Federal Reserve: Climate Change Could Cut U.S. Economic Growth by One Third Over Century
A study recently published by the Federal Reserve Bank of Richmond said that climate change could stunt U.S. economic growth by one third over the next century, according to the Wall Street Journal. The researchers came to this conclusion by looking at the impacts that rising temperatures have already had on the economy and extrapolated from there. For instance, above-average temperatures slow down factory output, agricultural activity and construction. Retail tends to take a hit as well, since fewer people go out to shop, and worker productivity sags too, even when air conditioning is accounted for. Beyond direct effects from heat, the paper also noted that higher temperatures mean more extreme weather, which translates into higher insurance costs, as well as the need to spend on either reconstruction or preventative measures, both of which divert economic activity from other areas. Overall, the researchers said that a one degree Fahrenheit increase in the average summer temperature reduces growth at the state level by 0.15 to 0.25 percentage points. Researchers applied this metric to temperature projections to develop the prediction that climate change will eat up a third of expected U.S. economic growth in the 21st century.