Climate Change, Mortality and Adaptation : Evidence from Annual Fluctuations in Weather in the U.S

This paper produces the first large-scale estimates of the US health related welfare costs due to climate change. The full welfare impact will be reflected in health outcomes and increased consumption of goods that preserve individuals' health. Using the presumably random year-to-year variation in temperature and two state of the art climate models, the analysis suggests that under a 'business as usual' scenario climate change will lead to an increase in the overall US annual mortality rate of approximately 2% at the end of the 21st century. Among different age groups, the estimated mortality increases are largest for infants. Individuals are likely to respond to higher temperatures by increasing air conditioning usage; the analysis suggests that climate change will lead to increases in annual residential energy consumption of up to 32% by the end of the century. Overall, the estimates suggest that the present discounted value of willingness to pay to avoid the climate change induced mortality and energy impacts predicted to occur over the remainder of the 21st century is about $900 billion (2006$) or 6.8% of 2006 GDP. This estimate of willingness to pay is statistically insignificant and is likely to overstate the long-run costs of climate change on these outcomes, because climate change will unfold gradually and individuals can engage in a wider set of adaptations that will mitigate costs in the longer run