Climate change is already affecting everyday lives. Record-breaking temperatures, melting ice on land and sea, more frequent coastal flooding, prolonged droughts, and damaging storms are just some of the intensifying risks that people will face as the planet continues to warm. The best available scientific evidence suggests that climatic changes observed over the past few decades are likely to accelerate, with implications for the health and welfare of every community around the world and the performance of every sector of the economy.
To confront these challenges, business leaders, policymakers, investors, and other stakeholders need information about the nature of the risks they face. They need to know the impact climate change is already having on supply chains, investments, and their local communities, and how things are likely to change going forward. The need to know how those risks can be mitigated by greenhouse gas emissions reductions, investments in resilient infrastructure and public health systems, and other forms of adaptation. And, they need to know how much it will cost. These questions have remained largely unanswered at the level of detail and with the level of rigor required for effective decision-making.
The Research
To advance understanding of the social and economic costs of climate change, EPIC Director Michael Greenstone co-founded the Climate Impact Lab, a first-of-its-kind multidisciplinary effort that includes a team of approximately 25 economists, climate scientists, and computational experts. The team is focused on producing two primary outputs: 1) the world’s first empirically-derived estimate of the global social cost of carbon, the cost to society from each ton of carbon dioxide emitted; and 2) estimates of the physical (e.g., temperature, precipitation, inundation, and flooding/storm surges) and economic impacts of climate change at a highly localized level (e.g., counties in the United States) for the world.
Using the most comprehensive climate and economic data sets ever compiled, the Lab is estimating the relationship between a changing climate and human well-being across eight principal categories: mortality, agriculture, energy demand, labor productivity, conflict, crime, migration, and coastal damages due to sea level rise and altered storms. They have made much progress in estimating these impacts.
The Lab’s first peer-reviewed findings were published in Nature in 2021 on the impact of climate change on the energy sector. Using data from 146 countries over 40 years, the researchers studied the effects of behavioral adaptations like the adoption of air conditioning that populations in each region will undertake as they become more affluent and exposed to warmer climates. They found that on hot days in wealthy locations, per-person electricity consumption soars, especially among the richest 20 percent. This reflects access to air conditioning, present in 90 percent of homes in the United States. For the poorest 60 percent, extreme heat results in virtually no increase in electricity consumption as costly technologies remain largely out of reach. This is the case, for example, in India where currently only 5 percent of homes have air conditioning.
“[One of the] biggest hubs of real-time climate research.”
– Emily Holden, Environment Reporter, Guardian US
The Impact
The Climate Impact Lab is rapidly making its mark on the research community, having already provided the first-ever estimates of the effect of climate change on total energy consumption globally; the most detailed and comprehensive empirical analysis of the susceptibility of crops to high temperatures; the first-ever methodology for evaluating the property-level impact of storm surge and wind damage; the largest dataset ever assembled on migration; the first estimates to capture the loss of productivity of the workforce due to climate change; and, one of the first fully empirically derived measures of willingness-to-pay to avoid climate change impacts on mortality.
As the Lab blazes new trails in climate research, it is equally committed to educating policymakers, business leaders, and the public about their exposure to climate risks and helping to inform adaptation efforts. This effort includes producing the tools needed to guide decisions. The Lab has developed a web-based Impact Map that allows users to view projections of the number of hot days for the communities where they live. Additionally, users can view the impact climate change will have on mortality and energy costs, in terms of GDP lost or gained. Moving forward, users will be able to see the costs of infrastructure damage due to storms and sea-level rise along their coastline, the need for new crop rotations or crop switching as temperature and rainfall conditions change in their area, and more.
“This is like the adults entering the room. Economists have, for a quarter century, insisted that more work needs to be done to estimate climate damages. This team has done so.”
– Gernot Wagner, Harvard Economist, The Atlantic
To date, the U.S. Government Accountability Office has used much of the Lab’s research in a report urging the federal government to take climate change risks seriously. Nike teamed up with Lab researchers to study the connection between climate change and athletic performance and participation across a range of sports, from football and running to tennis. And, as “climate risk” enters the mainstream investment lexicon, the Lab is helping to provide financial regulators with a holistic, evidence-based snapshot of how climate change will impact the economy and their investment decisions. Lab leaders are working with the International Monetary Fund, the Federal Reserve System and the Commodity Futures Trading Commission to inform their efforts to address the risks posed by climate change.
