U of A prof estimates climate change cuts U.S. income by 12%

A University of Arizona economics professor says his research shows climate change has reduced U.S. income by an estimated 12%.

Derek Lemoine, a professor in UA’s Eller College of Management and co-director of the university’s Consortium of Environmentally Resilient Business, said measuring climate change’s current economic impact has large-scale, long-term implications for policy-making and business investment.

“If we can’t figure out what climate change is already costing us with the data we have, projecting the future becomes almost hopeless,” Lemoine, lead author of a new study published in the journal Proceedings of the National Academy of Sciences, said in a UA news release.

Previous research in this area largely focused on local, short-term weather changes, which negatively affected U.S. income by less than 1%, he said. However, when climate change’s year-after-year persistence, nationwide reach and connections between regional economies is also studied, the income loss increases to 12%, the news release said.

“A lot of the real cost comes from how temperature changes across the whole country ripple through prices and trade. It’s not just about the weather where we live. When every region is affected at the same time, the economic consequences add up quickly," Lemoine said in the release.  

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Lemoine’s research included working with climate model simulations to analyze the world with and without human emissions and figure out how different each county’s weather would have been if there was no climate change.

He then combined county-level data on daily temperatures with county-level personal income per capita from the Bureau of Economic Analysis covering 1969-2019 to measure how income has changed over the years, with the number of hotter and colder days both locally and around the country.

This showed him how shifting temperature patterns affected the economy, he said.

“The reason the effects get so much larger is that climate change operates through the whole economy,” Lemoine said. “Places are linked through trade, so temperatures in California or Iowa can influence income in Arizona. Those cross-state connections turn local weather changes into nationwide economic impacts.”

Measuring climate change as a continuous economic factor instead of only focusing on future projections helps businesses navigate the financial landscape, he said, since year-after-year temperature changes affect everything from prices to productivity to regional trade and energy demand. Lemoine said agencies can use a framework like his to regularly publish the economic cost of climate change, using it to help design policies.

Lemoine said with a clearer picture, policymakers can make better-informed decisions about where adaptation funding is needed most, and which industries and regions are being hit the hardest. He hopes his research is expanded on a global scale, so the calculation becomes more precise and actionable with more data.