M., DeAngelo, B., McFarland, J., Jantarasami, L., …, Li, J. (2014). Overview of the special issue: a multi-model framework to achieve consistent evaluation of climate change impacts in the United States. Climatic Change, DOI 10.1007/s10584-014-1206-0.CrossrefGoogle Scholar

  • Watkiss, P (ed.) (2011). The Climate Cost Project. Final Report. Volume 1: Europe. Published by the Stockholm Environment Institute, Sweden, 2011. ISBN 978-91-86125-35-6.Google Scholar

  • Wobus, C., Lawson, M., Jones, R., Smith, J., & Martinich, J. (2014). Estimating monetary damages from flooding in the United States under a changing climate: Climate change and damaging floods. Journal of Flood Risk Management. 7(3), 217–229. doi:10.1111/jfr3.12043.CrossrefGoogle Scholar

  • World Bank (2010). The Costs to Developing Countries of Adapting to Climate Change: New Methods and Estimates. Washington DC: World Bank.Google Scholar

  • Wright, L., Chinowsky, P., Strzepek, K., Jones, R., Streeter, R., Smith, J. B., …, Perkins, W. (2012). Estimated effects of climate change on flood vulnerability of U.S. bridges. Mitigation and Adaptation Strategies for Global Change, 17(8), 939–955. doi:10.1007/s11027-011-9354-2.CrossrefGoogle Scholar

  • Yohe, G. (1990). The cost of not holding back the sea: Toward a national sample of economic vulnerability. Coastal Management, 18(4), 403–431. doi:10.1080/08920759009362123.CrossrefGoogle Scholar

  • Yohe G., Schlesinger M. (1998). Sea level change: the expected economic cost of protection or abandonment in the United States. Climatic Change, 38, 447–472.Google Scholar

  • Yohe, G., Knee, K., & Kirshen, P. (2011). On the economics of coastal adaptation solutions in an uncertain world. Climatic Change, 106(1), 71–92. doi:10.1007/s10584-010-9997-0.CrossrefGoogle Scholar

  • Yohe, G., Neumann, J., Marshall, P., & Ameden, H. (1996). The economic cost of greenhouse-induced sea-level rise for developed property in the United States. Climatic Change, 32(4), 387–410. doi:10.1007/BF00140353.CrossrefGoogle Scholar

  • Zhang, X., Zwiers, F. W., Hegerl, G. C., Lambert, F. H., Gillett, N. P., Solomon, S., …, Nozawa, T. (2007). Detection of human influence on twentieth-century precipitation trends. Nature, 448(7152), 461–465. doi:10.1038/nature06025.CrossrefGoogle Scholar

About the article

Corresponding author: James E. Neumann, Principal, Industrial Economics, Inc., 2067 Massachusetts Avenue, Cambridge, MA 02140, USA, e-mail:

Published Online: 2015-01-13

Published in Print: 2014-12-01

Citation Information: Journal of Benefit-Cost Analysis, Volume 5, Issue 3, Pages 411–443, ISSN (Online) 2152-2812, ISSN (Print) 2194-5888, DOI: https://doi.org/10.1515/jbca-2014-9003.

Export Citation

©2014 by De Gruyter.Get Permission

Citing Articles

Here you can find all Crossref-listed publications in which this article is cited. If you would like to receive automatic email messages as soon as this article is cited in other publications, simply activate the “Citation Alert” on the top of this page.

Michael Toman
Journal of Benefit-Cost Analysis, 2014, Volume 5, Number 03, Page 469
Fran Sussman, Anne Grambsch, Jia Li, and Christopher P. Weaver
Journal of Benefit-Cost Analysis, 2014, Volume 5, Number 03, Page 333
Jia Li, Michael Mullan, and Jennifer Helgeson
Journal of Benefit-Cost Analysis, 2014, Volume 5, Number 03, Page 445
C P Weaver, R H Moss, K L Ebi, P H Gleick, P C Stern, C Tebaldi, R S Wilson, and J L Arvai
Environmental Research Letters, 2017, Volume 12, Number 8, Page 080201
Francisco Estrada, Richard S.J. Tol, and W.J. Wouter Botzen
Environmental Modelling & Software, 2019, Volume 121, Page 104504
C. P. Weaver and C. A. Miller
Environmental Management, 2019, Volume 64, Number 3, Page 245
Luis Moisés Peña-Lévano, Farzad Taheripour, and Wallace E. Tyner
Environmental and Resource Economics, 2019
Delavane Diaz and Frances Moore
Nature Climate Change, 2017, Volume 7, Number 11, Page 774
Fran Sussman, Christopher P. Weaver, and Anne Grambsch
Journal of Benefit-Cost Analysis, 2014, Volume 5, Number 03, Page 347
John Weyant
Journal of Benefit-Cost Analysis, 2014, Volume 5, Number 03, Page 377
Robert J. Lempert
Journal of Benefit-Cost Analysis, 2014, Volume 5, Number 03, Page 487

Comments (0)

Please log in or register to comment.
Log in