Climate Impact Lab research has also informed features in the New York Times, Washington Post, the Wall Street Journal and Bloomberg, bringing cutting-edge climate research to the screens and breakfast tables of millions of readers around the world. For example, the Lab’s research informed a cover story in the New York Times Magazine about how changing climate conditions could displace Americans from their homes. The piece generated enormous interest, including more than a quarter of a million engagements on social media. Another interactive in Bloomberg—which featured detailed maps showing the differential impacts of heat on mortality in various geographies and at differing income levels—was picked up by major advocacy leaders and organizations, including former Vice President Al Gore and Microsoft co-founder Bill Gates.
Members of the Lab team have been involved in a number of additional efforts to advance knowledge and decision-making within specific realms of the research. These include:
Social Cost of Carbon: The Lab is working in direct partnership with key states and central governments to improve the estimates and use of the social cost of carbon in policymaking. This work has included hosting top officials from Canada, Norway, and state governments throughout the United States for a full day of training and capacity building on ways to use the social cost of carbon in energy policy. Further, Lab members are advising a group of lawyers from the University of Chicago Law School in their efforts to advocate for the social cost of carbon as “best available science” in a number of current legal cases. Co-Director Michael Greenstone has testified before Congress on several occasions to inform lawmakers on the social cost of carbon and climate change’s impacts on various aspects of society.
Coastal Damage: With a growing body of evidence connecting climate change to increased hurricane intensity, the Lab’s team is helping to drive a new conversation around how to enact more efficient and forward-looking recovery plans in the wake of disaster. Members of the Lab have testified before Congress, stressing the need to help communities prepare for the future and underscoring the importance of integrating scientific inquiry with risk management. The Lab’s work quantifying past, present, and future flood risk from hurricane-driven rainfall and storm surge helped shape a first-of-its-kind climate risk assessment mandated by the Bank of England in the stress tests it requires of all insurance companies it backs. Further, the states of California, Washington, Oregon, Maryland and Delaware, and the cities of Boston and New York, are relying on the Lab’s sea level rise data to prepare and update their coastal plans.
Working with the First Street Foundation, the Lab’s coastal team developed a one-of-a-kind tool to help investors and homeowners gauge flood risk on any property in America, today and in the decades to come. The risk is communicated as a FloodFactor™ score of one to ten, and reflects current and future property-level flood risk. These scores are intended to help with investment decisions for everyone from first-time homebuyers to major property investors. They were launched on an easy-to-use, public-facing tool by the First Street Foundation and are also available for all listings on Realtor.com and Redfin.com. A report from First Street Foundation based on this model was released in February 2021. CNN, Politico, Reuters, and the Wall Street Journal covered the unprecedented collaboration. Their stories called attention to the “hidden” flood risk revealed by the maps that is not evident on flood maps published by the Federal Emergency Management Agency (FEMA), pointing out that homeowners may be liable for unexpected flooding costs.
Conflict: Amid the growing global crisis of migration and displacement, Lab members are helping humanitarian organizations, crisis prevention groups, and national security agencies parse climate change’s role in driving conflict. This work has included the development of a real-time seasonal forecasting tool to predict changes in the risk of conflict induced by seasonal climate conditions, transforming the data and statistical models in this field into a user-friendly product that can help guide crime- and conflict-prevention efforts. Lab members worked directly with the International Rescue Committee (IRC) on a pilot project to mobilize these maps into policy-relevant updatable tools to enhance the IRC’s standard risk assessment process. By request, they have also provided briefings to the Department of Defense regarding the development and possible uses of this forecasting tool.
Energy: The Climate Impact Lab has worked with the U.S. Department of Energy and several electric utilities to assess the potential impact of climate change on U.S. energy systems. This work included providing highly granular temperature and demand data to several electric utilities to use in their long-term infrastructure and procurement planning processes.
Labor: With the Lab’s initial work showing climate change will have a substantial impact on worker productivity, Lab members have presented findings to the Organization of Economic Cooperation and Development (OECD).
